Ghana Moves to Curb Offshore Investments to Shield Cedi

Ghana’s securities regulator has introduced new restrictions on offshore investments by domestic fund managers, in a decisive move aimed at protecting the Ghanaian cedi and strengthening macroeconomic stability as the country advances its recovery from a severe economic crisis.

In a circular, the Securities and Exchange Commission of Ghana directed local fund managers to reduce their exposure to foreign securities. Under the revised framework, investment funds will no longer be permitted to allocate more than 20% of their assets to foreign instruments, a sharp tightening compared to previous rules that allowed some funds to invest the bulk of their portfolios abroad.

While a prior upper threshold of up to 70% had applied to certain funds investing externally, the new directive significantly narrows that flexibility, signaling a more assertive regulatory stance.

The regulator further stipulated that any overseas investments must be confined to jurisdictions that maintain information-sharing agreements with Ghana’s securities authority. The measure is designed to enhance transparency, improve regulatory oversight, and mitigate risks linked to unmonitored capital outflows.

The policy shift comes as Ghana, one of the world’s leading producers of gold and cocoa, works to complete a three-year economic support program backed by the International Monetary Fund, scheduled to conclude in August.

Authorities have been focused on stabilizing the financial system and easing volatility in the cedi, which has faced sustained pressure amid balance-of-payments challenges and tight foreign currency liquidity.

Market observers view the offshore investment cap as part of a broader strategy to limit capital flight, reduce strain on foreign exchange reserves, and curb additional depreciation pressures on the local currency.

Foreign currency liquidity remains a sensitive component of exchange rate stability in Ghana. By restricting external allocations, policymakers aim to moderate demand for foreign exchange, potentially easing inflationary pressures linked to currency weakness.

The new framework is expected to affect both local and international fund managers operating in Ghana, prompting portfolio rebalancing toward domestic assets. Analysts suggest the move could bolster demand for local securities while helping retain capital within the domestic financial system.