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08.05.2008 General News

Fiduciary Rating Agency In The Offing

By Daily Graphic
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Representatives of the country's financial community have begun charting the course for the development of a national fiduciary rating programme.

A fiduciary risk measurement is the means for probing the activities of institutions that look after other people's money and also assesses the quality of management and systems established to enable firms to meet their fiduciary obligations.

In line with this, a two-day workshop has been organised by Africa Investor, Rating Capital Partners and BizClim to develop the measurements in which an effective fiduciary rating programme can be achieved.

Africa Investor publishes the Africa Investor magazine and also offers specialists investment communications to firms, governments and international organisations, while Rating Capital Partners are a pioneering fiduciary rating firm based in Geneva.

BizClim is a European Union-funded initiative under the Cotonou Agreement that seeks to improve legislation, institutional and financial environment, and the private sector in the African, Caribbean and Pacific (ACP) countries.

Briefing the press after the meeting, Mr Simon Griffiths, the workshop manager and a Senior Writer with the Africa Investor magazine contrasted credit risk with fiduciary risks and pointed out that with the former, there was no need for trust as investors were promised interests on their funds or a funds back guarantee.

With the latter, however, there was no promise of an interest but the assurance of good returns on the management of one's investments.

With credit, because there was a promise, there was no need for trust while the need for trust arose with fiduciary.

He said it was for that reason that a fiduciary risk measurement was needed for investors to access the competence of fund managers and institutions in the administration of their investments.

A fiduciary risk measurement, Mr Griffiths said, would also be a measure by which fund managers improve on their capacities and skills.

The system, according to him, was established in Europe, America and Asia, while the measurement was largely absent in Africa.

Listing some benefits, he said, a fiduciary risk measurement would attract more local and foreign investments and said initial trends from discussions held showed that Ghana had the environment that needed to be improved upon.

For starters, a College of Investors made up of insurance, pension and fund managers, with the requisite knowledge of the Ghanaian market, would be formed to determine the measurements, he said.

He said a group of experts would be set up and they would be made up of people with a thorough knowledge and skills in definite aspects of fiduciary risk rating.

Ghana is the first country to benefit from the workshop, with the next country being Nigeria.

Story by Caroline Boateng

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