Promote issue of regional bonds - SEC Boss

BY Charles Benoni Okine

THE Director-General of the Securities and Exchange Commission (SEC), Mr Adu Anane Antwi, has called on African countries to promote of the issue of bonds within the region to enable them to raise funds to accelerate their development.

“Regional bonds would allow companies and governments to raise huge capital outlays from the region to finance their expansion and infrastructure without depending on donors”, he said.

Mr Antwi made the call when he delivered a paper at one of the plenaries of the on-going 2nd Africa Congress of Accountants (ACOA) in Accra on the theme “Africa’s Economic Growth, Accountability and Democracy”.

The two-day conference on the theme “Africa’s economic growth, accountability and democracy”, is being attended by more than 1,000 registered participants from 39 African countries and 34 Pan African Federation of Accountants (PAFA) member bodies.

It is also being hosted by the Institute of Chartered Accountants Ghana (ICAG) and partly sponsored by Graphic Business, the official financial newspaper of the Graphic Communications Group Limited, publishers of the leading brand of newspapers in the country.

The call comes at a time when funds from bilateral and multilateral donors are drying up as a result of the credit crunch that has affected many, otherwise financially powerful countries including Europe and America.

Speaking on the topic “Strengthening Financial Markets and Institutions in Africa”, Mr Antwi said “Such bonds would attract international investors resulting in capital inflows into the region”.

“To the companies, the huge capital outlays would see them become larger and more competitive by serving larger and better diversified markets”, he added.

Consequently, he called on governments to complement the creation of what he described as “franchise value” by adopting a regulatory regime based on rules designed to align the private incentives of market players with the social goal of financial stability, and by strengthening supervision.

Mr Antwi also stressed the need for the governments to build the capacity of financial regulators and ensure their independence.

He said the use of peer review mechanism must also be encouraged within the region since “This process may have the potential to broaden the pool of experts available”.

According to him peer review will ensure the development of the financial supervisory and regulatory systems in the region.

The SEC Director-General said given the economic importance of the financial sector and the dangers when it functions poorly, it is not surprising that governments in both developed and emerging market countries alike take a keen interest in regulating and supervising financial institutions and markets.

As a result “Sharing lessons, experiences, and challenges among policy-makers and regulators in the region will further enhance co-operation, which will eventually strengthen financial markets and institutions in Africa and lead to greater financial stability in the region”.

Taxes and IFRS

In his presentation on the topic “Tax Implications of Implementing the IFRS”, Mr Benson Okundi, the Vice President of the Institute of Certified Public
Accountants of Kenya (ICPAK), gave a historical background to the adoption of the  International Financial Reporting Standards (IFRSs) saying they “are the language of business and their wide acceptability around the world continues to make it possible for businesses to communicate results of their operations, search for finance in the global arena and produce understandable and comparative set of reports to a diffused set of shareholders and stakeholders”.

According to him, the “Tax law on the other hand represents country specific measures normally enacted as law to drive national fiscal policies and generate revenues for government.  As is to be expected, there are and will always be variances between local tax laws in any given jurisdiction and the IFRSs”.

Agains this background, he said without doubt, adoption of IFRSs has immediate and on-going implications on the tax authorities.

“The impact is dependent on how similar the national accounting system is closer to IFRSs, the manner in which the IFRSs are adopted and the investment made to improve the skills set of accountants and agents of tax authorities”, he said.

As to whether the implementation of IFRSs can result in more tax resources, he said that remains an open question and will vary case by case. 

“The journey to IFRSs needs to be driven by the supreme accounting body in a given jurisdiction with the support of the state and other stakeholders”, he said.