Ghana's Securities and Exchange Commission (SEC) will offer concessions on its new asset-under-management (AUM) levy for fund managers holding genuinely distressed investment portfolios. This decision provides potential relief for investors whose returns are already suffering from troubled assets.
The move represents an important qualification to the regulator's new funding framework. The framework had drawn criticism from the investment industry. Concerns arose that charges linked to assets under management could apply even when portfolios were making losses or generating little income.
This development fits into Ghana's broader economic narrative of navigating financial challenges. The country's capital market stakeholders are seeking stability and fair regulatory practices. The SEC's new levies aim to ensure regulatory stability but must also consider market realities. The debate highlights the balance between regulatory oversight and market viability, especially during periods of economic uncertainty.
Mensah Thompson, Deputy Director-General of the Securities and Exchange Commission Ghana, confirmed the regulator's stance. He stated, “It will be no point for the commission to be charging fees on AUM on a portfolio that is not performing or that is distressed.” He made these remarks during a NorvanReports Economic Governance Platform on Sunday, August 16, 2026.
This intervention addresses a central industry concern: whether investors would absorb additional regulatory costs. This concern is particularly acute when underlying investments are already under financial stress. The SEC's willingness to differentiate between performing and distressed portfolios offers a pragmatic solution.
Under an AUM-based system, the levy ties principally to the value of managed assets. It does not depend on the fund manager's profitability or the client's investment return. This provides the regulator with a stable revenue base. However, it creates a problem when funds hold impaired or non-performing assets. Their nominal values may not accurately reflect their ability to generate cash or returns.
A mechanically applied levy could deepen losses if passed to clients. This problem becomes visible in distressed funds. Investors may already struggle to redeem their money freely. The underlying securities might be difficult to value or sell. Mr. Thompson affirmed, “If there are genuine concessions, we will make them.”
The emerging approach favors case-by-case relief. It avoids an automatic exemption for any fund recording poor returns. This distinction is crucial because temporary underperformance differs from genuine distress. Equity prices can fall and recover. Bond values fluctuate with interest rates. Investment funds can record negative returns without their underlying assets becoming impaired. An automatic exemption based on weak performance could incentivize operators to classify ordinary volatility as distress.
Case-by-case assessment reduces this risk. However, it introduces potential regulatory uncertainty. Operators need predictability over regulatory costs. This predictability is vital when setting management fees and designing investment products. Clear eligibility rules are important for concessions to be effective. The SEC may need to define what constitutes a distressed portfolio. It also needs to specify documentation requirements for impairment. Furthermore, it must clarify how relief applies and for what period.
Transparent rules would reduce the risk of similar portfolios receiving different treatment. This debate reinforces a broader issue regarding the economic incidence of the SEC’s new levies. A regulatory obligation may formally sit with a fund manager. However, the cost can ultimately be absorbed through lower institutional profits. Alternatively, it can be transferred to clients through management fees or reduced returns.