Savings, the only way forward

Mon, 7 Nov 2005 Source: Kwakyi, Kwaku

I returned recently from a 3-week vacation ("business observation") trip back home. A quick summary of our situation is the WILLINGNESS TO WORK IN LIGHT OF FEW AVAILABLE JOBS. Ghana has actually worked pretty hard to make it easier for private businesses to thrive. Problem is, most people complain of not having money. Hence, all eyes are upon the government to deliver the bacon. Like it or not, the role of government (from time immemorial to date) is well entrenched in the affairs of every Ghanaian. This role is CREATE THE RIGHT ENVIRONMENT FOR BUSINESS TO THRIVE. Somehow, MOST Ghanaians expect the government to create jobs for our graduates. Yet, these graduates see no reason and feel no shame to abandon their employers (private or public) in search for greener western pastures. In most cases, no sooner had these graduates landed in the west do they realize that their dreams (of making it quickly and returning home as heroes/heroines) is an illusion, not real. Rather than going back at the quickest opportunity, they linger on and before time, the new culture grows on them ? borrow money to buy cars to go and fro work, borrow money to buy a houses, borrow money to furnish the houses, borrow money to further their education, borrow money to organize weddings, borrow money to ? you get the drift. Yet, this is life in the west that most residents in Ghana do not know about or simply refuse to pay heed to.

Although our government?s achievement in some business enterprises has been good (e.g. government transport, Akosombo Dam, Tema Motorway), the result of her participation in other businesses (e.g. city bus operation, workers brigade) has been horrible at best. Therefore, it is fitting for most Ghanaians, rich and not so poor, local-based or foreign-based to endeavor to save money and wrestle government?s role in business creation once and for all. Some politicians have publicly stated that THE GOVERNMENT IS NOT IN BUSINESS TO DO BUSINESS. In our case, the government is being forced to do business because most Ghanaians are unable and are ill equipped to start and run their own businesses.

Continuing with my recent trip to Ghana, what I found repelling was the general consensus of INVESTMENT BY SOMEONE ELSE, without identifying or committing anyone let alone one?s self. In the absence of the investor, this business creation exercise becomes more academic than real, something most Ghanaians/Africans have done ?successfully? since independence.

Like some (most?) visitors, I rode around Accra in taxis and tro-tro; and outside Accra on State Transport Corporation (STC) buses. In most of my taxi rides, I picked up economic conversation with the drivers and got unanimous responses of HARD TIME from most, if not all. Although my economic discussions or outlook included other professionals, I am writing specifically about cab drivers because I noticed that about a third of vehicles in Accra and elsewhere are taxis or tro-tro buses. Based on this notion, the general level of employment (on-wheels) in my view is taxi driving. Thus, I thought there would be a wider economic impact when economic changes started with cab drivers. Wrong or right, I asked my typical taxi driver how much he spent buying PK chewing gum, ?pure water?, apples, nkate3 burger and the like each day. After the classic I DO NOT KNOW initial response followed by further probing questions, the general answer was roughly 55,000 cedis. Then I asked to remove the essentials (e.g. pure water, food) and the realistic answer was 25,000 cedis each day. When asked what they considered HOW MUCH A BIG AMOUNT OF MONEY IS, most cab drivers said 50Million cedis (about US$5,500). I now realized at this point that the representative driver was keen and willing to soak in whatever I had to say. So I asked each to save this daily 25,000 cedis, not under their beds or in a savings account, but in government guaranteed treasury bills. I cautioned that this act would be difficult to start but with dedication and consistently a driver could realize 150K cedis each week, based on 6-day work week, 600K cedis a month and at least 7.77Million cedis or US$853 yearly (at a flat 14% T-Bill p.a.) or 15.5% of his 50Million cedi BIG MONEY target.

Here are the details for amassing such funds ?

 Month	Beginning balance    Interest      Ending balance 
(cedis) (cedis at 14% p.a.) (cedis)
1 600,000 7,000 607,000
2 1,207,000 14,081 1,221,081
3 1,821,081 21,246 1,842,327
4 2,442,327 28,494 2,470,821
5 3,070,821 35,826 3,106,647
6 3,706,647 43,244 3,749,891
7 4,349,891 50,749 4,400,640
8 5,000,640 58,341 5,058,981
9 5.658,981 66,021 5,725,002
10 6,325,002 73,792 6,398,794
11 6,998,794 81,653 7,080,457
12 7,680,457 89,605 7,770,062
I told the typical driver, now fully captivated that he could buy his own cab, employ a fellow Ghanaian, and impart this simple process with his friends, family, and relatives. Soon, the tro-tro drivers may duplicate the taxi drivers? example and the country may eventually register increased savings without government involvement. Socially, the reduction in purchasing frivolous imported items (e.g. PK chewing gum, apples) may naturally reduce the number of street hawkers. Consequently, Accra Metropolitan Authority (AMA) will need not fight street hawkers when removing them but content itself with cleaning the gutters, streets, etc.

Suppose the taxi drivers? achievement is replicated by 10 percent of workers/professionals in Ghana, I am sure you will agree that it may help our country to eventually break off of its dependent on foreign infusion of cash to resolve/remedy budget deficits. As more people save money, it is likely for more jobs to be created and the government may register increased taxes and life will be begin a pleasant up tick. Let us suppose that Ghanaians in the Diaspora also join the creation business opportunity and chip in 10% of their annual US$2-4Billion remittances. Will US$200-400Million of added investment make a positive change? Certainly! Will the US$853 annual investment by the average taxi driver help? Of course it will. Will such investment happen? May be, may be not. Surely, some people do invest and/or take risks but working together continues to be our exposed Achilles? heel. Fact is Ghana?s economic progress has a direct dependence of savings level of her people ? locally based or abroad. The more people save, the better the chance of Ghana?s economy improving and growing. Do your part. Then tell others to replicate the process and see what happens.

It is believed that most Ghanaians may endeavor to save for nation building when clear cut directions are emphasized. This willingness to save may be curbed by certain ill-advised practices including ?Each Minister To Get $38,500 Vehicle? http://www.ghanaweb.com/GhanaHomePage/NewsArchive/artikel.php?ID=92102. If this new loan is legitimate after the same people had received $ 25,000 loan for cars in less than a year (http://www.ghanaweb.com/GhanaHomePage/NewsArchive/artikel.php?ID=74497), will it set a good precedence for increased savings to occur? Can the same government people look themselves in the mirror and ask their constituents to save?

Any how, let us remember that one?s future wellbeing is directly related to his/her propensity to save. Whether or not government officials approve big loans for themselves, your retirement income will amount to nothing if you do not save now. Otherwise, life will be bleak during your golden years when rest, enjoyment of your past labor should set in. Please start saving now and trust me, you will not regret it.

Kwaku Kwakyi
Huntington Woods, Michigan USA

Views expressed by the author(s) do not necessarily reflect those of GhanaHomePage.

Columnist: Kwakyi, Kwaku