Ghana's Wrong Economic Foundation: Why Banks And Businesses May Keep Failing.

Economists can predict growth and joy as well as gloom from their desks. They have no money in the pot! The great Alan Greenspan of the United States once said his predictions were accurate more than fifty percent of the time. However a Businessman with his own capital cannot afford to lose his money! He/she must study the fundamentals well.

In the last 40 years I have personally lost a few hundreds of dollars of my money at Bank for Housing, Ghana Commercial Bank, Barclays, and Ecobank for various reasons. Other members have tales of losses at Banks. While not much money, the reasons have been due the following:

-a. Inadequate disclosure of fees by the Banks,
- b. The Banks failure to provide written monthly or quarterly or even annual statements of the accounts, as done in almost all developed nations now.

- c. Inability to access my account online from overseas.

Kofi Amoabeng of UT Bank did well as UT Financial services to lend using what one might call the patapaa traditional shirt-collar approach of money collection. He was very successful! We see that as soon as he came in the main line of conventional lending his Bank is broke!

Conventional lending involves using collateral as security or relying on peoples credit profile and income history. Ghana is weak! We have failed in 60 years to change the flawed fundamentals of inadequate and unplanned infrastructure, human resource development, rule of law and discipline, and application of our education.

As founder and convener of the global Ghana Leadership Union (GLU) forum, my assessment of Ghana based on many years of dialogue as well as academic research is that Ghana does not have the fundamentals right to grow a sustainable economy! No!

Let me illustrate and elaborate.
1. We don't have our Real Estate Laws streamlined or polished yet. Real Estate litigation are allowed to take an average of 11-13 years according to a UN study.

A simple offer to purchase a house can take 6 month to a year due to cumbersome Title search and lack of database to do basic recordation and facilitate such searches.

Real estate agents don't even know how to write adequate valid and enforceable contracts with consideration.

2. We have no property identification. I advised governments since the Acheampong regime in the 1970s to get this done, but nobody seems to have the will or understood the value of organization and implications.

Due to lack of the above,
3. We cannot build investor confidence to attract adequate capital.

Even Ghanaians overseas who invest out of love and emotion for Ghana are burning out!

No American Bank or capital company is going to risk his investors funds in a nation where even Uber drivers cannot find a location on a main road in East Legon after 3 phone calls and a customer has to go back! This happened only last week!

4. Inadequate infrastructure: as obvious as this may be, building roads and electricity and phone poles is not enough.

Even with the George W. Bush or Kwame Nkrumah Highway, we have inadequate Highway Signage large enough and planned for safety and visibility of the driver, especially at night! We try to save on Ink and Size of Boards and we may be cutting short somebody's life!

5. Ghana has no credit database companies because of the lack of personal Identification numbers and Property identification.

This leads to the following:
6. Loaning money is at very high risk, causing Banks to raise the cost of borrowing to the customer to 30-39%!

In America one can borrow say $100,000 on a home at 4% interest for 15 years at a monthly payment of $740.

In Ghana the same loan principal will charge the borrower about 25% interest and hence a monthly payment of $2,136.

The Ghanaian is hence paying almost three times as much as Americans for the same money. Why?

In addition, by the end of the 15 year term the poor Ghanaian would have paid $384,480 for the $100,000 borrowed.

The same borrower in America would have paid $133,200!

To bring this personal, I loaned about $1,000 to an old school mate some 25 or so years ago and never heard of him or saw him again!

In addition and not to be forgotten,
7. The Corruption mindset, greed and self interest make government Ministers, deputies and executives stand in the way of writing simple letters of repatriation guarantee for foreign investors. Absolutely nonsense to expect somebody to invest say $200 million in Ghana and unable to repatriate their capital after they get paid! No way!

8. Our workers are not trained in the modern way and in use of modern tools, and they are not licensed!

Hence based on my own experience in the last 14 years dealing in the home construction (and technology) industry, our workers are totally inadequate for any major roads or building contracts or to be hired by a builder except as laborers and with close supervision (means low wages also).

Example I got to Ghana last year thinking a concrete contractor had done a good job at the parking lot of my small Plaza only to come this year and see the cement wearing off already! And this is the 3rd time in 14 years!

How then do you build one Factory in each district? For them to collapse every 5 years?

This is not to predict doom. Members of the Ghana Leadership Union feel that Ghana can be made great again!

But The President needs to "GIVE THEM FIRE", as the great warrior Shaka Zulu once said!

Wishing our new President all the luck.
Dr. K. Danso
Co-Founder/Exec. President,
Ghana Leadership Union (GLU)