Self-Centredness Will Destroy Us If We Do Not Wake Up!

The composition of people who currently control how Ghanaians should lead their lives is quite frightening to observe. There is just too little information about the operations of companies whose activities directly impact on the lives of our people.

Hidden faces run our economy to a large degree. Yet, these days, countries that offer a relatively comfortable lifestyle do so because they benefit from what is called a system of meritocracy.

Gone are the days when, in places like the USA, the UK, Germany and France, a man built up a business and then handed it down to (usually) his eldest son. Who also did the same.

Shareholders have been largely responsible for the decease of this stem. As businesses grew, their need for capital to help them expand and meet competition, also grew. So they went private and invited shareholders to invest in their operations. And when the shareholders came, they looked for performance in the companies in which they had invested their money.

If the members of the families that originally owned a company, could attract business and thereby enable the shareholders to earn a profit on their investments, all is well and good. But if the family members allowed their paternalistic or nepotism-flavoured instincts to affect their attitude to business affairs, they were usually booted out.

Their successors were a breed of engineers, economists and management personnel who proved their worth with mainly one thing, namely, the “bottom line”. Dividends can’t lie. And when you regularly maximise them, the shareholders whose pockets are filled by your annual results, support you. Otherwise, out you go.

When last did you read the Annual Report of a company in this country? Maybe such Reports are regularly mailed to shareholders. But do they send copies to the media? Or do the media have to go to the Registrar of Companies or the Ghana Stock Exchange to fish out reports about how company A or company B is doing?

Without constant discussion in the media about how companies are performing – or not performing – how do we know which companies to buy shares in (assuming we are interested in investing)?

When the catastrophic mortgage crisis initially broke out in the UK in September 2007, Britons didn’t learn of it from Companies House or the London Stock Exchange. It was a journalist called Robert Peston who wrote an article in the London Financial Times, disclosing that Northern Rock Building Society (which had become a bank) was about to crash.

Peston instantly became a radio and TV star. Because of the facts he revealed, queues began to form outside Northern Rock’s offices, made up of anxious customers who wanted to take out their money.

The British Government had to bail the company out. But eventually, it died. Its mortgage business was taken over by Virgin Money. But the Northern Rock bail-out, which was effected by the Bank of England deploying monetary policy in a precursor to what became known as “quantitative easing”, became a precedent. The Bank of England opened a “facility” allowing high street lenders to tap central bank reserves at a cheap rate.

And then, on September 15, 2008, Lehman Brothers, one of the biggest financial players in the USA, crashed. This occurred in spite of “rescue operations” that saw investment banks Bear Stearns and Merrill Lynch swallowed by rivals. In the aftermath, major lenders, mostly banks in the US, the UK, Japan and Europe, had to be bailed out by their respective governments, as the entire global financial system reeled with shock.

On October 8, 2008, the Bank of England cuts interest rates by half a percentage point. A co-ordinated move then began with the central banks in the US, the Eurozone, Japan, Switzerland, Sweden and Canada. More interest rate cuts followed, The US Congress approved a whopping $700bn “Troubled Asset Relief Programme (TARP)”. A plan was also put in place that obliged banks to accept purchases of $250bn worth of bank shares. Thus, Goldman Sachs, among others, were able to boost their reserves with government loans.

On November 25, 2008, the US central bank, the Federal Reserve, unveiled an $800bn Quantitative Easing (QE) plan. This involved printing money to buy assets off financial institutions, in the expectation that they would reinvest the funds in the wider economy. It included spending $100bn buying mortgages from providers Fanny Mae and Freddie Mac and $500bn on shaky, mortgage-backed securities, issued by banks.

But on March 18, 2009, the biggest bombshell fell on the financial system: the Federal Reserve increased its Quantitative Easing debt pile by $1 trillion, adding government debt to the mortgages on its balance sheet. US stock markets finally rallied.

These catastrophic economic problems arose in countries where business information is readily available to the public. If such information had been regularly available here, too, would we have suffered the bank failures and loan scheme fiascos that our banking system has been enduring?

I think there is an unhealthy secretiveness about business affairs in Ghana. Whom you know appears to be the major criterion in relation to recruitment.

Worse, qualification seems to be entirely based on degrees and professional certificates. What people have actually done in their fields, is almost always a “secret”.

But as our economy expands, entities in both the private and public sectors need to become more responsive to the public need for information.

This week alone, I have experienced two unannounced power outages. If I knew whom to quiz about them, I would do so. But the last time I tried that, my name and telephone number were taken down. I was told that I would be called back.

That never happened! And that’s Ghana for you.