Unlocking the Funds of the Dead at the Financial Institutions: Economic Freedom can Help End Family Poverty

Free and open economies have led to greater economic development and alleviation of poverty. The pillars of freedom that have made more countries prosperous which we equally support, include: freedom to trade, limited government, Low regulations, and secure property rights for businesses and economic development. The Fraser Institute of Canada in its annual Economic Freedom Index Report, has consistently found that, countries embracing institutions, policies and programs of economic freedom have more successfully alleviated poverty.

For example, 64 years ago, South Korea was one of the poorest countries on earth. Starting in 1960 with nearly equal GDP per Capita to that of Ghana, South Korea pursued policies of trade liberation, strong property rights and economic freedom programs, and by 1990 its GDP is 10 times that of Ghana. South Korea has its GDP per Capita at $33,150 in 2023. Ghana on other hand embraced state sponsored policies and heavy regulations.

Today in Ghana, we find numerous land litigations, state sponsored anti-poverty programs, unclear property right protection rules, enormous amount of aid dominating domestic policies and programs, and heavy regulations for revenue generations instead of facilitating business and trade. In 2023, Ghana’s GDP per Capita stands at $2,240 far lower than South Korea. It is inarguable that more Ghanaians are getting poorer with the web of regulations and state-led policies.

A typical example is the barrier to accessing the funds of a deceased person at the banks, insurance and pension firms. These processes are greeted with illiberal institutions and heavy regulations.

As many more Ghanaians are dying intestate – in road accidents, in rivers, burnt in fire (infernos), and others in some rare circumstances, their savings and investment are locked up with financial institutions. In the past 10 years, Ghana records that 72 persons out of every 100,000 population have suffered bodied injuries and 8 out of the same population died through Road Traffic Accidents. Statistics from the National Road Safety Authority (NRSA) shows that 1,086 died in the first half of 2023 alone, stood at 1,086 compared to 1,300 deaths in the same period of 2022.

The deceased may leave behind funds with the banks, insurance and pension firms. Others who died in at hospitals, homes, infernos, floods are sometimes unidentified, and may equally leave behind funds with the financial institutions. Many of the deceased are likely the breadwinners of their families. In 2022, the Ghana Police service held a mass burial of 300 unidentified bodies and the 37 military hospital conducted a mass burial of 48 unidentified and unclaimed corpse. In many cases, when funds of the deceased are kept by the Bank of Ghana (BoG), Insurance and Pension firms, it worsens the fight on poverty and creates more dependency.

The imperatives of private property are to prevent aggressions and adjudicate disputes, prioritizing the legal rights of citizens. The government since 1970 has capriciously imposed its will on property ownership and transfer of inheritance through burdensome regulations and outrightly taking over funds through the Bank of Ghana in the case of financial institutions, while other entities keep the funds forever.

In the financial sector, it is incumbent on the banks, insurance companies and Social Security and National Insurance Trust (SSNIT) to find out whether their accountholders, clients or customers are deceased or missing in the case that the account becomes dormant. This is why all insurance policyholders, bank account holders, pension schemes have their Next of Kin, serving as the point of contact.

The Bank of Ghana’s Policy through the Banks and Specialized Deposit-Taking Institution Act 930 (2016) demands that Banks must contact the next of kin of the accountholder to find out the whereabout of the accountholder when the account is dormant for 3 years.

After 5 years when the account is still dormant, the Funds that could alleviate the povety of families, children and spouses are transferred to the government for keep. In the case of the insurance companies and SSNIT, they are not required of such exercises to transfer the funds to the Nationals Insurance Commission (NIC) or National Pensions Regulatory Authority (NPRA). This means, they keep the funds to themselves if no one is able to clear the legal huddles for the funds.

There is a web of laws and rules governing inheritance and property distribution. These laws include the 1992 constitution of Ghana, Administration of Estates Act, 1961(Act 63), 1973 Conveyance Act (NRCD 175), the 1971 Will Act (Act 360), 1884 – 1985 Marriage Act (Cap 127), 1985 Intestate Succession Act (PNDC Law 111), National Pension (Amendment Act) 2014 Act 883, Birth and Death (Act 1027) 2020, Head of Family Accountability Act 1984 (PNDC Law 114), Banks and Specialized Deposit-Taking Institution Act 930 (2016), Insurance Act (1061) 2021, the Children Act (560) 1998 and 1991 Intestate Succession Amendment Law (PNDC Law 264) and other regulatory instruments. The family members of the deceased who died interstate must hire a lawyer to seek justice for the distribution of property.

When you die testate, (with a Will) you will decide how your property must be distributed. But, when you die interstate, the government has the legal power to decide how your property will be distributed. The acquisition of burial permits, coroner inquest report, medical report, letter from the Assembly man, letter from the chief, letter from the church or Imam, letter from Head of Family, affidavit, death extract, Letter of Administration (LA) with various consultations renders the process cumbersome and bureaucratic.

The long delays of justice, cost and cultural challenges often results in abandonment of the processes, which is certainly not surprising given the number and magnitude of the administrative hurdles that must be cleared.

The cost, and web of information required to unlock the funds of the deceased could take months and years. The acquisition of documents to secure other documents to access the funds come with challenges including identity crises, cost, time and institutional challenges. In most cases, the beneficiaries, nominees, or next of kin could die in the process of accessing the funds. This sometimes leads to inheritance fraud.

The economy becomes weaker and weaker when those who are eligible to access the funds or do business are prevented from doing so because of red tapes and administrative barriers.

Although administrative barriers are embraced as means to weeding out fraud and prevent mistakes, it should also not prevent the low-income and poor-but-eligible people from accessing their rightful inheritance. Therefore, administrative barriers should not be used as a measure of efficiency in service delivery. Administrative barriers and red tape have the tendency to push 65% of the population into poverty.

It is imperative for the banks, insurance companies, and SSNIT to restructure their account opening forms, policy subscription forms, and pension documents to avoid identity challenges leading to administrative delays. The Bank of Ghana must intensify proper supervision and ensure banks comply with the dormant account sections in the Banks and Specialized Deposit-Institution Act, 2016 (Act 930).

Again, the Bank of Ghana, as a matter of policy, must find ways to identify families of the deceased bank accountholders to receive their funds kept for the past 10 years. The Insurance companies and SSNIT should also simplify the processes and equally identify beneficiaries, next of kin and families to access the funds kept with them in the past 10 years, while the Births and Deaths Registry should be retooled by relocating them with a more spacious edifice to work and deliver within time.

The government and all stakeholders should consider that the more administrative barriers we have, the more we push people into poverty. It is also incumbent upon all Ghanaians to start amending their bank accounts, insurance and pension details, especially on the information of beneficiaries, nominees and next of kin to prevent the loss of funds to their heirs when one is gone.

It is therefore an opportune time to institute free market reforms with low regulations by removing red tapes and eliminating administrative bottlenecks that hinder the efforts of people and families to rise up out of poverty. Free market reforms have taken many countries (South Korea, USA, Japan, New Zealand, Hong Kong, United Kingdom etc) and billions out of poverty. Why not Ghana? We must ensure that the world that we pass to succeeding generations is one that’s friendly, liberal, protects private property rights and is full of opportunities for a prosperous society.

Peter Bismark Kwofie
Institute for Liberty & Policy Innovation
Tema