Time Value of Money and Woyome’s GH¢51.2m booty

Between 2010 and 2011, Mr. Alfred Agbesi Woyome was able to outwit government ministers and officials and picked GH¢51.2 million from the national kitty. At that time, it was valued about $36.6 million. Today, such an amount, when converted into cedis, will be about GH¢173.5 million.

In all honesty if Uncle Alfred decides to repay the loot, he must know that he will pay over five times the value of the money he picked up.

This is so, because of what is known in finance terms as the time value of money, of which Mr. Woyome must be conversant with, if he is, indeed, a Financial Engineer, as he claims.

Time value of money is one of the most basic fundamentals in all of finance. The underlying principle is that a cedi in your hand today, is worth more than a cedi you will receive in the future, because a cedi in hand today, can be invested to turn into more money in the future. Additionally, there is always a risk that a cedi that you are supposed to receive in the future won't actually be paid to you.

The time value of money is the concept that money available at the present time is worth more than the identical sum in the future, due to its potential earning capacity.

This core principle of finance holds that provided money can earn interest, any amount of money is worth more the later it is received. Time value of money is sometimes referred to as present discounted value.

So just how much will Alfred Agbesi Woyome be expected to pay today? Working out the time value of money of GH¢51.2 million (from 2010 to 2017) will involve using, among other options, the annual inflation rates over the period.

The annual inflation rates from 2010 to 2017 were, 6.7%, 7.7%, 7.1%, 11.7%, 15.5%, 17.2%, 17.5% and 12.4% respectively. By using annually compounded rates, Alfred Agbesi Woyome would have been expected to pay nothing less than GH¢125.8 million as at December 31, 2017. This amount, in simple terms, is what our GH₵ 51.2 million in 2010 is worth as at the end of last year.

As the months of this year roll by, inflation rates will have to be calculated on the compounded balance brought forward from 2017, and this means Woyome has got a huge bill to clear. If the month by month inflation rates are worked on the balance as at December, last year, then with rates from January to July of 10.4%, 10.6%, 10.4%, 9.6%, 9.8%, 10% and a projected 11.045% respectively, will surge the total balance, as at July 2018, to, at least, GH¢249.3 million. However, if the trial judge decides to be lenient and rules that an average of the seven months' inflation rates should be worked on the compounded balance as at 2017, then Woyome will escape with only GH¢138.7 million to pay after an average of 10.26% inflation rate has been worked on the balance outstanding, as at December 31, 2017.

However, Woyome's problems could be compounded in case the trial judge, for punitive measures, decides to have prevailing interest worked on the true value of the GH¢51.2 million he stole. Remember that the time value of money is to give the true value of money at a future date. Meaning, what GH¢51.2 million could buy in 2010, it will take at least, GH¢138.7 million to do same a month ago, in July this year. It will, therefore, make sense for the whole amount to be “invested” by using commercial rates. A kind judge may rule that prevailing rate be used on the balance by way of simple interest on a one-time basis.

With this kind of looming and growing debt, it is surprising that Mr. Alfred Agbesi Woyome is not in any urgency to pay up what the average Ghanaian knows he 'stole'. His own leader and founder of his political party, ex-President Jerry John Rawlings, was very blunt in calling him a thief.  The Supreme Court of Ghana, the highest court in the land, had ruled that he should return the loot. And, even as Mr Woyome, at one time, said he would draw up and give Ghanaians his own repayment schedule, to indicate how soon he would start paying up, he, nonetheless, decided to go gallivanting and shopping from court to court at home and abroad to establish that his human rights were being violated. How and why that? Because Ghana and Ghanaians are demanding he returns the state money he stole.

In all honesty and in humility, this is rather a gross abuse and injustice on the concept of human rights by Woyome himself and the courts which entertain him.

A hungry man who might have uprooted just two or three tubers of cassava from someone else's farm to feed himself and family would be either dragged to the chief's court or the local magistrate court after a few slaps from the locals and police, if any, where instant justice would be meted down upon him – six months in jail, with hard labour, as a first timer by the court, or made to return the loot and/or face banishment from the community by the chief's court.

Those who may scale up higher by committing more serious crimes than stealing a few tubers of cassava, and go stealing fowls, goats or cattle, which would not get anywhere near, GH¢5,100 ($1,078), are quickly locked up in prisons with hardened criminals to associate with.

And here we have someone who stole such a coliseum amount, and he is allowed by the same law to walk free and go beating his chest about daring anyone to touch him.

Where are the principles of June 4, when people perceived of economic crimes where given an apology of a trial and shot dead without the right of appeal? Where are the principles of June 4, when people who actually legally acquired loans to build their houses where shot dead for doing what was right, with no trace of robbing the banks? Where are the principles of June 4, when others were incarcerated to serve terms of over one hundred years for alleged and unproved crimes of financial malfeasance? Where are the people who shouted let the blood flow in agreement with the leadership of the revolutionary council, which promised to clean Ghana of all crimes and mismanagement of state and government affairs? And where are those revolutionaries who introduced bloodletting into the body politics of this country?

To think that we allowed an era called June 4 to come and annihilate people for alleged crimes as a result of improper trials, but judged solely on hearsays and perceptions, and yet have an offspring of June 4 to actually steal heavy sums and walk about freely beating his chest, is difficult to comprehend.

Indeed, all Woyome is saying to colleague crooks is that he has found out how to steal, and steal any amount you want, and yet beat the law and justice and walk a free and celebrated man, protected by the same law.

For how can justice descend heavily on the poor and hungry who only stole a few tubers of cassava, or a petty thief who only picked someone's pocket, and yet, at the same time, allow a person who stole money enough to put up and fully equip at least twelve hospitals the size of the celebrated Asofan Hospital, which came into the news lately? If that GH¢51.2 million were invested into education, many schools under trees would have been relocated to schools under ceilings. Or, if it is invested in the money market, the returns alone can help alleviate poverty and make life meaningful to the ordinary Ghanaian.

We have citizens sleeping in kiosks and on pavements exposed to the weather. And these are Ghanaians who queue to vote for political leaders, with the hope to have their lives turned around, but, in the end, they have nothing, because one man, one single human person, made a bold and calculated step and stole what could have transformed their lives.

The other day, a beautiful Ghanaian woman, Evelyn Boakye, was criminally assaulted by a foreigner while dutifully at work, and, today, we do not know whether she has been duly compensated and that foreigner thrown into jail.

Then we had another Ghanaian woman, Patience Osafo, who sleeps in a kiosk and petty trades in the open at the expense of the weather, and who genuinely went to the bank she saves in to withdraw her money, only to meet the worst beating of her life. Gladly, at the moment, justice is shining on her face, but Ghanaians are asking will justice be that fair and just to her if she were to have been assaulted by a foreigner, taking a cue from Evelyn Boakye's situation?

In fact, it is very possible that the lives of these two ladies would have been greatly transformed if people like Woyome had not been allowed to freely steal and walk away freely with what belongs to all of us.

Justice can only be served if the likes of Woyome are made to return their loot. When people who did not understand why others could put up big houses and mansions and own big industries like Tata Brewery, and so, either confiscated or pulled them down to the ground, are, today, living in mini castles and enjoying heaven on earth, then we must know that in society there are two categories of people, those who live by the law, and those who die by the law.

The most important question at the moment is, when will Woyome be made to pay the money he stole at its time value as at now?  This is an important issue this administration of H.E. Nana Addo Dankwa Akufo-Addo must resolve, and resolve fast, if we are to believe that all are equal under the Law.

Hon. Daniel Dugan