Let’s build a high savings culture - Omega Capital boss advocates
It is common knowledge worldwide that a high savings culture begets an investment culture. Given that investment is at the bedrock of every nation's development, any country that encourages the citizens to save, therefore, prepares itself for leapfrog development, the type that will help transform the lives of the people.
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This is one of Ghana's biggest challenges, hence it’s over reliance on externally sourced debt to finance infrastructural development.
With a savings to gross domestic product (GDP) ratio of 12 per cent, compared to over 50 per cent in most Asian countries, the country is unable to accumulate enough money internally, which it can use to finance its development agenda.
Although this low savings culture is blamed mostly on rocky economic indicators, which conspire with other indices to erode the benefits of any money saved, the low awareness among the citizenry of the need to invest instead of consume is also not helping.
It is for this reason that the Springboard, Your Virtual University, on Joy FM used its December 13 edition to discuss investment and how it can help build a good society.
As a continuation of the show's series on Building the Good Society, the discussion exposed audience to the cost of a consumption mentality, the benefits of savings and investments, and how a savings and investment culture can be inculcated
The Chairman of investment advisory firm, Omega Capital, Mr Kwesi Amonoo-Neizer, spoke against the low savings culture in the country and called for a drastic change to help create financial independence for the citizens.
"I say that the kind of issues we face as a nation is a reflection of the kind of issues we face in our individual lives. So, if individually we cannot be financially independent, then it means that Ghana as a nation cannot also be financially independent," he told the host of the programme, Rev. Albert Ocran.
He explained that financial independence did not necessarily mean living a luxurious life but being able "to meet individual daily financial needs without having to rely on someone."
"Being able to pay school fees, afford a car, house and these basic needs of ours that we should be able to do without relying on someone," he said.
Sacrificing
Although investment is not new to the ordinary Ghanaian, Mr Amonoo-Neizer said developing an investment culture required sacrifice, which has been the main bane of the Ghanaians.
"The bottom line is without sacrifice, you cannot invest. Investment is delayed consumption – you are delaying consumption now so that you can consume later. So, if you do not put something down now, you cannot transform your situation," he said.
Touching on how to invest in the midst of scarce , Mr Amonoo.Neizer observed that taking such a decision would always be a choice for the person in question.
"It comes back to sacrifice. If you want to educate your children, you need to sacrifice. It may involve foregoing a meal or two and if you do not do that, you will not be able to do what you what," he added.
He further bemoaned the situation where people failed to save towards their children's education right at their infancy only to start crying over lack of funds when the children are fully grown and ready to be educated.
To help make a meaningful impact in a person's life, Mr Amonoo-Neizer said every individual needed to save a minimum of 20 per cent of his/her income to be able to accumulate substantial money to take care of daily and societal expenses.
The numbers
"We are a nation of consumers and I will even go further to say that if you consume without replenishing, then its gradual decay that you are presiding over," he added.
Using the current 91-day treasury bill rate as a benchmark, Mr Amonoo-Neizer said one million of Ghana's citizens would be able to accumulate some GH¢57 billion in 20 years if they invested just GH¢10 per month.
This GH¢57 billion, he said would be of immense benefit to both the government and the private sector, which would use it to grow and transform the economy.
"I know that when you mention 20 years, people see it to be very far away but I can tell you that it’s just around the corner and it will come just now," he noted.
He also disagreed with concerns that the rising inflation rates in the country was detrimental to savings, explaining that "if you do nothing at all, you will be in a dire situation."
And for those who are convinced that having an investment plan is worth the whole, Mr Amonoo-Neizer said "I advise you go out there and do something now; just get an investment plan and start to put something down."