THE Ghana Chamber of Mines (GCM) has called on the government and other stakeholders to help fashion out a strategic policy that will help integrate subsidiary businesses within the country’s mining sector into the economy.
According to the chamber, this will help the country to reap more benefits from the sector while erasing the growing perceptions among the populace that the sector was contributing less to the economic development of the country.
The Chief Executive Officer (CEO) of the chamber, Dr Toni Aubynn, said that to the Daily Graphic in an interview and added that the chamber would be more willing to help in that regard.
Dr Aubynn explained that instead of waiting for mining companies to pay taxes to the government, the business community and the government should fashion out a policy that would help create business opportunities in adjoining areas within the sector.
“The country needs to properly integrate mining into the economy to enable it realise the full benefits of the sector. It is not only through taxes and royalties that we can derive maximum benefits from mining,” he said.
According to Dr Aubynn, a bulk of the mining revenues and expenses goes into the supply chain and contracts awarded by the companies for subsidiary jobs but the country was yet to take advantage of such fall-outs.
The chamber’s call come in the midst of growing resentment among most people, especially persons within mining communities, that the mining sector has contributed little to the economic development of their areas despite enriching mining companies in diverse ways.
The Chamber of Mines’ CEO said although the country produced rubber in commercial quantities, most mining companies were still faced with the challenge of importing tyres for their heavy duty trucks just because “we do not have a threading company in Ghana to manufacture these tyres.”
Dr Aubynn said that was not good for the country and the economy and pointed out that “if we fashioned out a linkage between mining and the other sectors of the economy, then mining companies would not be sending money outside this country to import these things.”
With gold prices continuing to rally high and demand for other minerals firming up in the mineral market, Dr Aubynn said revenues from the sector to the government could be expected to jump up in 2011 and subsequently do same in 2012.
He lauded the government’s decision to dialogue with the chamber over the newly introduced windfall tax for the sector and the upward adjustment of the corporate tax from 25 per cent to 35 per cent.
The GCM CEO, however, called for a speedy clarification of the modalities involving the calculation of the windfall tax so as to enable the companies plan into the year.
With 2012 being an election year, Dr Aubynn feared the menace of illegal mining (galamsey) could spike and lead to a reduction in the concessions of mining companies.
He thus called on the government and the security agencies to tighten their surveillance against the galamsey phenomenon “since perpetrators of the act have a feeling that the government often gets weak in election periods.”
Sunday, January 22, 2012
Wednesday, January 18, 2012
Will BoG tighten the screws?
Current developments in the national economy are causing some economic watchers to predict 2012 as a thorny year for the Bank of Ghana’s Monetary Policy Committee and the government’s economic management team
CONTINUOUS rise in food production and a slow down in government expenditure last month helped to sustain the rate at which the general price levels of goods and services increase in the country within that period.
Consequently, inflation for December 2011 inched up to 8.58 per cent after ending November 2011 at 8.55 per cent. The December 2011 rate thus represented a 0.03 per cent surge from that of the November 2011 rate, but 0.41 per cent lower than the goverment’s end-year inflation target of nine per cent for 2011.
WHY THIS REVERSE BLIP?
Although the December 2011 inflation rate was a blip, it contrasts sharply with the dips that were recorded in the same period in 2009; when the 16.92 per cent rate for November 2009 declined by 0.95 per cent to 15.97 per cent in December 2009. The situation was the same in 2010 when the November rate of 9.08 per cent went down 0.58 per cent to 8.50 per cent in December.
The Government Statistician, Dr Grace Bediako, who announced the December 2011 inflation figures in Accra, said the rise could have been higher had the food group of the inflation basket not acted positively to suppress the jumps in the non-food group.
The non-food inflation group, she said, recorded a 11.21 per cent rate in the month under review which “was more than two and half times that of the food inflation rate of 4.27 per cent.” This means the non-food group exerts more pressure on the entire basket.
She explianed that the rise in inflation for last December was partly due to the minimal hike in utility prices in late November.
The 15 per cent and 30 per cent increment caused a corresponding 10 per cent rise in transport fares nationwide. The rise in transport fares is currently feeding into prices of goods and services nation-wide as many traders now charge higher to offset the additional cost coming from the adjustment.
REALITIES FOR THE MPC
All things being equal, the general price levels of goods and services in the country, otherwise known as inflation, should go up slightly between January and February. But such an increase (if it does happen) will not come as a surprise since a similar adjustment in the prices of petroleum product in December 2010 caused inflation to reverse a then declining trend in January and February 2011 only to resume a consistent decline in March.
The challenge, however, is how this projected rise in inflation (for January and February) added to the speculated rise in government spending and a continuous pressure on the cedi will play to the benefit of the national economy in the coming months.
Some policy analysts and economists are already beginning to see the Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) sitting on tentacles as they face a difficult decision of tightening its policy rate to contain the heavy spending to accompany the electioneering or leaving the policy rate untouched in order not to disrupt the free fall in interest rates.
Also, the inability of the various managers of the economy to tame these fears and the reality of a possible high spending in an election year are further fueling public anxiety over the status of the economy during and after 2012.
Such anxiety can lead to panic in the market as many people could opt for foreign currencies as safe havens for their individual investments. Banks can hold on to (or at worst hike) their lending rates for fear of a distabilised economy after 2012 or businesses rushing to import more so as to avoid the blues of trading with a weaker cedi after election 2012.
With all these in place, the MPC and the government’s economic management team will definitely have hard issues to tackle in the year under review.
Key among those for the MPC will be what to do to the monetary policy rate, which is already under pressure from speculated spending and projected rise in inflation for an upward review.
According to the Executive Director of the Centre for Policy Analysis (CEPA), Dr Joseph Abbey, “the MPC is really under pressure to review the rate upward, gauging from the quarter four MPC report that was released after that sitting.”
He added that “unless the BoG is well-cushioned (build up more international reserves) to offset these pressures, a rise in the policy rate should be expected soon.”
An upward review of the rate would, however, limit the amount of cash flow in the economy, slow down economic activities and raise the cost of credit again. And that will be disincentive to the economy unless accumulated surplus funds are found and used to offset the deficit that may arise thereof.
For the government, managing the fears and mistrust of the business community and the general public on government expenditure and fiscal policies and actions in an election year will be paramount. Beyond that, however, the government will have to muster the political courage against the temptations of excess spending in a bid to fulfil election promises.
Anything short of that will mean returning the economy to harsher times after 2012 and a recurrence of the rebuilding of the national economy after every election year. And that is a reckless phenomenon that must not be accepted. GB
CONTINUOUS rise in food production and a slow down in government expenditure last month helped to sustain the rate at which the general price levels of goods and services increase in the country within that period.
Consequently, inflation for December 2011 inched up to 8.58 per cent after ending November 2011 at 8.55 per cent. The December 2011 rate thus represented a 0.03 per cent surge from that of the November 2011 rate, but 0.41 per cent lower than the goverment’s end-year inflation target of nine per cent for 2011.
WHY THIS REVERSE BLIP?
Although the December 2011 inflation rate was a blip, it contrasts sharply with the dips that were recorded in the same period in 2009; when the 16.92 per cent rate for November 2009 declined by 0.95 per cent to 15.97 per cent in December 2009. The situation was the same in 2010 when the November rate of 9.08 per cent went down 0.58 per cent to 8.50 per cent in December.
The Government Statistician, Dr Grace Bediako, who announced the December 2011 inflation figures in Accra, said the rise could have been higher had the food group of the inflation basket not acted positively to suppress the jumps in the non-food group.
The non-food inflation group, she said, recorded a 11.21 per cent rate in the month under review which “was more than two and half times that of the food inflation rate of 4.27 per cent.” This means the non-food group exerts more pressure on the entire basket.
She explianed that the rise in inflation for last December was partly due to the minimal hike in utility prices in late November.
The 15 per cent and 30 per cent increment caused a corresponding 10 per cent rise in transport fares nationwide. The rise in transport fares is currently feeding into prices of goods and services nation-wide as many traders now charge higher to offset the additional cost coming from the adjustment.
REALITIES FOR THE MPC
All things being equal, the general price levels of goods and services in the country, otherwise known as inflation, should go up slightly between January and February. But such an increase (if it does happen) will not come as a surprise since a similar adjustment in the prices of petroleum product in December 2010 caused inflation to reverse a then declining trend in January and February 2011 only to resume a consistent decline in March.
The challenge, however, is how this projected rise in inflation (for January and February) added to the speculated rise in government spending and a continuous pressure on the cedi will play to the benefit of the national economy in the coming months.
 |
| Dr Kwabena Duffuor, Minister, Finance and Economic Planning |
Some policy analysts and economists are already beginning to see the Monetary Policy Committee (MPC) of the Bank of Ghana (BoG) sitting on tentacles as they face a difficult decision of tightening its policy rate to contain the heavy spending to accompany the electioneering or leaving the policy rate untouched in order not to disrupt the free fall in interest rates.
Also, the inability of the various managers of the economy to tame these fears and the reality of a possible high spending in an election year are further fueling public anxiety over the status of the economy during and after 2012.
Such anxiety can lead to panic in the market as many people could opt for foreign currencies as safe havens for their individual investments. Banks can hold on to (or at worst hike) their lending rates for fear of a distabilised economy after 2012 or businesses rushing to import more so as to avoid the blues of trading with a weaker cedi after election 2012.
With all these in place, the MPC and the government’s economic management team will definitely have hard issues to tackle in the year under review.
Key among those for the MPC will be what to do to the monetary policy rate, which is already under pressure from speculated spending and projected rise in inflation for an upward review.
According to the Executive Director of the Centre for Policy Analysis (CEPA), Dr Joseph Abbey, “the MPC is really under pressure to review the rate upward, gauging from the quarter four MPC report that was released after that sitting.”
He added that “unless the BoG is well-cushioned (build up more international reserves) to offset these pressures, a rise in the policy rate should be expected soon.”
 |
| Amissah-Arthur, Governor, BoG and Chairman of the MPC |
For the government, managing the fears and mistrust of the business community and the general public on government expenditure and fiscal policies and actions in an election year will be paramount. Beyond that, however, the government will have to muster the political courage against the temptations of excess spending in a bid to fulfil election promises.
Anything short of that will mean returning the economy to harsher times after 2012 and a recurrence of the rebuilding of the national economy after every election year. And that is a reckless phenomenon that must not be accepted. GB
Lack of port facilities hindering business
As growth in the country’s maritime trade business gathers momentum, stakeholders in the sector will have to devise strategic solutions for the inherent challenges or risk limiting growth in the sector, writes Maxwell Adombila Akalaare
THERE is growing concern among stakeholders in the country’s maritime business that the lack of adequate port infrastructure and space constraints at the ports could limit the volumes of businesses recorded at the ports in the near future.
The constraints are consequently raising the cost of shipping and clearing of cargoes at the ports to the frustrations of the shippers and port authorities.
Statistics from the Ghana Shippers’ Authority (GSA) show an annual average growth rate of 25 per cent in the sector, a trend the Head of Freight and Logistics at the authority, Mr E K Arku, said could pose a challenge to port authorities gauging from the various infrastructural challenges currently facing the ports.
“There is increased business activity at the ports and that is good news to the government and the economy since more revenue will be generated and more businesses created for freight forwarders.
“The challenge, however, is the capacity of the ports to contain those volumes,” he said noting that lack of space at the Tema Port has so far limited expansionary works there even though it continues to record higher volumes of trade.
The country’s maritime trade business has been witnessing tremendous growth after recording a sharp dip in 2009 as a result of the global recession at the time.
The dip in growth of maritime businesses, however, recovered in 2010 as the global economy rebounded from the recession and is now recording an average growth rate of 25 per cent per annum.
The first three quarters of 2011 for instance saw total throughput (the total amount of cargo imported and exported) rising by 29 per cent to 12.78 million metric tons from the 9.88 million metric tons recorded within that same period in 2010. Total exports for the period amounted to 3.35 million metric tons with the remaining 9.43 metric tons coming from imports. Transit trade (using the country’s corridors to transport cargo to neighbouring countries) also grew by 46 per cent during the period under review.
In terms of monetary value, the statistics show that export businesses in the first three quarters of 2011 amounted to US$11.8 billion as against the US$14.4 billion raked in by imports within the same period.
Although the shippers’ authority is estimating cargo throughput to end 2011 at 14.5 million metric tons using a projected increase in quarterly tonnage of 23 per cent, officials at GSA said the figure could even jump beyond 16 million tons “base on information we are getting from the Tema and Takoradi Ports.”
But as oil inflows begin to gain momentum and production of gold and cocoa firm up, port authorities will have to brace themselves and the ports up for greater volumes of business in the years ahead.
The challenge, therefore, is the ability of the ports to handle these increments as growing throughput and transit trades will mean more infrastructure expansion, personnel and adequate regulations to address the various challenges that arise as a result.
“Increasing volumes is good but the challenge has always been space constraints which end up making it frustrating and costly to ship and clear goods at the ports,” Mr Arku observed. Despite the said constraints, Mr Arku said “the volumes keep coming thereby causing congestions at the individual ports.”
Shippers, he said, have consequently been confronted with the challenge of having to pay higher amounts as demurrage (the price paid for delayed clearance of goods at the port), rent fees and other associated prices and penalties.
According to Mr Arku, about 85 per cent of all the imports that pass through the ports attract demurrage, a trend that confirms the various frustrations that the issue of space constraints at the ports is causing shippers.
An average of US$45 million, he said has been spent yearly to pay demurrage fees with an extra US$13.5 million also going to shipping agents as rent fees due to the lack of space to house cargoes that are yet to be cleared.
The Head of Freight and Logistics at GSA also blamed the apparent disorganised nature of some shipping and clearing agents and complex clearing procedures at the ports which he said was unnecessarily causing some shippers to incur high costs by way of rent and demurrage fees.
He also mentioned shipping agents’ resort to charging for shipment in addition to the fees already charged on the cargo by the main shipping company.
Such double charges, he said were costing shippers as much as US$45 million a year, an amount Mr Arku said is siphoned out of the economy for no service rendered.
“All these high costs of shipping cargo translate into frequent increases in prices and that greatly hurts the national economy,” he observed.
In a bid to tame some of these challenges, Mr Arku said the GSA as an advocacy institution for shippers in the country will introduce a cargo tracking information “to enable shippers track their vessels. Once the vessel arrives, then we quickly notify them to clear and avoid these fees associated with delayed clearance.”
In addition, Mr Arku said the authority was also seeking Parliamentary approval for a new regulation, the Ghana Shipper Authority Regulation 2011, to mandate freight forwarders, shipping and clearing agents to negotiate with their respective shippers over the implementation of standards for the industry and the charging of fees for the various services rendered.
While admitting that services rendered by freight forwarders and agents ought to be paid for by the shippers, Mr Arku said “the forwarders and agents need not hide under that to take undeserving monies which intend hurt the economy in diverse ways.”
THERE is growing concern among stakeholders in the country’s maritime business that the lack of adequate port infrastructure and space constraints at the ports could limit the volumes of businesses recorded at the ports in the near future.
The constraints are consequently raising the cost of shipping and clearing of cargoes at the ports to the frustrations of the shippers and port authorities.
Statistics from the Ghana Shippers’ Authority (GSA) show an annual average growth rate of 25 per cent in the sector, a trend the Head of Freight and Logistics at the authority, Mr E K Arku, said could pose a challenge to port authorities gauging from the various infrastructural challenges currently facing the ports.
“There is increased business activity at the ports and that is good news to the government and the economy since more revenue will be generated and more businesses created for freight forwarders.
“The challenge, however, is the capacity of the ports to contain those volumes,” he said noting that lack of space at the Tema Port has so far limited expansionary works there even though it continues to record higher volumes of trade.
The country’s maritime trade business has been witnessing tremendous growth after recording a sharp dip in 2009 as a result of the global recession at the time.
The dip in growth of maritime businesses, however, recovered in 2010 as the global economy rebounded from the recession and is now recording an average growth rate of 25 per cent per annum.
The first three quarters of 2011 for instance saw total throughput (the total amount of cargo imported and exported) rising by 29 per cent to 12.78 million metric tons from the 9.88 million metric tons recorded within that same period in 2010. Total exports for the period amounted to 3.35 million metric tons with the remaining 9.43 metric tons coming from imports. Transit trade (using the country’s corridors to transport cargo to neighbouring countries) also grew by 46 per cent during the period under review.
In terms of monetary value, the statistics show that export businesses in the first three quarters of 2011 amounted to US$11.8 billion as against the US$14.4 billion raked in by imports within the same period.
Although the shippers’ authority is estimating cargo throughput to end 2011 at 14.5 million metric tons using a projected increase in quarterly tonnage of 23 per cent, officials at GSA said the figure could even jump beyond 16 million tons “base on information we are getting from the Tema and Takoradi Ports.”
But as oil inflows begin to gain momentum and production of gold and cocoa firm up, port authorities will have to brace themselves and the ports up for greater volumes of business in the years ahead.
The challenge, therefore, is the ability of the ports to handle these increments as growing throughput and transit trades will mean more infrastructure expansion, personnel and adequate regulations to address the various challenges that arise as a result.
“Increasing volumes is good but the challenge has always been space constraints which end up making it frustrating and costly to ship and clear goods at the ports,” Mr Arku observed. Despite the said constraints, Mr Arku said “the volumes keep coming thereby causing congestions at the individual ports.”
Shippers, he said, have consequently been confronted with the challenge of having to pay higher amounts as demurrage (the price paid for delayed clearance of goods at the port), rent fees and other associated prices and penalties.
According to Mr Arku, about 85 per cent of all the imports that pass through the ports attract demurrage, a trend that confirms the various frustrations that the issue of space constraints at the ports is causing shippers.
An average of US$45 million, he said has been spent yearly to pay demurrage fees with an extra US$13.5 million also going to shipping agents as rent fees due to the lack of space to house cargoes that are yet to be cleared.
The Head of Freight and Logistics at GSA also blamed the apparent disorganised nature of some shipping and clearing agents and complex clearing procedures at the ports which he said was unnecessarily causing some shippers to incur high costs by way of rent and demurrage fees.
He also mentioned shipping agents’ resort to charging for shipment in addition to the fees already charged on the cargo by the main shipping company.
Such double charges, he said were costing shippers as much as US$45 million a year, an amount Mr Arku said is siphoned out of the economy for no service rendered.
“All these high costs of shipping cargo translate into frequent increases in prices and that greatly hurts the national economy,” he observed.
In a bid to tame some of these challenges, Mr Arku said the GSA as an advocacy institution for shippers in the country will introduce a cargo tracking information “to enable shippers track their vessels. Once the vessel arrives, then we quickly notify them to clear and avoid these fees associated with delayed clearance.”
In addition, Mr Arku said the authority was also seeking Parliamentary approval for a new regulation, the Ghana Shipper Authority Regulation 2011, to mandate freight forwarders, shipping and clearing agents to negotiate with their respective shippers over the implementation of standards for the industry and the charging of fees for the various services rendered.
While admitting that services rendered by freight forwarders and agents ought to be paid for by the shippers, Mr Arku said “the forwarders and agents need not hide under that to take undeserving monies which intend hurt the economy in diverse ways.”
New savings culture emerges in Bolga, to fund rural business ideas
In rural communities where modern day banking is still a preserve for the privileged few, a new initiative by the Catholic Relief Services (CRS) is giving the folks a reason to patronise savings for its long term business opportunities, writes Maxwell Adombila Akalaare
RURAL women in some parts of the Upper East region are quickly embracing, with both hands, a new savings and lending initiative that is fast proving a source of funding to their long-held business ideas.
With a motivation to save in groups and an opportunity to borrow at low rates from their saved monies, women in the area are now beginning to realise their dreams and create business ventures, proceeds of which are used to support their respective families.
Modest as it may be, the Savings and Internal Lending Community (SILC), an initiative of the Catholic Relief Services (CRS), is able to mob up funds in areas where commercial banks and their trained bankers would have failed to mobilise savings.
The community-based and savings-centered initiative was started in May 2011 by the CRS with one goal in mind; to encourage savings among rural folks as a way of empowering them to start up their own businesses.
But even before the programme takes shape, beneficiaries and facilitators of SILC have already started using their borrowed monies to start businesses and undertake petty tradings from which they generate incomes to cater for their individual needs.
HOW SILC WORKS
Madam Celestina Aduko, a facilitator within the Talensi-Nabdam District, who took the GRAPHIC BUSINESS through the various operations of SILC explained that persons wishing to join the SILC initiative are first put in groups with membership ranging from 15 to 30 persons per group.
Individual members, she said, are then encouraged to save (contributing any amount that the individual can afford) in a group’s money box which is kept by the group leader. Contributions are taken on weekly basis, a third of which is then loaned to an interested party after every other four weeks.
Madam Aduko explained that although the initial plan was to loan a third of an individual’s savings back to him or her after four week’s of savings, the groups had realised that “the individual’s savings alone will not be enough for him to use in starting something meaningful.”
Repayment of loaned funds, according to Madam Aduko is done base on the amount taken with a flat interest rate of a tenth of the loaned amount.
She mentioned that the programme which started with 19 groups in few communities has now flourished into the entire region as a result of its promising benefits to the people and the economy as a whole.
“The CRS realised that the poverty in our part of the country makes it difficult for the people to find a proper source of living for themselves and their families. And so they brought this initiative to encourage group savings and lending, from which comes businesses,” the SILC facilitator noted.
Madam Aduko added that the SILC initiative has currently brought about various forms of improvements in the lives of the populace with most of the beneficiaries using the proceeds to set up smaller businesses, engage in petty trading and also finance their individual family needs.
The SILC, she said envisions that “non of its members will have any money related problem because we don’t want a situation where members will still be poor, have no source of living and do not create income for members of their families come five years.”
WHY ENCOURAGE SILC
Although the revolution in the country’s banking and non-banking sector has agreeably pushed more people into patronising the services of financial institutions nation-wide, most people off the streets of city are yet to see any reason to do same. And That may not be a big surprise. After all, how many financial institutions have the nerve to set up their operations in these rural areas where money is best known to be saved in bedrooms and pillows.
But even where financial institutions, especially the banks, have registered their presence for the sake of deposit mobilisations, not many had patronised their services.
With Ghana’s low domestic savings rate of nine per cent, all efforts aimed at encouraging savings must, therefore, be pushed as a savings habit engineers an investment culture.
But in the face of that comes many challenges, some of which are currently facing SILC and its members.
In enumerating the various challenges facing the implementation of the SILC initiative, Madam Aduko said the successful operations of the SILC will be based on the market that will be created for the businesses it generates.
“The people are more than eager to use their savings to start businesses; to weave baskets, produce sheabutter and engage in petty trading. The headache, however is how fast can these produce move to enable them manufacture more.”
Madam Aduko thus called on the CRS and other benevolent institutions to help market the business proceeds of SILC so as to help encourage more savings and investments among Ghana’s rural folks.
“They should try and link our products to buyers outside the region so that the produce can move quickly for them to produce more,” she said.
And once that is done, Madam Aduko said the success of the SILC can then be replicated in other areas and regions to the benefit of the populace and the economy at large.
RURAL women in some parts of the Upper East region are quickly embracing, with both hands, a new savings and lending initiative that is fast proving a source of funding to their long-held business ideas.
With a motivation to save in groups and an opportunity to borrow at low rates from their saved monies, women in the area are now beginning to realise their dreams and create business ventures, proceeds of which are used to support their respective families.
Modest as it may be, the Savings and Internal Lending Community (SILC), an initiative of the Catholic Relief Services (CRS), is able to mob up funds in areas where commercial banks and their trained bankers would have failed to mobilise savings.
The community-based and savings-centered initiative was started in May 2011 by the CRS with one goal in mind; to encourage savings among rural folks as a way of empowering them to start up their own businesses.
But even before the programme takes shape, beneficiaries and facilitators of SILC have already started using their borrowed monies to start businesses and undertake petty tradings from which they generate incomes to cater for their individual needs.
HOW SILC WORKS
Madam Celestina Aduko, a facilitator within the Talensi-Nabdam District, who took the GRAPHIC BUSINESS through the various operations of SILC explained that persons wishing to join the SILC initiative are first put in groups with membership ranging from 15 to 30 persons per group.
Individual members, she said, are then encouraged to save (contributing any amount that the individual can afford) in a group’s money box which is kept by the group leader. Contributions are taken on weekly basis, a third of which is then loaned to an interested party after every other four weeks.
Madam Aduko explained that although the initial plan was to loan a third of an individual’s savings back to him or her after four week’s of savings, the groups had realised that “the individual’s savings alone will not be enough for him to use in starting something meaningful.”
Repayment of loaned funds, according to Madam Aduko is done base on the amount taken with a flat interest rate of a tenth of the loaned amount.
She mentioned that the programme which started with 19 groups in few communities has now flourished into the entire region as a result of its promising benefits to the people and the economy as a whole.
“The CRS realised that the poverty in our part of the country makes it difficult for the people to find a proper source of living for themselves and their families. And so they brought this initiative to encourage group savings and lending, from which comes businesses,” the SILC facilitator noted.
Madam Aduko added that the SILC initiative has currently brought about various forms of improvements in the lives of the populace with most of the beneficiaries using the proceeds to set up smaller businesses, engage in petty trading and also finance their individual family needs.
The SILC, she said envisions that “non of its members will have any money related problem because we don’t want a situation where members will still be poor, have no source of living and do not create income for members of their families come five years.”
WHY ENCOURAGE SILC
Although the revolution in the country’s banking and non-banking sector has agreeably pushed more people into patronising the services of financial institutions nation-wide, most people off the streets of city are yet to see any reason to do same. And That may not be a big surprise. After all, how many financial institutions have the nerve to set up their operations in these rural areas where money is best known to be saved in bedrooms and pillows.
 |
| Naba Moses Agangzuah Koomkiisibugu hands over a SILC savings box to Madm Abampoka Azidizian |
But even where financial institutions, especially the banks, have registered their presence for the sake of deposit mobilisations, not many had patronised their services.
With Ghana’s low domestic savings rate of nine per cent, all efforts aimed at encouraging savings must, therefore, be pushed as a savings habit engineers an investment culture.
But in the face of that comes many challenges, some of which are currently facing SILC and its members.
In enumerating the various challenges facing the implementation of the SILC initiative, Madam Aduko said the successful operations of the SILC will be based on the market that will be created for the businesses it generates.
“The people are more than eager to use their savings to start businesses; to weave baskets, produce sheabutter and engage in petty trading. The headache, however is how fast can these produce move to enable them manufacture more.”
Madam Aduko thus called on the CRS and other benevolent institutions to help market the business proceeds of SILC so as to help encourage more savings and investments among Ghana’s rural folks.
“They should try and link our products to buyers outside the region so that the produce can move quickly for them to produce more,” she said.
And once that is done, Madam Aduko said the success of the SILC can then be replicated in other areas and regions to the benefit of the populace and the economy at large.
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