Make savings attractive to the people

In spite of the numerous banks and financial institutions in the country, the savings culture is still very low. Charles Benoni Okine reports on the way forward.

The lack of attractive interest rates and products has been identified as one of the major causes for the low savings culture in the country.

Consequently, the Managing Director of TF Financial Services Limited, a subsidiary of the Teachers Fund, Mr Aaron Badza, has called on banks and other financial institutions in the country to turn the situation around by offering attractive interest on savings to improve the saving culture in the country.

He said many people who save monies with the banks and other financial institutions get nothing on their savings while the holders of their money make huge returns on those funds at their expense.

In an interview with the GRAPHIC BUSINESS in Accra, we said “it is on record that many of these banks pay as low as one per cent on savings accounts and even charge something when people have current accounts”.

The banks mockery

As at last year, it was estimated that a little more than five million out of the over 25 million persons living in Ghana have savings accounts.

Although the figure is considered some bankers as an improvement over previous years, it however constitutes only about nine percent of Gross Domestic Product (GDP).

It is also considered to be far less than the 25 percent of GDP in terms of savings rate among the Asian Tigers such as Japan, Korea among many others.

Some banks in their quest to woo more people to save have ended up with promotions in which tends to benefit only a few people in society, the majority being their own customers.

Upon a careful assessment, it is also realised that the motive for the promotions is not really intended to encourage people to save but also for the bank to make some more returns on the monies saved with them.

In many instances, banks ask their customers or new customers to save a certain amount, mostly more than Ghc100 and leave it with the bank for a minimum of three months.

Those who oblige are given coupons to qualify them for a draw and they could or not win anything at all at the end of the promotion but yet, the bank would have returned some interest not less than the prevailing treasury bill rate which since last year, has been hovering around 23 per cent per annum while the customer gets absolutely nothing at all.

Presently there are no records of the number of new customers that come on board except the same old customers or people who already save but have to move their accounts from one bank to the other.

Meanwhile it is imperative to note that the clamour for an improved savings culture is not for people to entice overnight but for banks and financial institutions to put in place permanent products that will attract people who do not save at all.

Mr Badza said “if a person with money wants to save and he realised that there is no way he is going to earn anything on his money but can get even a token from doing something else with it, why should he worry to go to the banks to save”.

Mr Badza also noted that another worrying trend that discouraged people from saving is the treatment they get when they attempt to go for the money they have saved.

“Some go through hell to withdrawn a chunk of their money so that if even he/she gets nothing on his savings and he/she is also confronted with having to toil to withdraw or close his accounts, why would he bother about savings”, he said.

Mr Badza said it was risky for people to hold monies on them without finding a safer place to keep it and urged those in that dilemma to scout for banks or financial institutions that offer attractive interests to enable them to make some returns on their savings.

He said at TF Financial Services, one of the major attractions was the interest people earned on their savings and noted that “once we are able to turn the money around positively, we at least share what we earn with the people who bring the money to us”.

Mr Badza also noted that the company also ensures that those who intend to withdraw their monies are not frustrated “because we do not know what that person might want the money for at that instance”.

He further urged all financial institutions to be more proactive to improve the savings culture in the country.