Random thoughts of a rural farmer (22): Inflation shocker at Oda market!


Inflation shocker at Oda market!

I went to the village to check on my cocoa farm last week. I decided to go to the Akim Oda market to  buy some ingredients for palm nut soup to enjoy with my chief labourer, remembering that we had harvested some palm fruits the previous day.

Before I could say jack, I had spent over one hundred Ghana cedis on a simple soup for a simple people in a simple village setting. The shock quickly reminded me of an old nursery rhyme that goes like this……

“Who has seen the wind?

Neither you nor I,

But if you see the trees,

Bend, bow their heads,

You will know the wind is passing by “

Indeed, I had not seen inflation physically entering anybody’s pocket to deplete their purchasing power, but that morning, I saw and felt the real scourge of inflation like never before.  Common palm nut soup (abekwan) too?

God bless the daughters of our father in laws who are coping against grave odds to put food on our tables without their complaints scorching us to lose weight!

Now, I can fully appreciate how those with large families are coping with three square meals a day increasingly becoming a mirage! I can also understand why most people have become so intolerant and easily prone to provocation in the streets, schools, markets, shops and homes.  When even roasted plantain, waakye and  gobe get out of reach of the average student/worker, a new form of silent insanity emerges.

In my travels in and outside the country, I have noticed that the first sign of a buoyant local economy is lower food prices relative to prevailing incomes. It beats my understanding therefore, why we should continue to complain about food prices in Ghana and shamelessly blame the Russian-Ukraine war, among other untenable excuses.

Most grains (rice, maize, millet) and legumes take roughly six months from cultivation to harvesting. Nature has endowed the country with large swathes of land suitable for food production, even when one acknowledges the ravages  galamsey has wrecked on some of these lands. Changing weather patterns are  not peculiar to Ghana for us to add to our  litany of excuses .

What, at all does a Ministry of Agriculture and allied agencies need to increase food production that seems to elude our policy makers? Or this is also part of the crippling colonial architecture we inherited?

When are we going to muster the political guts to stop importation of rice, meat, fish and vegetables from abroad as Nigeria did sometime ago as part of inducing local production, among other initiatives?

Can one safely surmise that food importers are the financiers of the political parties and their fortunes will be negatively impacted by an import freeze on selected food items? If that were so, what stops these business people from engaging in direct import substitution strategies to propel local agriculture?

Should we continue to underfeed students in a FSHS scheme and muzzle hapless school authorities from complaining? Should we underfeed prisoners and harden them due to extreme hunger and desperation before releasing them into the society again?

With a concerted strategy involving inter agency collaboration, we could, in just one or two years, draft say 30 percent of national service personnel into the agricultural front.  With targeted inputs, we could regenerate the sector in all its segments, and reduce the unnecessary, (and to some of us), shameful food import dependency, while creating avenues of useful pursuit for a teeming and restless youth.

For now, some of us refuse to be amused by a whole national service outfit  cultivating 1000 acres of maize and patting themselves over such success with a combine harvester, when individuals are doing much better with fewer resources.

Constitutional Review

If we had resources to conduct a referendum on the present constitution of this country, I believe there will be an overwhelming majority that will endorse a review of various sections of this needlessly expensive, anti- growth and development document that is crippling us. It beats my imagination, therefore, to see the lackadaisical measures we have employed so far in this direction.

Is it because the over concentration of power in the president and the resultant “winner takes all” syndrome inures to the individual president and his party? Granted that this scenario, as some have opined, arose as a heavy and perhaps necessary price to pay for a return to democratic rule (to appease the ego of a then restless revolutionary), what have successive presidents in the 4th Republic done in terms of using this enormous power to significantly change the fortunes of this potentially great nation?

What is happening in the political terrain in the sub region, from Mali, Chad, Burkina Faso and now Niger, has elements of the cold war still at play. Nonetheless, we cannot dismiss the discontent with democracy as being practised in the region, where peoples’ aspirations have hardly been met as a result of the prevailing governance system. Mass discontent breeds chaos.

A sure way to make the electorate see the significance of a democratic system of governance is improvement in their well- being. Inclusivity in the governance process should not be limited to just queuing to vote, and sometimes, taking monies to influence voting patterns.

Proper governance requires a visible positive change in their livelihoods, instead of this needless and deepening political polarization.

In the absence of this, desperation will continue to force the masses to welcome coups as we have witnessed of late in the afore-mentioned countries, even if such “liberators” have no clue about developmental issues.

Poor insurance penetration.

The insurance sector in this country has immense untapped potential.  A penetration rate of just about two percent of the population is a serious indictment on a sector which boasts of some of the finest financial brains in the country.

In commercial banking no one is forced by law to open an account. The individual banks have to strategise at great expense to mobilize deposits, while being saddled with tough liquidity and solvency measures. They also have to find credible borrowers or risk capital depletion through non-performing loans.

The insurance industry however has a fertile captive pool simply on account of the law that obliges various firms, individuals and organisations to insure their properties like cars and commercial buildings in the general insurance space.

Even with life assurance, certain aspects of our culture and banking business already force certain people to take life, fidelity and funeral policies, if only insurance sales executives will be more transparent and accountable, instead of their fixation on sales targets.

A rising middle income segment, the acquisition of various home appliances, security consciousness, growing reliance on mortgages and even multiplicity of gigantic church buildings, have opened new cross selling opportunities to be exploited by insurers.

The problem, from my personal experience over the years, has been the customer service orientation of most of the staff of these insurance companies. There is risk in every business outfit but that is why there are also risk mitigants.

With the emergence of data analytics, it is not too difficult to conduct risk assessments to map out the causal factors and probability of losses occurring  in the insurable risk areas. Deploying mitigating schemes and premiums commensurate with the degree and probability of risk occurrence becomes less difficult.

To hammer on the incidence of fraud in the insurance industry alone to make genuine claimants appear like common criminals has not helped the industry where “my word is my bond” is flippantly breached by the insurance companies themselves. In the financial sector, when integrity becomes doubtful, confidence wanes.

Such tendencies make even educated potential purchasers of insurance products  less enthusiastic about covering their risks, unless obliged to do so by law. In other jurisdictions, one comes across policies which return a part of premiums paid if no claim is made over defined periods. More of these companies are also introducing investment related products to cope with uncertainties.

What, for instance, is the logic in consistently paying agreed premiums for a new car only to be told after say 5 years that due to depreciation on the car, its value has diminished, and therefore in the event of a claim arising from a write-off, the insured cannot get the earlier sum assured? That appears to me to be a blatant breach of contract.

Does the same depreciated value not also mean that inflation would make the cost of replacing the car equally expensive, instead of relying on the weak argument that insurance is not designed to enrich the insured in the event of a claim?

I can understand the place of galloping inflation on assured sums in the life and annuity space. But insurers tend to forget that they are not the only parties that suffer from diminishing maturity values. The insured suffers similarly from forgone opportunities.

Without mentioning names, this writer has had bitter experiences with endowment policies with some key insurance companies whose terms have been altered without reference to the assured. In other instances, products have been cannibalized without communication to patrons.

In many of these cases, new terms offered have been grossly detrimental to the assured’s aspirations. If the same funds had been invested in a mutual fund, for instance, the returns would have yielded much better despite inflation.

On more than three occasions, after several years, the insurance company gets away from paying a pesewa and no law obliges them to compensate the premium payer….all accumulated premiums going into their income statement.

I believe increased transparency across the industry will help to deepen insurance penetration if the practitioners will stop building Chinese walls anytime a claim has to be settled.

Insurance practitioners must also learn to tone down their superiority complex in handling customer complaints. With increased literacy rates and the extension of internet services, financial services consumers generally are more sophisticated than they were 20-30 years ago. It may be suicidal to adopt a take it or leave it attitude during customer interfaces.

It must also be drummed home loudly that in service marketing, where insurance sits, one does not get a second chance to make a good first impression. Getting it right the first time is the game changer. With inflation eroding peoples’ purchasing power, it takes greater ingenuity, patience and empathy to convince people to take up insurance products in their scale of preferences.

Now, with the national identification system and digital addressing technology, much of earlier fraud schemes can be mitigated, if not eliminated in the insurance space.

The National Insurance Commission must crack the whip on insurance companies that renege on their obligations to their clients and note that marketing does not start and end with just sales or customer on-boarding.

The writer is a Fellow of the Chartered Institute of Bankers, an adjunct Lecturer at the National Banking College and the Chartered Institute of Bankers, a farmer and the author of “Risk Management in Banking” textbook.

Email; [email protected]  Tel. 0244 324181

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