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 SOCIAL SECURITY & NATIONAL INSURANCE TRUST (SSNIT)
Interview with
Mr. Charles K. Asare,
Director General
September 1st 1999
Contact:
P.O.Box M 149 - Accra - GHANA
Tel: (233 21) 667 731 –2 /4-9
Fax: (233 21) 662 226
E-mail: snitrec@ncs.com.gh
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Could you give us a brief historical background of SSNIT?
SSNIT basically administers the pension fund of the working population of Ghana. The history dates back to 1965. It was then a provident fund which run till 1991 when a new act was passed converting the provident fund into a pension scheme. The difference being that the provident fund was more or less a saving scheme where you get out what you contributed plus interest. The interest rate on the funds, the bulk of which was invested in government bills was far below inflation and this affected the benefits accruing to members. This therefore made the benefits woefully inadequate. To provide for a better social income protection, the provident fund was replaced by the pension scheme.
We currently have over 700,000 members contributing and we are paying out pension to over 30,000 people. We operate through 46 offices in the districts, 11 regional offices and a head office.
In terms of our business, we operate on two main lines. These are pensions administration and the investment management. To the investing public overaseas, I believe they would be interested in the investment aspect of what we do.
What are the objectives of SSNIT today?
The primary objective is to manage the fund to meet the pension obligations that we have promised the contributing members. Our slogan which ties in with our goal is to "deliver on our promise" and that is the primary objective of any pension scheme. We have a contractual obligation to pay the pensions when they come due. SSNIT provides 3 benefits; The old age pension for those between 55 and 60 years, invalidity pension for those who are total invalid and a survivors lump sum for dependants of a deceased member.
Today, you are the biggest non-banking financial institution in Ghana. What has been your philosophy to become what you are today?
We are the biggest by our assets and also by the volume of contributions that we take. As a young fund we are accumulating surpluses with investments in various sectors of the economy. We are very visible in the real estate sector. We are the largest single investor on the local stock market with investment in 16 out of the 21 companies on the stock exchange.
We also have investments in companies, spanning all the sectors; financial, manufacturing, services, agriculture. We are basically looking for returns to help us meet our obligations in the future so we are driven by the need to generate returns to meet these obligations.
What are your sources for raising funds?
The pension scheme is self-financed with contributions from members and the investment returns on the contributions. To maximise the returns on our investments, we are now looking at co-investing with other international pension fund managers who are interested in coming to Ghana. This will enable us to pick up bigger projects than we can take on our own.
Have you already had successful talks with other organizations?
We have started talking to some fund managers, some, others have come to us. We hope that before long we should be working with other fund managers to maximise the returns on our investments. So far we have been co-investors with other private investors but not with pension fund managers.
What would you say has been the sector in which you have invested most and why?
First we have to appreciate that the investment outlets in Ghana are limited and as a developing nation we are somehow driven by developmental needs so you will find that we have put quite a lot of investment in property development and tourism.
Our biggest investment outlay is in property development and tourism. We are through our participation in the housing industry, facilitating Ghana’s housing delivery programme. On the commercial front, we are participating in equities in listed and unlisted companies, across all the sectors of the economy. Our investments in the banks have proven to be the most profitable investment we have made.
How about the tourism sector, is it a sector where you see a lot of returns and a great future?
We see a lot of future in tourism, helping to diversify the foreign exchange earning of this country and also given the conditions around West Africa, Ghana is becoming increasingly attractive both for commercial business and direct investment and for the tourism industry. Politically, we have enjoyed stability, we have had two successive civilian governments, the economy has improved with the liberalisation and the various policies that are open enough to developing the economy. We have seen the inflow of tourists and SSNIT has moved to respond to the increasing demand. We have established two hotels at Busua in the Western Region and Elmina in the Central Region and investments in Labadi Beach Hotel, La Palm Hotel. As a matter of fact we just concluded discussions to link up to one holding company to create a chain of beach resorts, anchoring it at La Palm Royal where foreigners can come on packages, spend the weekend in Accra, move to Elmina, to Busua, come back and go back. I believe that should generate a lot of business over the next two years and beyond.
Into which company have you made your biggest investment?
If it is investment in terms of size of assets then it should be Elmina hotel, if it is in terms of returns then it is our investment in Merchant Bank Ghana Limited.
What is your number of staff?
SSNIT has about 2200 employees of which approximately half are officers and the rest junior staff. We operate a network of 46 district offices, 11 regional offices and about 3 administrative offices in the centre of Accra.
As you know the government has set up the Vision 2020 plan. To what extent are you helping implement this plan?
The overall objective of Vision 2020 is to make Ghana a middle-income country by then. It takes various components to achieve that. Savings levels must increase, investments must come in to create jobs. We want the health care system to improve, education to also improve and SSNIT is contributing in all these areas. In education we are assisting through our investment in the students’ loan scheme which we have funded for sometime.
In the healthcare, SSNIT has provided health centres to some deprived communities. We run a Trust Hospital and we have also provided financial assistance to develop some regional hospitals. We are currently in the process of launching a national health insurance scheme to be privately run and we should be able to do it to make healthcare affordable. If healthcare is more affordable a lot more people would stay healthy, be more active and help to propel the economy to the heights that we want to get. If you talk about investment I believe that is an area where SSNIT can contribute the most. I sense that with the surplus we stand ready to invest along with the foreign partners who can complement our resources which is financial and natural with technology, management and know-how. This will facilitate investments in certain areas that can generate jobs, and produce returns for SSNIT and the country.
| Would you say that you contribute a lot to the improving of the quality of life of the Ghanaian?
Certainly. We look at our investments in two broad ways; commercial and social. A successful commercial investment would have to generate jobs. If it is successful you are making profit, if you are making profit you are adding value to the economy. For the social investments we have focused our resources into education and healthcare and these are all areas that improve the quality of life in Ghana.
What are you doing in terms of attracting foreign investments into Ghana?
Basically, we have been reaching out in certain areas where we identify the need for foreign partnership, and that is where the skills are not available locally and you can talk of hotel management in the tourism industry. That was the impetus for this merger I was talking about. We have two beach resorts, they have one and I believe we can put the hotels together, source for a management group and make the best of the investments.
Another area we are looking at is commercial agricultural farms. We are in discussions with some foreign partners to come and team up with us to enter commercial farming ventures.
In the area of property development, we have built the five commercial office buildings which are going to require professional management. There is some level of expertise in Ghana but to maximize our returns we need to have the full complement of professionals who are also experienced.
Is that something you want to do in the future as well?
Certainly. You do not invest passively. You have to invest actively and pro-actively, you have to know what you want so that you can get the right partners who can help you realise your investment goals. We have started defining the areas into which we want to move, our priority areas being the agro business. I feel Ghana is well endowed with natural resources, good climate and soils, well positioned geographically to produce fresh vegetables and fruits for the European market or even flowers to compete with the East African markets or Caribbean markets and the technology is very simple. These are areas I believe we should look at as well as at food production for local consumption.
These are all advantages for foreign investors. Are there any grey areas where you would say there are disadvantages for foreigners to come to Ghana and where the government would have to work on?
There are certain grey areas. The history of all third world countries has been a hindrance to foreign investors and they have certain concerns politically, socially and commercially not being familiar with the areas so we all have to sell the positive elements that we have in the country. Most people in Europe look at Africa as one country without differentiating between the various countries and we tend not to enjoy the best press. Even within each country there are differences from year to year. Certain years may be good, others may be bad. We have to be pro-active and market our country.
Also the opening up of Eastern Europe has diverted a lot of attention and the general lackluster investment climate in the emerging markets have tended to affect developing countries. In the face of all that we need to aggressively market, create what has been an international finance parlance, "an enabling environment". Something I believe the country has done extensively. Politically we have set the right things, formed the right liaisons with America, President Clinton visiting us and our President going to the United States.
Various laws have been passed to facilitate investment and business in general and we have created one shop centre, the GIPC all aimed at reducing hindrance to investment. We are making the right noises and people need to know that you can invest safely here. Ghana has no restrictions on dividend transfers or corporate ownership.
Given that a lot of measures have been put in place to facilitate investment in Ghana and also to polish the image of the national team. How do you see the future of Ghana and SSNIT within Ghana?
The future looks good. We have come far, there is still some work to be done, we cannot relax. Our leaders have embraced the idea of opening up the economy to the global market place. If we can continue on that path, be competitive both in human and financial resources, I believe we can get there. Our vision 2020 is to make Ghana a middle income country by the year 2020 and if we can follow all that programme I believe we can get there. The vision is there, the leadership is there, the rest of us have to mobilize and execute.
What would you say have been your personal biggest achievement since you have been the Director General of SSNIT?
I have not been here long enough but I am proud of the fact that all of us at SSNIT are contributing to the nation’s development based on the work we do. I am the leader now and I will take credit for driving it in that direction, I also take the blame for failing to drive it in that direction. So far we have been driving it forward in a way that is consistent with the overall aspirations of the Ghanaian economy.
Could you give us a background of yourself?
I joined SSNIT in March 1998 and took over as the Director General in April. Before I came to SSNIT I was with HSBC Equator and based in the USA. Before joining Equator, I was at ECOBANK Ghana and in my career before that I was at Bank of Boston in the US. I have an MBA from Dartmouth College in New Hampshire and Bachelor of Economics from Harvard College in the US. I have been in finance and investment since I left school.
As you know our magazine reaches more than 4 million readers, mostly businessmen. What is your final message to them?
I believe Ghana is ready for investment from the international community. People should take Ghana serious and do business here, if you need information you should contact the GIPC or SSNIT. Companies are making millions here and the economy needs serious investors. The government is ready to help. If its capital, you need, as long as the project is right and consistent with what we are looking for, commercial or social, our doors are open to talk to people who are interested in looking at Ghana.
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© World INvestment NEws, 1999.
This is the electronic edition of the special country report on Ghana published in Forbes
December 13th 1999 Issue.
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GHANA
