Laws restrict long-term investments - Investment expert
The Group Chief Executive Officer of investment and property management firm, McOttley Holdings, Mr Kwesi Livingstone, says the low investment culture in the country is a major setback to long-term projects and entrepreneurship.
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He explained that the traditional risk averse culture of the average Ghanaian had found expression in some laws, which are critical to long-term investments, a phenomenon which must be changed to improve the investment climate.
“The investment horizon of Ghana is more ‘short termish’. Culturally, Ghanaians are risk averse. People always think their incomes are not enough and it takes a lot of effort to educate churches, clubs and different segments. Until the culture changes, it will be very difficult for Ghana, as a country, to make inroads into public private partnerships (PPPs) in infrastructure development,” Mr Livingstone said in an interview.
He added; “These have also translated into our laws such as the Insurance Regulation, Mutual Fund and Pension Fund regulations; the risk averse nature reflects through all of them. For example, if you’re a Mutual Fund you cannot do more than 10 per cent investment in property portfolio. Meanwhile, this area gives high returns,” the management accountant explained.
Mr Livingstone said that legal restriction meant that taking the pension fund, for instance, about 75 per cent of it should be in fixed income securities.
Between 2010 and December 2013 alone, about GH¢1.1 billion accrued from tier two contributions under the Pensions Act.
However, for a long-term and patient fund such as the pension fund, which is also the cheapest, locking in as much as 75 per cent of it in government securities, means “we are left with only 25 per cent for other investments.”
According to Mr Livingstone, those risk averse clauses in such very important investment laws served as setback to fund management in the country and partly contributed to the low local investments in the infrastructure and property sub-sectors which required long-term investment and patient capital.
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“Unless they revise these laws, we will continue to operate without the optimum returns,” he said, stressing that the country needed to look at its peculiarities and tailor laws to suit the prevailing situation.
The McOttley Holdings group has set out to change the investment and savings culture in the country by offering a credible platform for funds management as a way of restoring confidence in such operations which was previously dented by ‘dubious, deceptive and duping’ schemes.
The holdings company has three subsidiaries, namely; McOttley Capital, which is specialised in areas such as fund management, personal wealth management, venture capital, and economic and financial research and McOttley Money Lending, which offers loans to individuals and SMEs in particular.
McOttley Properties is into the real estate, property management, valuation, letting and sales and this is where the group channels its surplus funds into expansion of housing supply in the country.
Mr Livingstone said the group emphasised on real customer satisfaction in all its activities and therefore to promote SMEs, for instance, it did not only provide them loans, but also gave them management advice and engaged them regularly.
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Writer’s email: Samuel.ablordeppey@graphic.com.gh