The School of Business has held its maiden e-seminar on the theme “Coronavirus Pandemic, and Household Financial Anxiety and Wellbeing”.
Explaining the rationale for the topic, the Dean of the School of Business, Prof. John Gartchie Gatsi, noted that most of the discussions on the effect of COVID-19 focused on the macro level. For instance, he indicated that discussions have centered on “Effect on fiscal management situation, monetary policy management in various countries, the balance of payment effects, growth momentum, and job losses”. He added that “disruption of the global supply chain which is affecting import and export had taken the centre stage".
Prof. Gatsi observed that in all the discussions, attention had not been paid to personal finance which included family finance, retirement finance, and personal or household savings. “The pandemic is likely to have a greater effect on women and young entrepreneurs. Many families do not have emergency savings and investments to fall on during the pandemic,” he explained.
Pointing to the consequences of COVID-19 on households, Prof. Gatsi averred that small family businesses, micro, and small businesses have lost both operating capital and cash vulnerability and inequality had deepened. He further indicated that there had been a reduction in remittances for many families adding that “This is as a result of the intensity of the outbreak in countries where these relatives’ currently live and work”.
Prof. Gatsi noted that the effects of the pandemic had created psychological problems for households which eventually develop health problems for people. “Of course these problems also cause anxiety for families and individuals and that’s why this topic is apt for discussion,” he stated.
Formalise Ghana's Economy
In his presentation, the Head of the Department of Finance, School of Business, UCC, Dr. Anokye Mohammed Adam, proposed that efforts should be made to formalise Ghana’s economy so as to increase social security systems and put in place social intervention systems. For instance, he pointed out that in the United States of America (USA), the structures were formalised to deal with such shocks. “Ghana has not succeeded in formalizing the economy because of lack of good database to deal with these policies and even with LEAP, it sometimes gets into the hands of those who are not in need,” he stated. He noted that traders, artisans, hairdressers, tailors, and other small and medium enterprises mostly managed by households felt the brunt of COVID-19.
Dr. Adam proposed the incorporation of personal finance education in the curricula of educational institutions from the senior high school to the university level. “We need serious education on financial planning because uncertainty about life is inevitable,” he added. Dr. Adam noted that there was the need to inculcate savings into our culture stressing that Ghanaians do not normally invest; savings culture should be made part of us. “After COVID-19, the government must put in place policies to intensify financial education to secure our future wellbeing,” he recommended.
Reduction in Poverty and Inequality
An Economist at the World Bank Ghana Office, Mr. Kwabena Gyan Kwakye, indicated that the bank over the years had worked with governments to reduce poverty and inequality in many countries, including Ghana. On the intervention of the Bank during the COVID-19, he indicated that a Corona Virus Rapid Response had been rolled out with the aim of assisting the government to convert expenditures into clinical or health-related expenditures. “Through this fund, 100 million dollars has been disbursed to the Government of Ghana,” he stated. Another area he said the Bank was supporting the government was the release of funds to support the LEAP programme to help the needy and vulnerable persons to ease their burden during the COVID-19 period.
Mr. Kwakye said the next phase was support to the government to give some relief to SMEs and households in the form of grants and stimulus packages. In the medium to long term, “the bank is focusing on building resilient economies to enable households to withstand such situations in the future”.
A Professor of Practice and the Director of the Personal Financial Planning Master’s Program at Kansas State University, Dr. Megan McCoy, who spoke on Financial Therapy, said the overall wellbeing of an individual had an impact on financial wealth. She indicated that the financial stress of individual households has risen due to the rippling effect of the pandemic. “People are losing jobs and there are a lot of anxieties for those who still have their work because they are likely to lose them,” she noted.
In order to tackle this, Dr. McCoy said there was the need to ensure that people were safe. She also advised households not to channel their resources into capital intensive projects like building.