Free and open economies have led to greater economic development and the alleviation of poverty. The pillars of freedom that have made more countries prosperous, which we equally support, include freedom to trade, limited government, low regulations, secure property rights for businesses, and economic development. The Fraser Institute of Canada, in its annual Economic Freedom Index Report, has consistently found that countries that embrace institutions, policies, and programmes of economic freedom have more successfully alleviated poverty.
For example, 64 years ago, South Korea was one of the poorest countries on earth. Starting in 1960 with nearly equal GDP per capita to that of Ghana, South Korea pursued policies of trade liberation, strong property rights, and economic freedom programmes, and by 1990 its GDP was 10 times that of Ghana. South Korea’s GDP per capita will be $33,150 in 2023. Ghana, on the other hand, embraced state-sponsored policies and heavy regulations.
Today in Ghana, we find numerous land litigations, state-sponsored anti-poverty programmes, unclear property rights protection rules, an enormous amount of aid dominating domestic policies and programmes, and heavy regulations for revenue generation instead of facilitating business and trade. In 2023, Ghana’s GDP per capita will stand at $2,240, far lower than that of South Korea. It is inarguable that more Ghanaians are getting poorer with the web of regulations and state-led policies.
A typical example is the barrier to accessing the funds of a deceased person at banks, insurance companies, and pension firms. These processes are greeted with illiberal institutions and heavy regulations.
As many more Ghanaians are dying intestate—in road accidents, in rivers, burned in fire (infernos), and others—in some rare circumstances, their savings and investments are locked up with financial institutions. In the past 10 years, Ghana has recorded that 72 people out of every 100,000 people have suffered bodied injuries, and 8 people out of the same population died through road traffic accidents. Statistics from the National Road Safety Authority (NRSA) show that 1,086 people died in the first half of 2023 alone, compared to 1,300 deaths in the same period in 2022.
The deceased may leave behind funds with banks, insurance companies, and pension firms. Others who died in hospitals, homes, infernos, or floods are sometimes unidentified and may equally leave behind funds with the financial institutions. Many of the deceased are likely the breadwinners of their families. In 2022, the Ghana Police Service held a mass burial of 300 unidentified bodies, and the 37 military hospitals conducted a mass burial of 48 unidentified and unclaimed corpses. In many cases, when the funds of the deceased are kept by the Bank of Ghana (BoG) and insurance and pension firms, it worsens the fight against poverty and creates more dependency.
The imperatives of private property are to prevent aggressions and adjudicate disputes, prioritising the legal rights of citizens. Since 1970, the government has capriciously imposed its will on property ownership and the transfer of inheritance through burdensome regulations, outright taking over funds through the Bank of Ghana in the case of financial institutions, while other entities keep the funds forever.
In the financial sector, it is incumbent on banks, insurance companies, and the Social Security and National Insurance Trust (SSNIT) to find out whether their account holders, clients, or customers are deceased or missing in the event that the account becomes dormant. This is why all insurance policyholders, bank account holders, and pension schemes have their Next of Kin, serving as their point of contact.
The Bank of Ghana’s policy, through the Banks and Specialised Deposit-Taking Institution Act 930 (2016), demands that banks contact the next of kin of the accountholder to find out the whereabouts of the accountholder when the account has been dormant for 3 years.
After 5 years, when the account is still dormant, the funds that could alleviate the poverty of families, children, and spouses are transferred to the government for keeping. In the case of the insurance companies and SSNIT, they are not required to perform such exercises to transfer the funds to the National Insurance Commission (NIC) or the National Pensions Regulatory Authority (NPRA). This means they keep the funds to themselves if no one is able to clear the legal huddles for the funds.
There is a web of laws and rules governing inheritance and property distribution. These laws include the 1992 constitution of Ghana, the Administration of Estates Act, 1961 (Act 63), the 1973 Conveyance Act (NRCD 175), the 1971 Will Act (Act 360), the 1884–1985 Marriage Act (Cap 127), the 1985 Intestate Succession Act (PNDC Law 111), the National Pension (Amendment Act) 2014 Act 883, Birth and Death (Act 1027) 2020, the Head of Family Accountability Act 1984 (PNDC Law 114), the Banks and Specialised Deposit-Taking Institution Act 930 (2016), the Insurance Act (1061) 2021, the Children Act (560) 1998 and the 1991 Intestate Succession Amendment Law (PNDC Law 264) and other regulatory instruments. The family members of the deceased who died interstate must hire a lawyer to seek justice for the distribution of property.
When you die testate (with a will), you will decide how your property must be distributed. But when you die interstate, the government has the legal power to decide how your property will be distributed. The acquisition of burial permits, coroner inquest report, medical report, letter from the Assembly man, letter from the chief, letter from the church or Imam, letter from the Head of Family, affidavit, death extract, and Letter of Administration (LA) with various consultations renders the process cumbersome and bureaucratic.
The long delays in justice, cost, and cultural challenges often result in abandonment of the processes, which is certainly not surprising given the number and magnitude of the administrative hurdles that must be cleared.
The cost and web of information required to unlock the funds of the deceased could take months or years. The acquisition of documents to secure other documents to access the funds comes with challenges, including identity crises, cost, time, and institutional challenges. In most cases, the beneficiaries, nominees, or next of kin could die in the process of accessing the funds. This sometimes leads to inheritance fraud.
The economy becomes weaker and weaker when those who are eligible to access the funds or do business are prevented from doing so because of red tape and administrative barriers.
Although administrative barriers are embraced as a means to weed out fraud and prevent mistakes, they should also not prevent low-income and poor-but-eligible people from accessing their rightful inheritance. Therefore, administrative barriers should not be used as a measure of efficiency in service delivery. Administrative barriers and red tape have the tendency to push 65% of the population into poverty.
It is imperative for the banks, insurance companies, and SSNIT to restructure their account opening forms, policy subscription forms, and pension documents to avoid identity challenges leading to administrative delays. The Bank of Ghana must intensify proper supervision and ensure banks comply with the dormant account sections in the Banks and Specialised Deposit-Institution Act, 2016 (Act 930).
Again, the Bank of Ghana, as a matter of policy, must find ways to identify families of the deceased bank accountholders to receive their funds kept for the past 10 years. The insurance companies and SSNIT should also simplify the processes and equally identify beneficiaries, next of kin and families, to access the funds kept with them in the past 10 years, while the Births and Deaths Registry should be retooled by relocating them to a more spacious edifice to work and deliver within time.
The government and all stakeholders should consider that the more administrative barriers we have, the more we push people into poverty. It is also incumbent upon all Ghanaians to start amending their bank accounts, insurance, and pension details, especially the information of beneficiaries, nominees, and next of kin, to prevent the loss of funds to their heirs when one is gone.
It is therefore an opportune time to institute free market reforms with low regulations by removing red tape and eliminating administrative bottlenecks that hinder the efforts of people and families to rise out of poverty. Free market reforms have taken many countries (South Korea, the USA, Japan, New Zealand, Hong Kong, the United Kingdom, etc.) and billions out of poverty. Why not Ghana? We must ensure that the world that we pass on to succeeding generations is one that’s friendly, liberal, protects private property rights, and is full of opportunities for a prosperous society.
Peter Bismark Kwofie
Institute for Liberty & Policy Innovation
Tema
ILAPI Recommends Keeping your Next of Kin Updated at all Financial Institutions
