Accra Day 2

Photos at http://picasaweb.google.com/africanjones2go/AfricaPics#

We began today with a trip out to the University of Ghana to meet the professor we have been working with in collecting rainfall and crop data. Photos of the University of Ghana and us our meeting on a patio at a campus restaurant (under an umbrella). The campus is huge!! They actually have taxis that just take people around campus.

As we talked, I realized how fortunate we had been in choosing to work with her. I located her through an actuarial grad student from Ghana. She had been her math professor in her undergraduate studies. (Thanks Genevieve!!).

As she went through the data with us, she told us the story of how it was collected, where the data came from, and how reliable each data set was. (Turns out that there are different types of rainfall collection stations (synoptic, climate, agro-meteorological, and simple rainfall stations and data integrity depends on which one it comes from. ) She has written a book on data collection and was explaining how things have changed in that so much more of the information is available in electronic data form now rather than just recorded in books. This was certainly a currently at this transitional stage is a story unto itself. At this point we arguably have the most comprehensive and data set available in Ghana.

I think it is promising that given the electronic data now available, and how the data could become easily accessible in the future with a few enhancements in the system (such as adding new, faster computers at certain collection points and formalizing the data collection protocol) a market could develop as investors could rely on the ability of the system to provide quick feedback on the data in order to determine the appropriate level of indemnification. In addition to a private contract, Ghana has a developing stock market that might also be able to provide some capital. Will look into that later.

For the rest of the day, a business developer in Ghana, who happens to be the father of yet another actuarial student at ISU that works with me (yes the odds of that are quite fantastic), took us around in his air-conditioned car. (Thanks for setting this up Mukthar!!!). Our first stop was with an executive at Bank of Ghana who talked to us about rural banks. The bank of Ghana provides loans to these banks that in turn make loans to the various communities throughout Ghana. A typical rural bank might be comprised of about 2500 loans. This would be broken down into around 100 groups, with about 25 members in each group. The group usually has some common interest such as farming, or handcrafts, or small stores. The average amount of a loan is 200 CETIs ($150). Most of the people receiving loans are women. Each of the 25 members selects their executive, secretary, and treasurer. The group meets once a week to collect their payments (principal and interest) and they usually handle the situations where some person falls behind. The Ghana bank then collects the loans payments from each of the groups weekly. Although the default rate on loans is very low, the bank is interested in the concept of having some kind of an indexed-based product to provide protection to rural banks, especially in the north where the rainfall is a bit more variable. They set up a meeting with us for tomorrow to meet with the APEX organization that has loans from many banks like Bank of Ghana loans, including some from the government itself. The postcard view of downtown Accra with the impressive, ship-shaped building and the ocean in the background was taken from the bank. The building in the picture is their performing arts theater. I left one of our nice ceramic coasters with the rendering of the ISU College of Business building on it. It was a perfect gift as it could be used as a paperweight too. They still have fans and open windows there, so they have lots of paperweights.

Our next stop was at the Social Security National Insurance Trust (SSNIT) where we met with an actuary who had gone to school at Ball State. is like the SSA in the U.S. He explained that 18 percent of the income of workers is set aside for retirement benefits, disability (which they call invalidity) benefits, and survivor benefits. What was most interesting is that they have recently set up an “Informal Pension System” that permits small, self employed people to contribute to the system and receive benefits. The way it works is that some employees of SSNIT go around and educate the people in the local markets about the program. The government places such an importance on these people enrolling them in the system that it pays a commission for enrolling people in the Informal Pension System. It struck me that this distribution system (which currently only exists in major cities) could be used for private life insurance too. The problem in the past was how do you distribute micro insurance? The administrative costs are too high. I will be talking to companies about this option later in the week. I met the mom Genevieve’s mom who works at SSNIT. (Your Mom says “Hi” Genevieve :-)). SSNIT is an organization that would be a good place for ISU actuarial students to work and do a study abroad/internship. It would be a great experience and valuable for everyone.

We met briefly with SIC, the largest and oldest insurance company. The CEO had to go to
another meeting so we had to reschedule that for the next day. I was impressed by how much it looked like a regional mutual company you might see in the U.S. It had nice friendly people, dressed in business suits (they actually dress much more formally than we do in the U.S. especially in air-conditioned buildings like this). I guess that is the British influence. They had their mission statements, vision statements, and photos of “Best Worker” on the wall. I could definitely see our students doing summer internships in a place like that. Will meet with them again tomorrow.
The talk among local people is the impending arrival of President Obama. He will be here June 10th. The World Cup Finals. The really big news was the Champions League Finals between Manchester United and Barcelona. Lots of people in the restaurant tonight watching the game.
Bye for now.
Jim