Union Saving and Loans, a member of the Jospong and Zoomlion Group of Companies has introduced two new products designed to help parents and adults students to save consistently over a given period and earn bonuses for education financing.

Union-Scholar (U-Scholar) is for adult students above 18 years who wish to save a specific amount monthly for between six and 12 months to finance their education, while Union-Junior (U-Junior) is for below 18-year olds and comes with similar benefits.

Union launched the two products at its end of year dinner and Awards night, where it also rewarded staff and clients who excelled in 2013.

Managing Director of Union, Philip Oti Mensah later told ADOMBUNSINESS both products offer combined interests and bonuses up to the interest rate on fixed deposits, which he said should be handsome enough to finance education depending on the monthly installment one makes.

He said both products require the client to agree to save a specific amount every month for an agreed period, and once the client meets the target, he or she earns the bonus.

“This is to encourage and reward the culture of consistent savings and also assist adult students raise money to pay for their education, and parents to save towards the education of their wards,” he said.

Philip Oti Mensah believes there is more money outside of the banking system, but banks are not doing enough to compel people to keep their moneys in the banks for long because they (the banks) generally offer very low interest rates on savings.  

He believes products like U-Junior and U-Scholar, which promises high interest rates, should be a motivation for many to adopt the culture of consistent and long-term savings.

“Indeed our regular saving accounts also give clients the option to choose the bonus offer, which would then mean they would agree to save specific amounts every month for a given period in order to earn the bonus,” he added.

The Union MD said in the coming year, financial institutions, including banks, saving and loans, companies, microfinance companies, rural banks and financial houses would be racing for the same clients, but the winners would be those who have the best strategies to attract cheap deposits.

He is confidents Union has what it takes to scoop enough of the available funds outside the banking system for business in 2014.

Mensah recalled in 2013, Union introduced the Car Owner Loan Scheme, Omni Banking, SME and Micro Clinic and recently U-Junior and U-Scholar, through which it was able to more than double its deposits, loan portfolio and assets, and branch network.

“In 2014 we have some exciting products and services planned that we believe will cause us to more than triple our assets, deposits and loan portfolio and we will also increase the number of branches from 10 to 20. We will open branches at Tema Habour, Takoradi, Koforidua, Kumasi, Madina and we are also looking at Tamale,” he said.

Caution against scam

Mensah however cautioned Ghanaians to be careful who they do business with in the coming year because lots of institutions, particularly microfinance institutions and others who claim they can offer 100% interest in one year are actually folding up and escaping with people’s moneys.

He said “Ghanaians need to ask questions of such institutions – ask them what business they intend to do with your money – check their performance in the past – check if they are registered with Bank of Ghana – and think twice before giving your money to such institution.”

“One hundred per cent interest rate in one year is not feasible – more often than not it is a scam – we have seen examples in Nigeria, Bolivia and Morocco – we must learn to be content with interest rates a little above the Treasury Bills rate instead of running after those promising 100%,” he urged.

Mensah said the influx of such companies poses a threat to the genuine financial institutions and to the entire economy because “it has the tendency of creating multiple borrowers from the side of the client and that would mean one client may be owing several institutions ant it then becomes difficult for each of those institutions to get their moneys back.”

The Union MD is urging a close collaboration between banks on sharing information about clients in order to prevent multiple borrowing, adding that banks should also use the credit bureaus more effectively to check the profile of clients before lending money to them.

Mensah did not mention any companies’ names, but it is no secret that several microfinance companies have folded up in Ghana and escaped with moneys belonging to their clients.

Meanwhile, other organizations like US Group of Companies, Safeway and Fishermen’s Brigade have taken huge moneys from thousands of Ghanaians and invested in tilapia farming and promised to give 100% interest in one year. But lots of the investors have remained stranded for more than a year without being paid, and officials of these companies have been playing hide and seek with the investors.

Some pundits believe once those companies are taking money from Ghanaians to invest, it is just like a bank taking deposits to invest so the Bank of Ghana should intervene and regulate those companies. But an official of the Bank of Ghana recently told journalists at a workshop that it still remains a grey area and so clients of such organizations would need to step cautiously when invited to make such investments.