It is a clear and undisputable fact that savings is of great value to a nation’s growth
and development. Mobilizing both domestic and international savings is necessary if
any society can proceed into ‘self-sustaining economic growth’. Higher savings has
been proven to precede economic growth. Therefore the analysis of saving is the
analysis of issues of growth and development.
This study therefore sought to examine the savings habit of households using the
GLSS 5 data with much emphasis on the various factors that predict the level of
savings. It also sought to examine the expectations, motives and uses of savings using
the data from a household survey in Ga-East municipality in the Greater Accra
Region because such data were not captured in the GLSS 5 data. Semi-structured
questionnaires were used to collect data from 200 household heads from eight
communities in the districts. Multivariate regression analysis (binary logistic and
OLS) were used to understand the factors that influence the possibility of holding a
savings account and the level of savings of households. Cross tabs, frequencies,
percentages, chi square test and mean test were also used to examine the associations
and the level of significance that might exist between them.
Analysis of the GLSS 5 data showed that the predictors of the likelihood that an
individual will hold a savings account were income, locality, NHIS registration, place
of accommodation, sex, age and education. Thus as income increased people held
more savings account and those living in the urban areas were more likely to have
savings account that people in the rural areas. Also those registered under the NHIS
held more savings account that those who were not registered and those living in
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rented apartment held more savings account than those living in their own homes or in
rented-free apartments. Females also held more savings account than males and as age
increased, the possibility to hold a savings account also increased till it reaches 39
years beyond which it begins to fall. Thus, there exist a non-linear relationship
between age and the probability to hold savings account. As people increased their
level of educational attainment from primary through secondary to tertiary, the
possibility to hold savings account also increased.
The determinants of the level of savings on the other hand were income, locality,
sector of employment, NHIS registration, age, education, household size and marital
status. Thus as income increased the mean savings also increased and those living in
the urban areas saved higher than those in the rural areas. Those working in the formal
sector saved higher than those who were not and those registered under the NHIS also
saved higher than those who were not registered. Savings increased with age and the
highest savings was recorded at 31 years beyond which savings begun to decline. A
non-linear relationship also exists between age and mean savings. As people increased
their level of educational attainment, their mean savings also increased and as the
number of household size increased, the level of savings decreased. Married couples
also saved higher than singles. The study also found that majority of the people did
not know whether their future income were going to increase or fall in the future but
savings was higher for those who knew because majority of them had higher levels of
education and were engaged in formal sector employment.
Many household heads had planned motives for saving; acquiring household asset,
unexpected expenditures, children future education, purchase business asset,
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retirement among many others. However, after saving, they used majority of their
savings for unplanned medical expenses, unplanned funeral or marriage functions
before the planned educational expenses, investment and household asset acquisition
which formed the primary basis for the savings. Thus unplanned expenditures tend to
take the bulk of people savings than the planned expenditures.
The study therefore recommended for government policies to be geared towards
subsidizing the cost of higher education since it induced higher savings. Also
sensitization programs on NHIS should be intensified to enable many people to enroll
on the program since those registered with the scheme had higher savings and people
first use of savings was unplanned medical expenditures.