Introduction

Savings, a necessary engine of economic growth, have been very low in Ghana. Gross Domestic Savings as a percentage of GDP in Ghana have been low compared with many other African countries, averaging, between 1980 and 2001, 6.4% in Ghana, 37.4% in Botswana, 21.4% in Cameroon, 21.6% in Nigeria, 13.9% in Kenya and 7.3% in Malawi (World Bank, 2003). The apparent low saving rate in Ghana has been due to a combination of micro and macroeconomic and political factors. In order to overcome the problem of low savings in Ghana, various monetary and fiscal policies have been pursued over the years, but these have not yielded the required results postulated by the Mckinnon-Shaw hypothesis (Quartey, 2002; Zorklu and Barbie, 2003). This raises a number of issues for consideration: why do people find financial savings less attractive? Which age group or occupational category saves in Ghana? Do females hold financial savings as compared with their male counterparts? These and a few other issues which have been of major concern to policy-makers in Ghana will form the focus of this paper. It will critically examine the reasons for the relatively low savings in Ghana despite the numerous macro-financial policies pursued in the 1990s.

Following a consideration of the literature in Section 2, Section 3 outlines the monetary policy instruments used in Ghana since the Economic Recovery Programme was launched in 1983. A section on the methodological approach follows this. Section 5 provides a descriptive analysis of GLSS 3 and 4, and Section 5 contains concluding remarks and suggests directions for further research.