Kelvin Chamunorwa looks at how long-term thinking can bring lasting solutions
The moment I learned I had qualified to become an actuary is one of my most vivid memories. At the time, I made a vow to myself not to go back to my studies, but reneged on it recently by dusting off my old core reading notes and getting up to speed by answering past exam questions again.
Along with another actuary from the UK, Clare Campbell, I had volunteered to travel to Ghana to lecture post-graduate actuarial students. It has been a fascinating experience. The students' commitment to their education and their ambition to help Ghana prosper is remarkable. Some students travel more than three hours to attend lectures and one told me of his aspiration to found a health insurance company to increase access to healthcare and drive economic growth.
Ghana enjoys a stable democracy. Large oil and gas reserves were recently discovered that provide revenue, as do cocoa and gold. But many people are frustrated by an erratic power supply with no apparent long-term solution and rising inflation, currently 16%, as a result of fiscal largesse and a sliding local currency.
By the time this issue is published, we will have returned to the UK, where, in contrast, inflation is likely to turn negative this year. Dr Andrew Sentance, economist and former member of the Bank of England Monetary Policy Committee, believes this does not signal the onset of a deflationary period, but cautions that interest rate rises will need to be brought forward to prevent aggressive rate increases in the future as the economy grows (Oil on troubled waters?).
Ashok Gupta also addresses the economic cycle in his article (Riders on the Storm). A two-year study by the Bank of England found that UK pension and life assurance funds have failed to provide stability to financial markets by investing for the long term, resulting in exaggerated market movements and higher peaks and deeper troughs.
As actuaries, our ability to think long term can be positive for our respective countries. This unique perspective can help us to influence stakeholders, and, as Nick Salter puts it in his president's comment (More to actuaries than meets the eye), "Help them to see things the way we see them".