Financial Engineering and Nana Israel’s wisdom

In the climb up life’s financial ladder, some people crawl, some walk and some jump.

When I was growing up, I had an uncle whose sole reason for living was to impress. He called it “show.” He had nothing much, yet had a high need to show off. The danger was that his showmanship was financed through unethical means. It was important for him to scream from any rooftop that he had arrived. Arrived where? Success-land, whatever he thought the onlooker perceived success to be. Periodically, he paid visits to the village cloaked in the appearance of success. And when he came, he really came – with flamboyant looks to announce his arrival in success-land.

Here is a description of the look of success. He wore “Bank Shoes” that I learned quickly are black polished shiny shoes, laced up for good effect. With the ground-level flamboyancy taken care of, he wore fine clothes – trousers and buttoned shirts and a coat – to complete the clothing ensemble. What really completed the loud statement of success were a large black suitcase and a bunch of keys that was not concealed in a pocket or the suitcase. Rather, the keys dangled noisily behind the back-pocket.

It was generally rumoured about that the individual in question did not have an office, or a real job. Yet, he self-described as a ‘Businessman’! My grandfather – the late Samuel Ansah Israel of Obosomase, Akwapim in the Eastern Region – described such people as thieves. From his deep sense of wisdom and well-informed vantage point, the keys, briefcase and businessman claim were buttressed on emptiness financed through unlawful means.

The more audit reports I study of the way Ghana is being managed (mismanaged?), the fresher the memories of my grandfather’s wisdom rushes down to the front of my memory. In this memory lane, I’m distrustful of bundle-key carrying folks. Although I love beautiful shoes, I shy away from wearing anything that looks like ‘bank shoes.’ But most of all, I flee when I hear of made-up professions like “Sanitation Engineer”, which is an upgraded ‘boola man’ or a Security Man who is your watchman of yesteryears with a uniform upgrade.

Enters Financial Engineering:

Is a Financial Engineer simply the modern-day equivalence of my grandfather’s perception of a Businessman as a common criminal, a mere thief? Not all that glitters is gold, right? Right!

This Financial Engineering nonsensical nonsense entered our national lexicon of professions at the close of last year. It was the professional address by which the senselessly humongous gargantuan financial bleeding of Ghana to the tune of GHc58,000,000 (or less/more?) occurred as reported in the Auditor-General Mr Richard Q. Quartey’s 2010 report. The carrier of the new profession is the now infamous but still filthily incredibly insanely wealthy Alfred Agbesi Woyome.

So my curiosity has peaked to understand what financial engineering is. Is this profession financial or is it engineering or it’s the engineering of finances? Or – is it the financial scheming of hard-core hustlers with pedigree?

One definition of Financial Engineering is: “The creation of new and improved financial products through innovative design or repackaging of existing financial instruments.” Investopedia explains that financial engineers “use various mathematical tools in order to create new investment strategies. The new products created by financial engineers can serve as solutions to problems or as ways to maximize returns from potential investment opportunities.”

Financial engineering is also known as computational or structural finance. I conducted an Internet search for academic programmes in financial engineering. The reputable Columbia University in the USA offers an MS degree in Financial Engineering. Here is the way Columbia describes its academic program.

It says, in part: “Financial Engineering is a multidisciplinary field involving financial theory, the methods of engineering, the tools of mathematics and the practice of programming. .….training in the application of engineering methodologies and quantitative methods to finance. It is designed for students who wish to obtain positions in the securities, banking, and financial management and consulting industries, or as quantitative analysts in corporate treasury and finance departments of general manufacturing and service firms.”

In short, financial engineering entails going beyond basic financial instruments and designing complex products that are tailored to specific needs. It’s like the difference between a trader who buys and sells tomatoes and a sophisticated trader who pays the tomato farmer ahead of time before the harvest season. If he predicts rightly that as a result of good rainfall, the crop yield will be higher, he can pay low upfront to the farmer and at harvest time, stands the chance of making more money than the straightforward tomato seller.

Oh, you’re confused, right? Right! This is exactly my point. Now do you see the depth of my grandfather’s wisdom about briefcase-carriers who wear bank shoes, dress well, have no offices but self-describe as ‘businessmen’? So let me break it down here with this loud ‘gong-gong’ message: There is no profession known as financial engineering oooo tong! It’s a course of study and NOT a profession.

My understanding of financial engineering is that a practitioner must have a firm grasp of finance, and ideally, be able to use the power of computers to manipulate figures. The engineering part of it is the wheedling, swindling and dealing, the ability to make something out of nothing. It’s the creativity and ability to contrive and concoct and make money by any means necessary.

On the lowest totem pole of society, most women have functioned admirably as financial engineers without making claim to a title. From time immemorial, our mothers have conjured meals for families with token or zero ‘chop money’ that in any jurisdiction, must be declared criminal. But then, out mothers our magicians! Unfortunately, no one honours them with trophies!

But the high-level big-shot financial engineer under discussion here was engaged in gargantuan deals. And oh, some synonyms of the word gargantuan are: huge, large, gigantic, enormous, vast, massive, colossal and immense. Tiny and miniscule are the opposites.

Any Lessons Learned?

One day one day, the corrupt instant gratification-seeking elites will sell Ghana for cheap and keep the change, and Ghanaians might not demand the change. Education bestows enlightenment. But for some, when the darkness wears off and they see a little light, they use it ‘nyafu nyafu’ for themselves to brighten only their corners instead of the dark corners of society. Greed can swallow up conscience.

Let’s face it: there are tricksters in the system who would not stop at anything to do Ghana harm because they do not care a hoot about the common good regardless of claims of super-Christianity. Pure Fire, Holy Ghost, St Paul, Evangelistic, Charismatic claims may just be pretence.

As a society, we don’t seem to ask enough tough questions so people can come to town, make some lie-lie claims and take us for granted. And we smile back. We use titles so loosely. Such a posture spells vulnerability. I’ve always wondered when some of our elite go to the backyard somewhere and re-emerge as Doctor this or Professor that and we quickly fall in line and address them by the titles with reckless abandon. That’s how come we quickly acknowledge some people as Luminaries, Gurus and now, Financial Engineers – no questions asked. Then they take us! Case closed!

So what if Woyome crosses the Togo border and leaves this sticky stinky matter behind? INTERPOL, right? Right!