Only 32% of populace are financially literate

Despite achieving 96 percent financial inclusion in terms of access, only about a third (32 percent) of the population have the necessary knowledge to make informed financial decisions, according to a recent Financial Inclusion (FI) report.

This phenomenon has been identified as a hindrance to citizens’ ability to plan for the future, secure loans and understand the terms and conditions of basic financial services.

The high access rate of 96 percent demonstrates that the country has the tools to engage with the formal financial system. However, without the requisite knowledge and understanding, many will be unable to fully benefit from these services, says the report.

The revelations underscore the importance of expanding access to financial education and ensuring that individuals have the necessary skills to utilise financial services effectively. The disparity highlights a pressing need for targetted efforts to enhance financial education nationwide.

Dr. Christian Jahn, Head of Programme Support to the Private and Financial Sector (PFS) at GIZ Ghana, cited the recent S&P Global Financial Literacy Survey that ranked Ghana 90th out of 144 countries based on financial literacy levels. He highlighted that although Ghanaian governments have undertaken some financial literacy initiatives over the years, financial education cannot be a one-off intervention but must be continued to ensure behavioural change.

“The repercussions of financial illiteracy are profound and far-reaching. Individuals may miss opportunities for growth and investment, fall prey to scams and fraudulent schemes or rely on advice from those who have their own interests at heart rather than the financial well-being of those they advise,” he said.

Improving Financial Literacy in Ghana to Bridge the Gap

To address this, the Ghanaian financial industry has launched the Financial Literacy and Education Campaign (FLEC) with support from the German Cooperation through the Private and Financial Sector (PFS) Programme, implemented by Deutsche Gesellschaft für Internationale Zusammenarbeit GmbH (GIZ), to restore public confidence in the financial sector and drastically increase levels of financial literacy across the country.

Head of Financial Component-Support to the Private and Financial Sector (PFS) Programme, GIZ, Cynthia Odonkor, explained that financial literacy is a cornerstone of economic empowerment and stability. Therefore, it requires financial education to equip individuals with the knowledge and skills necessary to make informed decisions about their finances – including budgeting, saving, investing and managing debt for sustainable economic development.

She reiterated that in Ghana, where a significant portion of the population – 68 percent – remains financially illiterate, improving financial literacy is key to unlocking economic potential and fostering inclusive growth.

“Financial literacy initiatives should be accessible, engaging and tailored to specific needs of the target audience. This campaign involves using a combination of traditional and digital platforms to deliver financial education to the audience. By employing a variety of mediums and content, we believe we can effectively reach a broader segment of the population and make financial education more engaging and relatable,” she said.

On her part, Head of Insurance and Pensions, Ministry of Finance-Financial Services Division, Patience Arko-Boham commended the GIZ, Bank of Ghana (BoG) and Ghana Microfinance Institutions Network (GHAMFIN) for their collaboration to push such an agenda.

She mentioned that efforts to enhance financial literacy must be multi-faceted and collaborative. Government agencies, financial institutions, non-profit organisations and educational institutions all have a role to play in promoting financial education and awareness.

“By working together, stakeholders can develop comprehensive programmes that cater for the diverse needs of Ghanaians across different age-groups and socioeconomic backgrounds,” she said.

These remarks were made at the FLEC launch in Accra on Wednesday, July 10, 2024 under the theme ‘Enhancing Financial Education to Promote Financial Inclusion’.

The campaign’s call to action tagline, ‘Know your part, do your part’, outlines the role everyone must play.