About 80 per cent of Ghanaian adults do not have access to any financial services such as savings, loans and insurance investment, a survey conducted by the Ministry of Finance and Economic Planning (MoFEP) has shown.
The survey further indicated that even in situations where consumers were aware of such financial services and products, the knowledge often did not translate into positive behavioural change. Mr Seth Terkper, Deputy Minister of Finance and Economic Planning, disclosed this in a speech read on his behalf, at a seminar under the theme: "Promoting Financial Capability and Consumer Protection in Ghana," in Accra on Monday.
The seminar jointly organised by the Government of Ghana and Ghana Microfinance Institutions Network (GHAMFIN), is a prelude to a two-day international conference to be hosted in collaboration with the Partnership for Making Finance Work for Africa (MFW4A). It is on the theme: "Promoting Financial Capability and Consumer Protection - A Step Forward Towards Financial Inclusion in Africa," and scheduled for Accra from 8 September to 9 September.
More than 250 policy makers, regulators, journalists and representatives from financial institutions and their apex organizations, the education sector, consumer protection agencies, and development partners from over 30 countries will participate in the conference.
Ghana is one of the first countries in Africa that has developed and started to implement a National Strategy for Financial Literacy and Consumer Protection in the Microfinance Sector. Over the past two years, "financial literacy road shows" have been carried out in all 10 regions of Ghana, easy-to-understand educational materials have been developed and distributed, high school quizzes have been organized, and radio programs on saving and responsible borrowing as well as television sitcoms on insurance have been telecast. All activities will culminate at the Ghana Financial Literacy Week, which will take place from September 28 to October 3, 2009.
Against this background, over 150 Ghanaian and international financial sector champions from the public sector and the financial sector as well as representatives from academia, consumer protection agencies, non-governmental organizations and development partners will discuss and evaluate whether "Ghana is on track and set the right priorities in financial capability and consumer protection". Additionally, innovative topics such as "Integrating Financial Capability into High Schools" and "Promoting Financial Capability through Mass Media" will be addressed.
Mr Terkper said it was important for consumers of financial services to be empowered to take advantage of knowledge of their rights and liabilities in order to make informed decisions. He said pro-client principles such as transparency, appropriate pricing, protection from unethical and abusive practices could be effectively achieved through consumer education and stressed that institutional aspects of consumer protection measured the ethical commitment of financial institutions to such principles. "It is for this reason that government in close cooperation with its development partners has launched an extensive financial literacy programme to build a relationship of trust between consumers and financial service providers which is essential for sustainable financial inclusion," he said.
Mr Terkper said early this year, the Ghana National Microfinance Forum adopted the National Strategy for Financial Literacy and Consumer Protection in the Microfinance Sector to address three crucial dimensions of financial education namely "Knowing, Understanding and Behavioural Change."
"It is recognized that people need to know and understand before assessing whether they need to change their behaviour," he said. Mr Terkper said moral arguments for consumer protection in the financial sector focused on the imbalance of power between financial institutions and their clients and added that functionally illiterate and first time consumers were particularly vulnerable. "Even middle income, relatively educated, clients may be insufficiently informed about their rights and can be pressured into making poor borrowing decisions," he said.
Mr Terkper expressed the hope that the workshop would provide participants the opportunity to make meaningful contributions on various aspects of promoting financial literacy in high schools, consumer education and micro-insurance as well as consumer protection to provide the road map to improve the country's economic sector.
Dr Sam Mensah, a Financial Economist, lauded the national financial literacy and consumer protection programme, initiated by MoFEP, but called for expansion of service delivery in the financial sector to meet growing demand. "If you develop and improve the financial literacy system, you are creating large knowledgeable consumers in the financial sector and you need to expand financial service delivery in order to sustain the demand. Availability of financial services must keep up with the growth," he said.
He expressed worry over the weak consumer protection regulatory system in the country and stressed that the regulators must be strengthened and pieced together to form positive coalition to effectively perform. Mr Daniel Owusu, Assistant Director of Banking Supervision Department of Bank of Ghana (BoG), said the bank was in the process of developing modalities to form a Ghana Cooperation of Susu Collectors Association, as a regulatory body, to weed out illegal and charlatan Susu collectors from the micro-financial sector.
Mr Ishmael Kwesi Otchere, General Manager of Upper Manya Kro Rural Bank Limited, expressed concern about a larger percentage of the Ghanaian population being financially illiterate especially with banking. He said the rural folks especially, could not tell the difference between investment "shares" and "shirts" (the latter being worn by men) stressing the terms confused many who even attempted saving at the rural bank.
Mr Otchere expressed worry that the total domestic deposit of rural banks in the country had declined from 8.8 per cent in 2007 to 7.6 per cent as of September 2008 attributing this to limited financial knowledge and education. He suggested that education on the benefits of banking, strengthening trust in the financial sector as well as removal of unnecessary procedural measures required at the banks to make banking convenient would help increase patronage in the banking sector.
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