Access to financial services is no longer just a convenience; it is a fundamental driver of development and economic empowerment. For Ghana’s underbanked population, financial literacy is the bridge that can lead them toward greater financial inclusion, economic stability, and improved quality of life. Yet, despite ongoing efforts to expand access to financial services, many Ghanaians remain financially excluded or underbanked due to alarmingly low levels of financial literacy.
Financial literacy, the ability to make informed decisions about managing money, borrowing, saving, and investing, is vital in today’s complex financial landscape. However, in Ghana, financial literacy rates remain worryingly low. According to a report by Standard & Poor's, only 32% of Ghanaians are considered financially literate, meaning a staggering 68% of the population lacks basic financial knowledge.
This issue is compounded by the broader challenges of financial exclusion. Recent data shows that only 39.2% of Ghanaians aged 15 and older own a bank account, leaving 60.8% unbanked. This highlights the significant gap between financial service accessibility and active participation, especially for those in rural and informal sectors of the economy.
The lack of financial literacy among the underbanked has far-reaching implications, not only for individuals but also for the broader economy. Here’s why financial literacy is critical:
Financial literacy empowers individuals to make informed decisions about opening accounts, managing savings, and using credit responsibly. With many Ghanaians still financially excluded, education is crucial to integrating them into the formal financial system.
Financial scams and Ponzi schemes continue to prey on Ghanaians, particularly those who lack basic financial knowledge. Educated individuals are better equipped to differentiate between legitimate financial products and fraudulent schemes.
Financial literacy equips people with the skills to plan for the future, such as saving for emergencies, retirement, or education. Without this knowledge, individuals are often unprepared for life’s uncertainties.
Many underbanked Ghanaians are micro-business owners or entrepreneurs. Financial literacy gives them the tools to secure business loans in Ghana, manage cash flow effectively, and grow their ventures.
Despite the increasing adoption of mobile loan apps and mobile money (Momo) services, barriers to full financial inclusion still need to be addressed. Some of the challenges include:
With only one-third of the population financially literate, many people need help understanding how financial services work.
In rural areas, access to financial institutions is limited, leaving many reliant on informal systems.
Perceived or actual high fees for banking services discourage low-income individuals from opening accounts.
Fraud and mismanagement in financial institutions have eroded trust, particularly among the underbanked.
These barriers show the importance of targeted financial literacy programs to educate individuals and encourage active participation in the economic system.
Financial inclusion goes beyond simply owning a bank or Momo account. It involves actively using financial products to achieve economic independence and self-reliance. Here’s how financial literacy supports financial inclusion:
Improved Decision-Making
A financially literate population can make informed choices about borrowing, saving, and investing, reducing the risk of bad financial decisions.
Financial literacy enables individuals and businesses to understand loan terms, avoid predatory lending, and secure financing for productive ventures.
By understanding how financial systems work, more people can participate in formal economic activities, contributing to Ghana’s economic growth.
To address the financial literacy gap and promote inclusion, stakeholders must implement comprehensive and sustained efforts. Here are some practical recommendations:
Making financial literacy part of the school curriculum can equip young Ghanaians with lifelong skills to manage their finances effectively.
Mobile apps and online platforms can be used to deliver financial literacy content cost-effectively and engagingly, especially for rural populations.
Conducting workshops in local communities can help educate underbanked populations about the benefits of financial inclusion and the dangers of financial scams.
Collaborations between financial institutions, NGOs, and the government can create impactful financial education programs tailored to the needs of Ghana’s informal sector.
To help with the issue of financial literacy the Bank of Ghana has different financial literacy documents on their website you can read and better understand different use cases in the financial space.
Financial literacy is not just an individual asset but a national necessity. For Ghana’s underbanked population, it holds the key to unlocking economic opportunities, avoiding exploitation, and achieving financial independence. With 68% of Ghanaians still financially illiterate and a significant portion unbanked, the time to act is now.
By prioritizing financial education and addressing barriers to financial inclusion, Ghana can create a more equitable financial system where everyone has the knowledge and tools to thrive. Financial literacy matters, not just for individuals but for the nation’s economic future.
