HON. MAJORITY LEADER OF PARLIAMENT
HON. MINORITY LEADER OF PARLIAMENT
CHAIRMAN AND RANKING MEMBER, PARLIAMENT SUB-COMMITTEE ON FINANCE
MINISTERS OF STATE
MEMBERS OF PARLIAMENT
GOVERNOR, BANK OF GHANA
COMMISSIONER, NATIONAL INSURANCE COMMISSION
DIRECTOR GENERAL, SECURITIES & EXCHANGE COMMISSION
CHIEF EXECUTIVE OFFICER, NATIONAL PENSIONS REGULATORY AUTHORITY
REPRESENTATIVES OF DEVELOPMENT PARTNERS
DIRECTORS OF RESEARCH AND ACADEMIC INSTITUTIONS
CAPTAINS OF FINANCIAL INSTITUTIONS
REPRSENTATIVES OF FINANCIAL INSTITUTIONS INDUSTRY ASSOCIATIONS
DISTINGUISHED INVITED GUESTS,
MEMBERS OF THE PRESS
LADIES AND GENTLEMEN,
I deem it a great pleasure to join you this morning to deliver the keynote address and to launch the fourth National Financial Literacy Week.
Distinguished ladies and gentlemen,
If knowledge is power then financial knowledge is security. Financial literacy has been identified globally as a critical tool for development – issue relating to budgeting, savings, investment and the management of risks are relevant for the individual, households and businesses in their development process. Making decisions on these issues depending on the level of complexity require at least basic financial literacy levels which involves the ability of the financial consumer to appreciate the essential and basic knowledge that will help make sound financial decisions and judgments.
Personal financial interest and the interest of the national economy are inextricably linked. The financial health of individuals and households contributes to the financial health of the economy and act as building blocks of the economy. Individuals and households spending, saving and investment significantly impact economic growth. The milestone decisions we make throughout our lives ultimately affect our financial security and ultimately the financial security of our domestic economy.
The strength of our country therefore depends on an informed public. The greater our grasp of issues including saving, investment, plan for contingencies through insurance and debt, the better we are conscious of our financial circumstance and our ability to improve it. When individuals and households are financially secured they face less risk and ultimately constitute the backbone of the economy.
It is for this reason that Government has institutionalized an annual National Financial Literacy Week as long-term financial sector policy priority measure, aimed at raising awareness on the range of financial products and services available to consumers to help them better understand and manage their personal finances, thereby improving financial behavior of the citizenry.
Distinguished Ladies and Gentlemen,
A key prudent lesson in life is how to achieve financial security. Consumers who are financially literate are in a better position to make effective financial decisions. Financial literacy therefore sets the stage for positive actions such as careful consideration of costs of financial services, avoidance of scams and fraudulent schemes, knowledge and understanding of financial products and services, and saving for a rainy day and for the longer term, such as for retirement. These together, work to secure the individual’s future.
Experience, in more developed economies has shown that financial education early in a person’s life leads to financial independence and sound investing decisions. Certainly our educational system has essential role to play. In this regard, it is gratifying to note that Government has integrated financial education in the reviewed Social Studies, Management in Living and Business Management syllabuses for the Senior High School.
So far, the content for the teaching and learning materials has been developed. The expectation generally is to equip students at Senior High Schools with adequate knowledge of basic financial issues and to enable them to make informed financial decisions as future customers of financial services providers.
Distinguished Ladies and Gentlemen, core to financial literacy is the understanding of essential financial concepts, an appreciation of the trade-off between risk and return, and the capacity to understand when to seek professional financial advice and where to find it. Broader concepts of financial education also assume that people will make better judgments about their financial affairs if they understand the relationship between their own finances and the wider economy.
Two baseline studies conducted to ascertain the depth of financial literacy among urban and rural adult Ghanaians established that nearly half, precisely, 43% of the respondents either did not have full or correct information on what they needed for successful financial planning or they did not have any of the information they needed to plan their personal finances at all. Government is in the process launching a follow-up current Demand Survey aimed at identifying barriers and highlighting opportunities for innovation in both formal and informal sectors which is aimed at improving the reach and depth of financial service delivery.
I wish to reiterate that financial education is relevant at all levels and to all segments of our population. Planning for financial goals is lifetime process. At each new stage of life we reach, we require different financial literacy competencies –from childhood, graduating high school, leaving home to college, entering the job market, marriage, parenthood, caring for elderly parents- require a new set of decision, a new understanding of financial implications, a new response to unexpected challenges.
Financial literacy is not a panacea for all financial challenges. Individuals and families who budget carefully and spend judiciously could also fall into costly financial traps. Some people fall prey to straight-out financial “scams” or frauds – offers that ‘seems too good good to be true’. It is worthy to note that there should be close link between levels of financial literacy among the population and successful financial regulation conducted through consumer protection issues and market processes.
Financial literacy cannot take the place of consumer protection and market conduct financial regulation. Neither can one have such regulation in the absence of financial literacy. Government’s role of protecting the public against fraud suggests augmenting the protective mechanisms within the legal & regulatory framework of the financial sector and the strengthening of surveillance by the supervision departments of the Bank of Ghana, the National Insurance Commission, the Securities & Exchange Commission and the National Pension Regulatory Authority.
Distinguished Ladies and Gentlemen,
To ensure that financial education is carried out in a more sustainable manner, there is the need to develop a national financial literacy strategy which seeks to coordinate financial education provision, extending outreach and limiting costs and duplication. Similarly, in countries where efforts are being made to address challenges associated with financial exclusion, the first objective of financial education is to broaden the access, awareness and appropriate use of a range of financial services through tailored financial education programmes. In this regard, Government is in the process of developing a national financial inclusion strategy.
We find the development of the financial inclusion strategy as crucial in view of the fact that the number of adults in Sub-Sahara Africa who have accounts with formal financial institutions is low. According to the World Bank Policy Research Working Paper on International Remittances and Financial Inclusion in Sub-Sahara Africa about 24% of the population (though higher in Ghana about 29%) compares with 55% of adults in East Asia, 35% in Eastern Europe, 39% in Latin America, and 33% in South Asia. Financial services providers including banks, non-bank financial institutions and insurance companies have, in their own innovative and diverse ways, been educating Ghanaians on their respective financial products and services. While we laud these efforts by the service providers, we urge them to go beyond ‘marketing products’ to ensuring that the mass of our people have the tools and skills to analyze the information that is presented to them.
In this regard, we also find the role of the mass media pivotal in helping to promote financial education and help in the dissemination of actions that would enhance financial security of the citizenry. The media already plays a leading role in giving us the facts about savings and investment. They inform us on the day-to-day business trends like how many points the GSE index has soared or plummeted and provide other insightful market information. However, there is still a large section of our people who know very little about investing, and for whom things like mutual funds and private pension schemes do not resonate.
Too much focus on the bigger issues without getting to grips on the minute day-to-day micro issues and details, basic information about saving and investing gets lost. I am of the view that we can extend the promise of greater opportunities and security to more of our people. While we do these, let me challenge media organizations to partner with the Government and financial sector to provide access to financial education to a wider range of the people of Ghana.
On this note, I have the singular honour to formally declare the Fourth National Financial Literacy Week duly launched.
Thank you for your kind attention and God Bless Ghana