The Dean of the University of Ghana Business School (UGBS), Professor Justice Bawole, has urged the government to intensify the campaign on financial literacy to help deepen awareness of the subject among the public.
He said as an important component of national development, it was necessary for the government to shift from the "command and control" approach of tackling the recurring challenges in the financial sector.
"’Command and control’ means that aawe set rules and expect the people to obey them, and when they don't, then we chase them with regulators. But that is expensive to deal with and difficult to achieve in developing countries where corruption is high," Prof. Bawole said.
He was speaking at the launch of a programme — Improving financial awareness and financial literacy movement — at the UGBS in Accra yesterday.
Effects of financial illiteracy
Prof. Bawole said illiquidity, insolvency, under-capitalisation and the high level of non-performing loans which had stifled growth in the financial sector were a result of financial illiteracy in the country.
The lack of public awareness of financial products and services, he added, had also contributed to fraudulent activities in the financial sector, which had led to the revocation of the licences of some financial institutions in the country.
“We need to tackle the problem from the supplier perspective, which is that you educate the population; you make sure that people are aware of what they should avoid and also provide market incentives to make sure that financial institutions have much responsibility in leading the education of the public.
“In the United Kingdom, if you give me a loan but I was not properly advised by you and I default in paying, you will not only be compelled to write it off but also be sanctioned by the regulator,” Prof. Bawole said.
Role of Banks
The Chief Executive Officer (CEO) of the Ghana Association of Bankers (GAB), Mr John Awuah, said aggressive actions were needed to improve financial awareness among the population.
He said for that to be effective, financial literacy initiatives needed to be scaled up to include banks, adding that “banks must coordinate community engagement efforts to register impact in financial literacy awareness and education”.
Mr Awuah said the education of customers, workers and the public should be considered a fundamental right and need, rather than a privilege.
“Banks must continue to make financial products more accessible through digital platforms and also do more to enhance financial literacy by reaching out to rural communities and the underprivileged in society,” he said.
Meanwhile, the CEO said the GAB would spearhead school-based financial education programmes and also fund research into the causes of sub-optimal financial decisions and broader understanding of the role of financial literacy and its relationship with the country’s financial services and consumer protection laws.