Opinion | Sep 11, 2018

A Neglected Solution To Improving Financial Decision Making: The Citizen At The Center Of It All

The level of penetration of financial products and structures in Ghana was very low until there was a massive upliftment with the introduction of mobile money. But the general financial environment is not well understood by the average Ghanaian. We seem unable to differentiate among microfinance, savings and loans, and banks; likewise are we unable to even understand the activities of insurance companies as compared to investment banks. All financial institutions seem to be guilty of one crime mis-selling to clients. We are yet to discover whether it is because of the over simplification of understanding of finance on the part of the average individual or it’s the tendency of the our sales team to rapidly get people on board without reasonable helping them understand what they are buying into or its other factors beyond these two main reasons.

Discussion with individual investors reveals their due diligence ranks from the return being offered, the branding of the company’s offices, and the flashiness of their vehicles. It is surprising to know that, even people with MBA in Finance and other reasonably knowledgeable Ghanaians do not ask for financial fundamentals such as who licenses you, what is your basic business model, please provide me with your past five years audited financial statements and other financial fundamental questions that is likely help them do a simple profit or loss assessment, or an asset liabilities assessment. All these revelations tell us that, despite the awakening of financial regulators, the fundamental problem of financial literacy still persist in our country and this largely needs to be mitigated by a rapid short term measures as well as a strategic long term approach.

Most developed countries were built and are still strong because of robust financial systems fundamentals. Despites there being bad nuts among the good ones, the people really understand which products they go for and why they are going for them and this makes people not to keep money under their pillows and invest in guaranteed rated schemes that promise unrealistic returns. The ability to educate the next generation of citizens with the aim of improving their proficiency to make financially sound decisions is key to improve the ability and capability of the financial sector. An introduction to banks and financial literacy at secondary education level which is not examinable will gradually instill some level and knowledge and understanding to our growing citizens. The current financial decision making capacity of the average Ghanaian is also a major concern. I believe most people tendencies to consult professional investment banking personnel to complement their decision making capabilities in the short term will help reduce the swindling of people into DKM, Savannah Brokerage, US groups and other schemes that only seeks to swindle people of their hard earned resources.

With a different look at how financial institutions are actually regulated coming into fruition, and the regulators now taking the laws by the horn, individuals in the economy can be inspired with confidence when we build their capacities to understand assets, liabilities, equity, income and revenue so as to ensure that some confidence is restored in the overall financial sector and the citizen gets to understand the conversations going on when some of these discussions take place again in the future. The nation is only as strong as the people living in it. I am an advocate for better financial education in Ghana.

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