Ghana: Promising Results from a Concerted Approach with Multiple Stakeholders
A GIZ/BMZ initiative with multiple Ghanaian stakeholders shows the effectiveness and challenges of a multiplayer initiative across several responsible finance pillars.
Forty-four percent of adult Ghanaians are financially excluded.[i] Broadening access and deepening participation in financial markets emerged as one of the key recommendations of Ghana’s Financial Sector Strategic Plan (FINSSP). The Government of Ghana is convinced that this goal can only be achieved if consumers are capable of making well-informed financial decisions and if financial service providers follow responsible finance principles. A survey revealed that the level of knowledge of financial institutions, services, and products among urban Ghanaian adults is low and that even when consumers are knowledgeable; their knowledge often does not translate into behavioral change.[ii] In January 2009, Ghana’s National Forum on Microfinance adopted the National Strategy for Financial Literacy and Consumer Protection in the Microfinance Sector, which places Ghana among the first countries in Africa to have a dedicated national strategy on financial literacy.
(GHAMFIN), Ghana Association of Microfinance Companies (GAMC), ARB Apex Bank, Credit Union Association (CUA), the Association of Rural Banks, and Ghana Cooperative Susu Collectors Association (GCSCA)) was established as a platform for discussion, development, and implementation of financial literacy activities. Similarly, GIZ, the Bank of Ghana and CGAP have begun a similar industry-wide engagement on consumer protection issues, including developing consumer protection priorities and action plans through a November 2012 policymaker and provider workshop.
The GIZ program collaborates with the Investigation and Consumer Reporting Office (ICRO) at the Bank of Ghana. Technical assistance focuses on development of a suitable regulatory framework for consumer protection across the entire market to establish consistent consumer protection standards for all providers offering credit, savings, and other common retail products and services.
In collaboration with BoG’s Investigation and Consumer Reporting Office, Technical assistance focuses on development of a suitable regulatory framework for consumer protection. The current focus is on disclosure, recourse, and the development of a set of general principles. The recourse model, the level of engagement of the associations, and integration of consumer protection in the supervision visits are being discussed. Guidelines are being developed with CGAP. At a later stage, specific activities will address the challenges of apex bodies in complying with or helping their members comply with the regulations.
Working on the third pillar of responsible finance, financial education, is equally important. GIZ supports the working group to implement the National Strategy for Financial Literacy and Consumer Protection in the Microfinance Sector. The following activities have been carried out:
- Support to the Ministry of Finance and Economic Planning for financial literacy weeks.
- Development of client educational material, such as DVDs on borrowing, savings, and banking operations, and an “ABCs series” of savings, loans, and insurance in the form of posters and brochures, which are distributed by the apex bodies to retailers.
- Organization of a financial literacy campaign with road shows that feature giant puppets, brass bands, and a drama and that ends with a question and answer session. The working group, a local event organizer, a drama troupe, and managers of MFIs developed the script and chose participating communities.
- Development of a financial literacy radio program called “Money Matters” based on the results of a survey among MSME’s about the perception of savings and credit access in Ghana. The content of the radio program was developed with the working group. The program was aired once a week on each radio station, using local languages and music. Each program consisted of a jingle, a drama, a panel discussion, and a phone-in section. This effort is now being followed by a series of radio messages about loans, saving, and consumer rights. One-minute messages were developed and are currently being broadcast. The plan is to broadcast several messages per day over one year to familiarize the audience with the messages in hopes they start following the advice.
- Training modules on customer care and protection for MFI employees and a “Financial Literacy and Consumer Protection Tool Box” have been developed. Staff members of microfinance apex organizations were trained as trainers for member institutions.
- Introduction of financial education in a compulsory curriculum forsenior high schoolsis currently underway.Seventeen teaching and learning modules have been developed. The teachers in pilot schools have been trained, and modules are being piloted, with the objective to roll out the project nationally.
Regulation and supervision of the microfinance sector: BoG is aware of the acute need to regulate and supervise the microfinance sector to avoid fraud and to protect the interests of its clients. The Microfinance Unit in the Banking Supervision Department helped develop a regulatory and supervisory framework that BoG approved in July 2011. Currently, the unit is working on licensing operators and developing the supervision model. GIZ has assisted in training and in developing a supervision manual.
The newly issued guidelines give associations a new role, particularly those falling under Tier 4, GCSCA and MLAG, to which supervision has been delegated. Technical assistance concentrates on Tier 4 associations by supporting them to develop required reporting systems and maintain a member database. Supervision manuals have been developed, and training has been delivered to most of the apex organizations. Technical assistance has been provided in areas that can impact good governance, such as proper internal financial management.
Exchanges with BoG’s Investigation and Consumer Reporting Office on the development of the draft guidelines for a consumer protection framework will be presented to BoG’s Banking Supervision Department management. Consultation with the apexes is the next step before final BoG approval.
Financial literacy and consumer education: An impact assessment of “road shows” revealed a generally positive impact. Road shows, a nontraditional approach to financial education, use giant puppets and other forms of entertainment to deliver financial education messages to consumers. Following the road shows, MFIs observed a significant increase in the number of clients and deposits and were able to improve their customer care services. After the shows, MFIs were more able to recognize and categorize clients’ expectations and had a better understanding of the clients’ needs. From the client perspective, 94 percent found that messages were appropriate and that the mode of delivery was suitable. The shows allowed consumers to improve their knowledge of cash savings and daily sales management and gain confidence to save money at the bank. Their savings also increased in anticipation of access to credit. Overall, the shows strengthened the bank-consumer relationship, improved the level of trust, and encouraged clients to transact business with banks.
Financial literacy in the schools: Seventeen learning modules are available covering all aspects of financial education. These modules, which serve as guides for teachers, use a highly interactive methodology. The modules are being piloted in schools, which will be followed by an impact evaluation.
Success Factors and Challenges
- The program’s comprehensive approach implies a synergy between increasing the number of microfinance clients through the financial literacy activities and a well-regulated and supervised financial sector plus the adoption of consumer protection measures. Improved regulation and supervision, including consumer protection, may encourage people to use financial services with confidence.
- The participatory approach involving all stakeholders builds consensus on measures to address the problem and facilitates coordination of activities. Through working groups, strong commitments from all parties were reached and maintained.
- A main challenge is ensuring sustainability of financial education programs. A champion to host and drive all the priorities included in the financial literacy strategy is needed.
- Introducing compulsory financial education into school curricula and scaling up to cover all senior high schools in the country are major challenges.
- Impact measurement of financial education activities, behavioral change among clients, and balancing costs and benefits remain challenging. It is difficult to find the right balance between financial resources dedicated to measurement and those dedicated to implementation.
- Rely on good analysis of partner commitment, particularly in areas where significant financial resources are needed, such as for the support of school curricula and for development of financial literacy materials.
- Develop plans jointly with partners. Take time to make the project ready to implement. The inception phase is critical for a project that involves multiple stakeholders who sometimes have opposing interests. A good stakeholder analysis is needed to identify potential conflicts.
- Identify a local financial education champion to ensure sustainability and steer the process.