Poor financial literacy threatens financial sector stability

High level of poor financial literacy among the populace has created a fertile ground for unrealistic financial institutions like Ponzi schemes to thrive, thus threating the stability of the country’s financial sector and economy at large, Mr. James Kesse, Manager of Sunyani Area Teachers’ Cooperative Credit Union (SATCUU), has said.

He said inadequate financial literacy, particularly about investment has made many people-irrespective of educational and social class susceptible to activities of juicy but deceitful investment offers, saying “Because of deficiency of financial knowledge in the system, people are unable to read in-between the lines to identify fake investment happenings.”

He has therefore advocated strenuous public education on financial literacy to broaden people’s horizon so as to reduce public investment vulnerability to discourage the operations of such financial institutions, and help build a formidably financial sector to drive the country’s socioeconomic transformational agenda.

Mr. Kesse made the observation in a side-line interview with the B&FT during a financial education programme for rural women in selected communities in the Tano North Municipality of the Ahafo Region. The separate fora were jointly organised by SATCUU, and Livelihood and Environmental Ghana (LEG), a non-governmental organization (NGO) for members of Tano Women Empowerment and Development Association (TWEDA).

See Also: DVLA boss directs staff post official price list The SATCUU Manager also appealed to the government to disburse credit facilities such as the Microfinance and Small Loans Centre (MASLOC) funds through Credit Unions and other financial institutions that have distinguished themselves with excellent loan recovery. This, he noted, will protect public funds by reducing high incidence of default among beneficiaries of such government credit facilities.

He also advised women micro enterprise operators against profligate spending in order to repay loans on time and grow their businesses to enhance their livelihood. “Don’t hide behind flimsy excuses to squander your business capital as well as loans. Such practice will compound your financial woes and make life more unbearable for you.”

The Executive Director of LEG, Richard Adjei-Poku said in the last three years, the social and environmental related NGO has collaborated with SATCUU to support about 160 rural women with soft loans to grow their businesses, adding the beneficiaries are scattered across four communities-Yamfo, Techire, Afrisipakrom and Susanso.

He stressed that the organization is committed to empower rural women, particularly those in mining affected communities to improve their entrepreneurial skills and urged the women to make judicious use of the loans. “Over the years, we have been promoting women empowerment in mining affected communities through health screening, public education and financial assistance.”

On her part, Comfort Yeboah, a beneficiary thanked LED and SATCUU for the support which she described as ‘game-changer.’ “Interest rate on banks loans and repayment terms are unfriendly to our micro businesses, but the soft loan by the two partners has been very helpful. Banks and other financial institutions should take a cue from Credit Unions and make their operations relevant to smaller businesses.”