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Financial sectors in Ghana in this recent time, have been swamped by imposters including investment management advisors and some micro-finance organization following the same direction as the old “Ponzi schemes” perpetrated by Charles Ponzi and imploring potential investors of their supposedly high returns coupled with low risk investment. A case in point is the recent issue concerning the investors’ frustration which led the deaths, poverty and loss of properties by investors who were attracted by high returns obsolete “Ponzi Scheme” Micro Finance Company, DKM. This is not the first of its kind. The rate at which some financial institutions in Ghana extort monies from investors with a promise of high returns is becoming alarming. They have taken advantage of the low financial literacy rate among Ghanaians in general as indicated by the survey conducted by the Ministry of Finance. This national upheaval has generated interrogations on the average financial literacy level of citizenry. The impact of low financial literacy on investment decisions can be minimized if government authorities, financial socialization agent such as parents, lecturers act as advocate and unceasingly offer financial literacy education to potential investors in order to make informed financial decisions.
Globally, financial literacy is gaining greater relevance due to the increasingly complexity in the financial market and the risk associated with lack of asymmetric information making it very risky and quite difficult for the ordinary person to make informed decision concerning the various financial products. According to the Organization for Economic Co-operation and Development (OECD), financial literacy or financial education is the development of investors cognitive abilities in order to make informed decisions on financial product, increases their confidence and the perception of risk and the opportunity in investment, enlighten them on where to get help in relation to investment, and how to improve their financial well-being by effectively and efficiently combining portfolio to minimize risk.
Knowing the relevance of financial literacy, countries globally have lunched financial literacy campaigns to equip its citizens with the requisite financial education to minimize the risk associated with investment and also to great an environment that will make Ponzi Schemes operation less attractive to perpetrators. One of such program was the financial literacy week awareness implemented by the government of Ghana in collaboration with other concerned stakeholders in 2008 to provide financial knowledge in various financial topics and capacity building services to Ghanaian youths and adult in order to enhance their financial management skills for a better financial well-being. In the early period of the first quarter of 2009, the Ghana National Forum on Microfinance implemented a nationwide policy financial knowledge and consumer safety in the microfinance industry. Their major activities for the program include a financial literacy week, road campaigns outside the urban cities, and developing financial literacy materials. One of the substantial activities was the countrywide contest on financial literacy among the various Senior High Schools.
Additionally, the Support Program for Enterprise Empowerment and Developing (SPEED) was also lunched by government in joint collaboration with the Bank of Ghana (BOG), the Danish International Development Agency (Danida), and the German Agency for International Cooperation (GIZ) to support and sustain growth of the private sector. The SPEED financial literacy initiatives propagated its activities using radio programs, road crusade show and engaging the print media to spread education on loans acquisition, investment, and insurance cover. Though much have been done in terms of enhancing financial literacy, evidence from literature indicate that, the low level of financial knowledge still persists among Ghanaians. Literature review have attributed the low level of financial literacy to factors including household income, numeracy effect, the way financial socialization is normally handled by agents of socialization in terms of perceived gender role during the early childhood.
Various recommendation concerning good philosophies and practices which might enhance financial literacy awareness have been postulated. Few among the recommendations are: There is a need for the government and concerned stakeholders to encourage unprejudiced, open-minded and consistent financial education and that, financial literacy should begin from the early age at school. Also, the curriculum of financial literacy awareness should be much focus on the relevance life-planning facets including simple savings, debt management, insurance, and pensions. Furthermore, imminent retirees should be enlightened on the relevant and the need to evaluate the financial suitability of their existing pension schemes etc. This then suggests that university lecturers who are seen as role models and agent of financial socialization have a significant role to play in the financial literacy awareness.
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