KEYNOTE ADDRESS BY HIS HIS EXCELLENCY JOHN MAHAMA, VICE PRESIDENT AT THE OPENING OF THE 2009 FINANCIAL LITERACY WEEK CELEBRATIONS
28TH SEPTEMBER 2009 AT THE NATIONAL THEATRE
Mr. Chairman, Honorable Ministers and Members of Parliament,
Members of the President's Economic Advisory Council,
Members of Diplomatic Corps and Development Partners,
The Mayor of Accra Metropolitan Assembly, other chairpersons and members of Assemblies,
The Governor of the Bank of Ghana, governors, directors, chairpersons, commissioners and management of financial and non-financial institutions,
The Clergy, distinguished guests, members of the Media, ladies and Gentlemen.
I am happy and gratified to be part of this important event - the opening of the second Financial Literacy Week. The general goal of celebrating the financial week each year is to raise awareness among ourselves about the benefits of literate population. However, as we stress the benefits, we also have a responsibility to our clients and a healthy financial sector in drawing attention to the underlying risks-in an environment of fast expanding financial services at home. We have also witnessed financial upheavals in major economies like the US, UK and other advanced economies, caused by inappropriate use of financial instruments, including mortgage lending to gullible consumers. There is no escape in the developing world from the consequences of these developments.
Mr. Chairman, in 2006 and 2009 the Ministry of Finance and Economic Planning sponsored two nationwide surveys to confirm the status of financial literacy among urban and rural adults. The main aims were to:
determine the extent to which personal financial literacy diverges among urban and rural adults;
determine why some adults in these two groups are more knowledgeable than others; and
examine how an individual's knowledge influences his or her opinions and decisions on personal financial issues.
While the financial sector at home keeps expanding, the surveys revealed several gaps in knowledge of financial issues, institutions and products among Ghanaians. One particular element is the poor awareness among young people in the 18 to 30 age-bracket. No question: it should be the envy of the financial sector that several of them know more about the Ghanaian and English Premier Football leagues than financial products and managing their personal finances.
On another note, while the stress in the campaigns is often on personal financial responsibility, even without another survey, we know that the nation has emerged with an unhealthy and unenviable financial scorecard since the last financial week celebrations. Surely, being also political, we have a herculean task in updating our knowledge about the consequences of this performance-particularly after a rather shortlived "robust and resilient" era.
The theme for the week is "financial Literacy---Knowledge is Money". While a theme must be catchy and apt, the goal must not be on mere literal knowledge or awareness of financial products among households, businesses and the nation's financial managers. We must strive to deepen understanding of both benefits and risks in exercising financial options and responsibilities-even as we make use of an ever-increasing array of financial products or instruments. for example,
credit and loans-either through over-the-counter arrangements or a credit card---are good for the economy; however, the global crisis enjoins financial and fiscal managers at home to explain to households, businesses and baffled voters that there are major risks in over-extendinq ones borrowing powers, including bankruptcy and loss of credibility;
let us make no mistake: the goal for borrowing can be laudable, such as constructing roads or building a house, but the outcome can still be a painful experience;
secondly, on both a lighter and serious note, a good friend and economist asked me in connection with this week's celebrations whether our adeptness in switching between old cedis and new Ghana cedis really hides a senous financial literacy problem.
Mr. Chairman, my friend has several theories which can confuse we non-economist. Nonetheless, his point is that, while we can be adept in Parliament and political corridors in coining or branding "mpempempem"-and also laugh off its light moments as we score political points-the practice may be hiding a serious issue financial illiteracy. I am sure the Governor and his colleagues at the Bank of Ghana did not mean to extend the transition program for the redenomination exercise.
Mr. Chairman, the main reason why we should strive to become financially literate is to set and reach important goals. For example, a habit of long-term savings and insurance among parents in many transition and developed countries is the path to a down-payment for mortgages and school fees. Therefore, the payoff is an improved standard of living and sense of confidence.
Mr. Chairman, government is gratified that public and private sector financial institutions have helped promote the literacy week celebrations. The benefits are mutual for households, businesses and the nation-be it an educated child or ability to make profits and sustain employment. I also wish to say we are extremely grateful to our Development Partners-GTZ, USAID TIPCEE, SPEED Ghana, DANIDA-who have been supporting our efforts including funding some activities of the Week.
We are also grateful to the media, which has a key role to play in helping to increase financial literacy and, therefore, financial security of Ghanaians. My challenge to media organisations and professional bodies such as the Institutes of bankers, marketing, accountants, architects and engineers is that they should continue to work in partnership with the financial sector to improve financial literacy among Ghanaians. To stretch the imagination with one example, the design of houses and business premises must be functional to avoid draining businesses and households that need the funds for other equally important purposes.
Mr. Chairman, invited guests, may I wish you all fruitful celebrations of the week.
Thank you.
