Every
change in government indicates a people who are hopeful and looking forward to
a brighter and a more promising future. This also means a shift in the
attitudes and behaviours of Ghanaians. Old Mutual through the second edition of
the Financial Services Monitor launch reaffirms its committment to championing
financial wellness of Ghanaians.
By
way of a recap, the Old Mutual Financial Services Monitor (OMFSM) serves to
provide a deep understanding of the working Ghanaian market, uncovering
financial attitudes, perceptions, and behaviour of working Ghanaians in both
the informal and formal sectors. The study aims to provide the consumer context
and texture, delving into how consumers are responding to the current
tumultuous environment.
Just
like the first edition, this survey also focuses its lens on a key cohort in
society, namely employed Ghanaians, which accounts for almost 60% of the Ghana
population.
In
particular, we look at urban and peri-urban working Ghanaians aged 25 to 59
earning GH¢1,000 or more. Ultimately, the OMFSM is key in supporting Old
Mutual’s drive to championing the financial wellbeing of Ghanaians. This is
aligned to Old Mutual’s overall purpose of becoming our customers’ first choice
to sustain, grow and protect their prosperity, throughout their lifetime.
The Insights reveal:
In
the face of the harsh economic recession and changing political landscape, the
2024 OM Financial Services Monitor shows that working Ghanaians remain
considerably financially stressed, and are less financially satisfied than they
were in 2023.
The
study reveals how challenging financial realities have intensified the powerful
sense of ‘biako ye’ in communities, an Akan term meaning the wellbeing of an
individual is linked to the wellbeing of the community. Whilst previously,
Ghanaians demonstrated self-reliance and not being dependent on debt, the past
year has ushered in a notable shift as Ghanaians increasingly turn to their
circles of trust for support. This is evidenced through increased borrowing
from their ‘bank of friends and family’, as well as from Susus, to help them
make ends meet. Similarly, Ghanaians have stepped up their own commitment to
support others to navigate this challenging period, emphasizing the increasing
interconnectedness and mutual support.
A
clear focus on savings preservation is evident too, as we see a notable decline
in dipping into savings as a vehicle to manage shortfalls, and consumers being
more open to explore savings options that will grow their money. Despite their
financial concerns, Ghanaians remain hopeful and positive about their personal
financial future, with 8 in 10 who believe things will improve for them
personally in the next 6 months.
Read
on to uncover consumers’ views on the Ghanaian economy, their financial
priorities, their financial behaviour, and what they deem to be their key
savings goals.
The Ghanaian economy
As
Ghana wrestles with a tumultuous macro environment, the survey reveals that
fewer than 1 in 4 consumers (22%) expressed confidence in the country's
economy, edging up from 17% in 2023. However, while confidence in the country’s
current economy is low, 61% are optimistic and believe the economy will improve
over the next 12 months.
Financial stress and financial satisfaction
Six
(6) in ten (10) working Ghanaians continue to experience substantial financial
stress, with minimal change since 2023 (64%). Also, Financial satisfaction has
declined with Ghanaians citing the stagnant economy, inadequate income and high
cost of living as their reasons for dissatisfaction - Both indicators
highlighting the financial anxiety amongst working Ghanaians.
Financial Priorities
Income security remains the
top priority for Ghanaians (as well as across all the other surveyed countries
in Africa). Just more than two-thirds (69%) noted lower or unchanged income
relative to a year prior. With the increased cost of living, this reflects an
overall erosion in real earnings, leaving consumers with less spending power.
In
order to fill the gap, Ghanaians supplement their incomes in various ways. Just
under 4 in 10 (38%) depend on income received from family and friends, either
locally or from abroad, another demonstration of ‘biakoye’ in Ghana.
Additionally,
to secure their income, consumers are looking to multiple income streams – in
this regard, just more than 1 in 5 (21%) are PolyJobbers – side-hustling,
freelancing and doing after hours work in addition to their regular job.
PolyJobbers are more prevalent among Ghanaians earning GHS 3,000 or more.
The
anxiety of losing their income has increased though, where close to half of the
Ghanaian consumers (46%) indicate they are constantly worried about losing
their income (up significantly from 40% in 2023.)
Financially assisting parents and extended family emerges as the
second highest financial priority amongst working Ghanaians. This priority has escalated -up significantly from 5th ranking in
2023, again reinforcing the growing sense of Biakoye (unity) among Ghanaians.
About
4 in 10 (38%) Ghanaians find themselves in the "sandwich generation,"
financially supporting both children and adult dependents. Child dependents are
noted at 67%, with the percentage of children being a combination of their own
and others having increased to 24% (+14). Adult dependents remain stable at
50%.
A 3rd financial priority among consumers in Ghana is getting the
best investment returns, this priority
shifting ahead of ‘ensuring investments are secure’. Underscoring this
priority, we see increased financial risk tolerance in the latest read, where
those noting to take average risks increasing to 26% (+12 relative to 2023),
and those not willing to take any risks declining to 36% (-7).
4th financial priority – paying off debt
As
Ghanaians are forced to further stretch their funds, consumers display a
notable increase in borrowing relative to 2023, rather than dipping into their
savings to make ends meet, where we see a significant decline from 62% to 32%. Many
are choosing to borrow from trusted sources. In the last year, 42% (up from
24%) had to borrow from ‘their bank of family and friends’, and 20% borrowed
from Susus (up from 12%).
As
regards formal lending, Ghanaians currently have a loan from a financial
institution at 13% (+5), as well as from microlenders at 9% (+4). Loans taken
via mobile money has also increased notably from 12% to 22% in the last year.
Key
reasons for the personal loans take-up are to buy stock or equipment for their
business, as well as for unexpected expenses, the latter being largely medical
expenses, education-related costs as well as for home and related maintenance.
As
Ghanaians are in a borrowing phase, paying off debt is more top of mind than
before – where more than a third (35%) now have ‘paying off debt’ as a key
priority up from 26% in 2023. However, it appears this is not an actionable
focus as yet. Debt servicing currently makes up only 6% of their household
income allocation. It seems that the borrowing behaviour has not yet triggered
concern for many, as close to half (45%) say they do not worry about debt, and
only 12% have approached a creditor to make other payment arrangements.
Savings
Saving
emerges spontaneously to describe consumers’ headspace when they think of their
finances. Furthermore working Ghanaians are endeavouring to saving more going
forward. It remains important to Ghanaians with 25% of their household
allocation going toward savings. Consumers use a multitude of ways to save -
from formal to informal, depending on their needs.
Most
preferred savings channels mentioned investing in their businesses (56%), via
the bank (53%), using Mobile money (32%), in property (30%), and via Susus
(17%). Detractors for not using more formal vehicles are that they are not as
relevant, not affordable (charges), and not trusted. Informal savings include
unbanked cash, cited by still by just under a third of consumers (28%), and
seen to be an accessible and a ‘safe’ savings option.
This
is driven by those earning less than GHS 3,000 a month. 37% of working
Ghanaians belong to a Susu, mainly one only, and more prevalent among females
(45% vs 29% males). Flexibility of the arrangement, affordability, discipline
of repaying, and access to loans, are the key drivers of appeal for using this
informal vehicle.
Mobile
Money usage is very significant in Ghana (98%) and across the African countries
surveyed. It is largely used for sending and receiving money, for airtime, cash
withdrawal, and payment for goods and services. In fact, almost 1 in 2 (46%)
also use this vehicle for savings.
As
regards formal savings, banked savings has increased to 57% (+10),
demonstrating that savings behaviour remains prevalent in the market. When
delving into their main savings goals, the top set include a mix of longer term
savings goals (saving for their children’s education and saving for their
family’s future) as well as for their business, and having a rainy day fund.
Saving for health expenses has declined considerably in 2024 from 41% to 22%.
Furthermore,
saving for a home of their own has increased notably since 2023 (from 10% to
19%), given that 7 in 10 are renting and do not yet own their home. Only 21%
are very confident in their savings and investment decisions, flagging a key
area for further support.
About retirement savings
Despite
8 in 10 (83%) acknowledging that saving for retirement is important, retirement
savings does not make it to the top set of working Ghanaians savings goals –
remaining in 8th ranking.
Only
a third say they are actively saving for retirement, whilst confidence in their
perceived adequacy of their retirement savings (from 18% to 9%) is even lower
relative to 2023. Confidence is equally low among consumers aged 50 years or
older. Potentially driving the lack of action to save for retirement, is the
more urgent short to medium-term savings goals noted in their top set. For
those who are saving for retirement, this is done formally through a bank, or
through their pension/provident fund, while a mere 8% note having a retirement
annuity product. Retirement annuities are not used which highlights the
opportunity to educate. When explained, still only 9% expressed they were very
likely to consider buying this offering, including older consumers.
Entrepreneurship
Entrepreneurship
forms a very significant part of Ghanaian consumers lives, with about half of
these working consumers (49%) who own or part-own a business, higher in the
informal sector (52% vs. 41% in the formal sector). Two-thirds are one-man
businesses. As regards funding for their business, Ghanaian entrepreneurs show
self-reliance as they either fund their business through profits of their
business (70%) or through personal savings and investments (37%), and if they
do turn to a third party to assist, it is more likely their circles of trust -
a Susu (19%), or loans from friends and family (15%).
Only
about 1 in 10 entrepreneurs (9%) noted financing their business through a
Financial Services Provider (FSP) – higher (17%) among entrepreneurs in the
formal sector. This could be due to lack of access, perceived high charges, or
provision of low limits. For business owners/part-owners, the top business
priorities are growing the business and improving profitability, followed by
business financing and innovation to stay ahead of competition. This in all
likelihood driven by the economic pressures of the past year where many
businesses had to borrow money or fall behind on financial commitments to
suppliers. 88% of entrepreneurs do not have their businesses insured, and this
may be because 79% note their businesses are not formally registered.
Employee benefits
More
than half of Ghanaian workers 57% do not have products through their employer.
Of those that have employee benefits – health insurance is the most prevalent
at 23%, followed by 13% who belong to a pension fund and 6% to a provident
fund. When looking at the formal sector specifically, 36% have a pension fund
vs 17% who have a provident fund. 42% of formal sector workers reported
receiving financial information from their employers or fund verses only 17% of
informal sector workers.
In closing, the amplified
sense of ‘biako ye’ in the Ghanaian communities, demonstrated through the shift
moving from relying on their savings to borrowing from trusted networks to help
manage their finances, has been a cornerstone in weathering the challenging
economic environment. This, together with consumers acknowledging the
importance of increasing savings to improve their financial well-being is
reflective of a market that has a positive savings mindset.
Moreover,
consumers cite investing in their businesses and side-hustles as another key
driver for enhancing their financial well-being. The study highlights the
continued need for financial education and advice to build on this foundational
savings mindset, given that the majority do not have a financial adviser (90%),
and half the market don’t know whom to turn to for financial advice. It also
points to opportunities for employers to play a role in providing their
employees with clear, relevant, and accessible financial information tailored
to their specific needs.
Given
that Ghanaians note not being very confident in their savings and investment
decisions, they need to be further guided on making informed savings choices
based on their risk appetite and profiles, while balancing both their shorter
and long-term financial goals. The aim is to ensure that their finances are
both sufficient in the present and sustainable for the future, ultimately
fostering Ghanaians overall financial well-being.
