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.
About Old Mutual
Old Mutual Ghana is Ghana’s top 10 leading financial institution with an innovative record in offering the best in insurance services.
Founded in South Africa, Old Mutual has been consistent in championing mutually positive futures by offering excellent financial services to a wide range of customers across the African continent.
The company established a branch in Ghana in 2013. It operates with a skilled knowledge of the Ghanaian market backed by the expertise of an international brand.
In Ghana, the company is currently made up of Old Mutual Life Assurance Company Limited and Old Mutual Pensions Trust.
