The adult population in Ghana’s microfinance sector and the broad financial sector of Ghana is the main target of financial service providers. This is because of the notion that it is adults who are of the legal age to make decisions and open accounts. So what then happens to the youth? Your guess is right: they are left unbanked.
Youth or persons who have not attained the age of 18 years in the country are unable to open accounts and most often have to do so with an adult opening the account ‘In Trust For’ (ITF). Under 18 years, one can have a student ID (which is not nationally recognized); a birth certificate; a national health insurance card; or a passport.
However, the laws do not allow the youth below 18 years to have an account on their own, without it being an ITF account, overlooking the fact that they would become adults in the future. Even educating the youth and students on financial literacy is shelved, whilst more attention is given to the adult population.
Documentation requirements are a barrier to the youth having accounts with financial institutions. But are these documentation requirements put in place strategically to deter the youth from opening accounts or is it mere disregard? Are there fears and concerns on what they stand to gain or lose as financial service providers if they open youth accounts?
For instance, the youth are difficult to handle. They however make up a huge percentage of the population. It is with much evidence from opening and running ITF accounts that the youth poorly manage accounts. They usually would draw on their accounts to the very last cedi, and are easily moved by price, making it very easy to lose them to competitors. Also, the youth are deterred by charges or deductions made on their accounts.
Aside the negatives, financial service providers have a good opportunity to capture the market if they target opening youth accounts. This would provide them the numbers for their projected targets and the adult population can give them the projected target value.
Another opportunity is for financial service providers to intervene in schools. They could probably make it a part of their corporate social responsibility initiatives to hold workshops in various schools, teach students and the youth savings habit, and introduce financial literacy programs or courses in the schools.
Such interventions will ensure that by the time the youth attain the age of account opening, they would be financially literate. It would also ensure that they start, even at the youngest age, to save be it Susu savings in the school or with an informal financial institution.
Instilling and ensuring that the youth and students have a basic or strong understanding of finances and savings would go a long way to improve the way they handle or run accounts in the future, and thereby reduce negative balanced and low balanced accounts.
Key questions to ponder over are: Will any financial institution take this risk and opportunity? Do the Bank of Ghana requirements restrict the opening of accounts in schools or for minors? Are accounts with informal financial institution the only way young ones can cultivate the habit of saving?
By Angela Esi Daisie