New Study Confirms 64% of Working Ghanaians Are Financially Stressed

Key Takeaway

  • 64% of working Ghanaians experience financial stress, especially those earning below GHC 3000 monthly and those in the informal sector. (Old Mutual)
  • 55% of respondents reported earning less than pre-2022 or pre-recession levels.
  • Primary means for covering expenses include personal savings (61%), loans from friends or family (24%), and ‘Susu’ (12%), while only 10% opt for loans from financial services providers.
  • Various savings channels are used, but barriers to formal savings adoption include concerns about relevance, affordability, and trust.
  • Key savings priorities include income security, cost-cutting, secure investments, emergency savings, children’s education, medical expenses, business funding, and family future planning.
  • 44% depend on a single source of income, while 24% actively pursue multiple income streams as PolyJobbers.
  • Retirement planning is not a primary goal for many, with only 37% initiating retirement savings and confidence in retirement provision scoring low at 5.8 out of 10.

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According to a new study conducted by Old Mutual, an African financial institution, 64% of working Ghanaians face financial stress.

The study reported that Ghanaians earning below GHC 3000 monthly face higher levels of financial stress. It also highlights that those in the informal sector face higher-magnitude stress.

Also, 55% of respondents reported earning less than pre-2022 or pre-recession levels.

The study indicates that the primary means for covering expenses is personal savings, with 61% utilizing their savings. While 54% consider personal savings as a source of income, only 10% opt for loans from financial services providers. Instead, 24% borrow from friends or family, and 12% seek funds through ‘Susu’. Additionally, 21% of respondents reported having a credit card.

A variety of savings channels are employed, ranging from formal to informal, such as banks, mobile money, Susu, and unbanked cash being the top choices. Concerns about relevance, affordability (charges), and trust act as barriers to greater adoption of formal savings vehicles.

Key savings priorities include ensuring income security, cost-cutting, and making secure investments. Emergency savings, especially important for the 40% concerned about job loss, are highly prioritized. Other significant savings goals include children’s education, medical expenses, business funding, and planning for the family’s future.

The study highlights that 44% of individuals depend on a single source of income, while 24% actively pursue multiple income streams as PolyJobbers, a trend particularly prevalent among those earning GH₵3,000 or more.

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Despite the significance of retirement planning, less than a quarter consider it a primary savings goal. Only 37% have initiated retirement savings, and confidence in retirement provision is notably low, scoring 5.8 out of 10.

The research indicates a limited adoption of formal retirement products, with only 20% holding a pension/provident fund through an employer. Moreover, a substantial 88% lack life cover, attributing it to being a non-immediate priority and deemed too expensive.

Regarding employment benefits, 28% of individuals in the formal sector do not have any, and among those who do, the most prevalent are medical/health insurance (28%) and pension/provident fund (20%).

A noteworthy discovery is that 54% of survey participants own a business, predominantly funded through business revenue or personal savings. The inclination to avoid debt is apparent, with only 11% actively seeking financial assistance from companies in the financial services sector.

The Financial Services Monitor by Old Mutual offers valuable insights into the financial circumstances of employed Ghanaians, underscoring the necessity for customized solutions to address the varied challenges they face.