Question

1. a) Define the term "Financial inclusion".

b) Explain the four dimensions you would employ to measure financial inclusion.

c) Discuss the role of government in promotion financial inclusion in Ghana.

Answer 1

a) Financial inclusion refers to efforts to make financial products and services accessible and affordable to all individuals and businesses, regardless of their personal net worth or company size. Financial inclusion strives to remove the barriers that exclude people from participating in the financial sector and using these services to improve their lives. It is also called inclusive finance.

b)

Name of the dimension	Significance
Branch Penetration	Measures the facilities of banking servies in rural areas.
Business Correspondent Model	Measures the availability of the business correspondents to facilitate doorstep banking services to the people in the rural area.
Credit penetration	Measures the access to the credit facilities including agricultural loans and small loans etc..
Deposit Penetration	Measures the access of Banks saving products and services by the rural prople.

c)

The government of Ghana has for the past years consciously put in place policies and programs to facilitate the promotion of financial inclusion. These policies have resulted to rapid expansion of the banking sector thereby making formal financial services accessible to all. The expansion of bank branches, ATM coverage, increment in Debit/Credit cards ownership and mobile money account holders are indications of achievement in the financial inclusion agenda. An estimated 83.1% of Ghanaians have mobile money account, which has taken savings and other forms of financial services to the doorstep of the ordinary citizen. This has also resulted to a rise in the level of making/receiving payment digitally from 22% in 2014 to 44% in 2017 among rural dwellers. Bank branches coverage per 100,000 adults has grown from 4.8 in 2008 to 7.2 in 2016. Because of the branch visibility, account ownership has also seen a surge especially, in the rural areas where it used to be minimal. Although there has been some success, there is the need for the government to continue with the provision of an enabling environment for faster progress since achievement of financial inclusion enhances stability and faster economic growth.