’Little money, big impact’ – after Muhammad Yunnus won the Nobel Peace Prize in 2006 for his microcredit concept, headlines like this were seen everywhere. The idea of granting very small-scale loans and other financial products to destitute members of the population on acceptable terms, thus enabling them to set up small business enterprises, for example, was much celebrated. The idea has since grown into a whole industry. Recently, though, fewer and fewer borrowers have been able to repay their loans. The financial institutions are accused of a lack of responsibility in dealing with their customers: ‘Microfinance has not shown the needy a way out of poverty but driven them into a new debt trap,’ writes the Frankfurter Allgemeine Zeitung.

Raising people’s awareness of how to deal with money
 ‘The best way of preventing such excessive debt is to raise people’s awareness of how to deal with money,’ says Torsten Schlink, who works in financial system development at GTZ. Together with Dirk Steinwand, a microfinance expert at KfW Entwicklungsbank, Emmanuelle Javoy, Managing Director of the rating agency Planet Rating, and Thomas Engelhardt, Managing Director of the consultancy company LFS, he discussed customer protection and social responsibility at the GTZ Representation in Berlin at the end of November.

Improving basic financial education through creativity
A good example of this is GTZ’s work in Ghana, says Schlink. One of the tasks of the programme for sustainable economic development in Ghana, working on behalf of the Federal Ministry for Economic Cooperation and Development (BMZ), is to advise the government on strengthening the microfinance sector. ‘This means on the one hand that we support the Ghanaian microfinance institutions with custom-designed training programmes,’ says Hanna Schommer, a GTZ staff member in Ghana. ‘What is particularly important, however, is improving basic financial education for the population, and creativity is an essential part of that. For example, we joined forces with 110 microfinance institutions and the Ghanaian Government to organise a roadshow across the entire country, in which we explained to people how financial products work and what rights and obligations they have.’

Ghana develops customer protection strategy
The Ghanaian Government considers basic financial education and customer protection to be such important topics that it has devised a strategy specifically to deal with them. Despite these initial successes, however, there is still a lot to do, says Schommer: ‘In the coming year we want to work with the Ministry of Finance and the Ministry of Education on integrating basic financial education into school curricula.’

Roadshow on basic financial education in Ghana