Financial inclusion vs. Business sustainability: Closing the gap in Ghana’s financial services

Across Africa, and Ghana in particular, financial inclusion has become a cornerstone of national development strategies.

Financial institutions – from microfinance providers to fintech startups and mainstream banks – routinely emphasise their commitment to banking the underserved.

Yet beneath this ambition lies a persistent tension: the economic profile of underserved populations is often misaligned with the strong commercial objectives that providers must pursue to stay afloat.

This article explores the validity of this misalignment, draws on global research, and proposes strategies for the financial inclusion ecosystem to reconcile inclusion with sustainability.

The Problem: Misalignment Between Inclusion and Financial Objectives

A recurring observation in Ghana’s financial sector is that underserved populations l – low-income earners, informal workers, and rural communities – often represent as much as 70–80% of the customer base of inclusive financial providers.

While this achieves outreach objectives, it creates challenges for meeting short-to-medium term profitability goals.

Three key realities emerge:

1. Longer Path to Profitability – Serving low-income customers often requires extended timeframes to achieve break-even, given smaller transaction sizes and higher operational costs.

2. Dependency on Scale and Efficiency – Survival depends on strategies such as economies of scale, airtight financial controls, and cost reduction.
3. Strategic Diversion – In some cases, providers temporarily shift focus to more profitable segments before returning to underserved populations once sustainable.

This misalignment has been well-documented globally. For example, Cull, Demirgüç-Kunt, and Morduch (2018, The World Bank) found that many microfinance institutions (MFIs) struggle with profitability when serving predominantly low-income clients, unless supported by external capital or cross-subsidisation models.

2. Global Evidence and Research

The tension between financial inclusion and sustainability is neither new nor unique to Ghana.

• Microfinance Experience: In South Asia and Africa, MFIs initially expanded outreach rapidly but many collapsed due to over-indebtedness crises and thin margins (Roodman, 2012, Center for Global Development).
• Fintech and Mobile Money: While mobile money has revolutionized inclusion in Ghana and Kenya, profitability depends heavily on transaction volumes and cross-selling. The GSMA State of the Industry Report (2023) notes that mobile money providers remain vulnerable to regulatory costs and infrastructure challenges.
• Blended Models: The World Bank (2016) highlights that blended finance – combining donor, government, and private capital – has been crucial in keeping inclusive finance providers operational while serving difficult markets.

These findings confirm that misalignment is a systemic reality that must be addressed structurally.

Bridging The Gap – A Responsibility of the Entire Ecosystem

1. . The Role of Businesses

Businesses pursuing financial inclusion must adopt pragmatic strategies to survive and thrive:

• Investor-backed Cushioning: Mobilizing patient capital to absorb early-stage losses while scaling operations.
• Economies of Scale: Leveraging technology and process optimisation to reduce unit costs and expand outreach.
• Financial Controls and Efficiency: Ensuring zero tolerance for wasteful spending and strong risk management.
• Strategic Phasing: Serving higher-income populations initially to generate profits before deepening reach to underserved groups.
• Leverage Data-Driven Business Management: Financial inclusion providers must deploy robust and agile Management Information Systems (MIS) and Decision Support Systems (DSS) that deliver accurate, timely insights. These tools enable precise business planning, customer-centric product design, proactive risk management, and scalable strategies – ensuring that inclusion goals are matched by effective execution.

Such strategies balance mission with market realities.

• The Role of Government

Governments play a decisive role in ensuring financial inclusion does not collapse under commercial pressures. Their intervention bridges the gap between social impact goals and business survival.

1. Policy and Regulatory Support: Ghana’s Payment Systems and Services Act (2019) created an enabling framework for FinTech’s and mobile money operators. Tiered regulation can further reduce burdens for providers serving low-income groups.

2. Subsidies and Blended Finance: Donor-government blended capital reduces risks for inclusive finance. The World Bank (2016) demonstrates its effectiveness across emerging markets.
3. Digital Infrastructure Investment: Government initiatives in mobile penetration and the Ghana Card project have expanded reach while lowering costs (GSMA, 2023).
4. Consumer Protection and Trust: Frameworks like the Bank of Ghana’s Consumer Recourse Mechanism (2020) enhance trust, encouraging long-term usage.
5. Public-Private Partnerships (PPPs): Partnerships in sectors like agriculture can expand access sustainably, as seen in Kenya’s PPP agricultural finance model (CGAP, 2018).

Government support ensures that inclusion providers remain commercially viable while achieving national development goals.

•  The Role of International Actors: DFIs, Multinationals, and Bretton Woods Institutions

Financial inclusion is both a domestic imperative and a global development agenda, which is why international actors play an outsized role in bridging the financing and technical gaps that constrain local providers.

a) Development Finance Institutions (DFIs)

DFIs such as IFC (International Finance Corporation), AfDB (African Development Bank), FMO (Netherlands), and DEG (Germany) play a catalytic role by:

• Providing patient capital and risk guarantees: DFIs typically offer long-term concessional financing that cushions local providers from short-term profitability pressures. For instance, IFC’s investments in Ghanaian FinTech’s and microfinance institutions have allowed them to scale outreach without collapsing under operating costs (IFC, 2021).
• Technical Assistance and Capacity Building: DFIs support governance, risk management, and digitization projects to strengthen inclusive finance providers’ institutional capability and sustainability.
• Market Development: DFIs often co-invest in digital infrastructure or rural outreach programs, reducing the systemic risks of financial inclusion.

b) Multinational Corporations (MNCs)

Multinationals, especially in telecoms, FMCG, and agriculture, increasingly partner with inclusive finance providers because their own supply chains depend on empowered low-income customers.

• Telecom-led Financial Inclusion: MTN Mobile Money and Vodafone Cash in Ghana demonstrate how multinationals expand access while cross-subsidizing financial services with profits from core telecom operations (GSMA, 2023).
• Supply Chain Finance: FMCG giants like Unilever and Nestlé support smallholder and micro-retail financing schemes to stabilise their distribution networks.
• Innovation Labs and Digital Platforms: Multinationals bring scale, technology, and brand credibility that inclusive finance providers struggle to build alone.

c) Bretton Woods Institutions (World Bank & IMF)

The World Bank and IMF are central to the policy, financing, and macroeconomic environment that underpins financial inclusion.

• Policy Frameworks & Technical Assistance: The World Bank provides governments with frameworks for financial inclusion strategies (e.g., Ghana’s National Financial Inclusion and Development Strategy 2018–2023 was developed with World Bank support).
• Direct Financing: The World Bank and IDA (International Development Association) fund infrastructure (digital ID, mobile connectivity, credit bureaus) that lowers the cost of inclusion.
• Stability and Risk Mitigation: IMF programs often emphasize financial stability, which indirectly supports inclusive providers by ensuring macroeconomic conditions (inflation, currency, banking regulation) remain predictable enough to attract investment.
• Blended Finance Initiatives: Both IMF and World Bank collaborate with DFIs and private investors to structure financing where risks are shared across actors, lowering the burden on local institutions.

5. Conclusion

The misalignment between underserved customers’ economic realities and financial providers’ commercial goals is both real and recurring. Global and local evidence confirm that financial inclusion, left to market forces alone, often struggles to achieve sustainability.

The way forward requires an entire system convergence:

• Businesses must adopt phased, efficient, and investor-supported models.
• Governments must create enabling policies, invest in both physical and market infrastructure, and provide financial risk-sharing mechanisms.
• DFIs, international development organisations, and impact investors must remain committed to strategies that de-risk financial inclusion, channel affordable capital to inclusion providers, and strengthen macroeconomic conditions. Such support does not only enable providers to achieve inclusion targets but also mitigates high operational costs, creating a sustainable pathway for long-term financial inclusion.

Financial inclusion should not be a burden carried solely by financial providers, but a national development project shared across private, public, and development actors. Only then can Ghana’s financial sector both serve the underserved and remain commercially viable.

References

• Cull, R., Demirgüç-Kunt, A., & Morduch, J. (2018). The Microfinance Business Model: Enduring Subsidy and Modest Profit. World Bank Policy Research Paper.
• Roodman, D. (2012). Due Diligence: An Impertinent Inquiry into Microfinance. Center for Global Development, Washington D.C.
• World Bank (2016). Blended Finance in the Financial Sector. World Bank Group.
• GSMA (2023). State of the Industry Report on Mobile Money. GSMA, London.
• Bank of Ghana (2019). Payment Systems and Services Act, 2019 (Act 987). Accra.
• Bank of Ghana (2020). Consumer Recourse Mechanism Guidelines. Accra.
• CGAP (2018). Public-Private Partnerships in Financial Inclusion. Consultative Group to Assist the Poor, Washington D.C.