Advancing Insurance and Risk Financing to Bridge the Financial Divide in Ghana

By Amina Sammo, National Coordinator, Insurance and Risk Finance Facility (IRFF)

June 14, 2024

Flood in Accra. Photo Credit @NADMO

Inclusive insurance and risk financing approaches are designed to make financial protection accessible to underserved populations to bolster their resilience against various risks arising from natural disasters and economic shocks. Risk financing involves mechanisms and strategies used to manage financial risks, ensuring that funds are available when needed to cover losses or damages from unforeseen disasters. Whereas inclusive insurance including microinsurance products, is specifically designed to be affordable, accessible, simple, tailor-made and relevant to people who typically lack access to traditional insurance services.

Globally, the insurance penetration rate, which measures premiums as a percentage of GDP, averages around 7.23% with Africa accounting for approximately 3%. Even within Africa, there is considerable variation among countries with South Africa dominating the market with about 70% of the total market value. There is substantial room for growth while addressing factors such as limited awareness of benefits, affordability issues, and the need for modernization and innovation in the insurance sector.

Much more recently, Ghana has taken steps to advance financial inclusion, in hopes of  transforming lives and empowering the underserved citizens who are usually the residents of poor neighborhoods and most rural communities across the nation. Financial inclusion extends beyond simply providing access to financial services, to creating an enabling environment and leveraging opportunities for allto fully participate in financial systems and unlock economic growth and prosperityIn Ghana, advancing financial inclusion has been marked by innovation including in digital technology, collaboration, and a commitment to bridging the gap in access to financial services so as to not leave any one behind.

Innovation in Digital Technology

One of the key milestones in Ghana's financial inclusion journey has been the expansion of mobile money services which has revolutionized banking in Ghana, particularly in rural and marginalized areas where traditional banking infrastructure is limited. Through mobile money platforms, millions of Ghanaians now have access to basic financial services such as savings, payments, and small loans, empowering them to better manage finances and invest in their future.

An important aspect to financial inclusion is access to insurance products, with plans to expand coverage to economic and income-generating activities among those in low socio-economic brackets. In expanding coverage, and access to finance and insurance products, digital lending platforms, peer-to-peer payment apps, and other technology are being leveraged to make financial and insurance services more accessible, affordable, and convenient for all, irrespective of their socio-economic status.


The United Nations Development Programme (UNDP) in collaboration with its Insurance and Risk Finance Facility (IRFF) has been working to actively enhance the insurance and risk financing landscape in Ghana. UNDP’s IRFF focuses on creating and scaling up innovative insurance solutions and risk financing mechanisms by helping to create inclusive insurance products tailored to the needs of low-income households, training and supporting local insurance providers to develop and distribute these products, and running campaigns to educate the public on the benefits of insurance and risk financing.

The project is working with the government to create an enabling regulatory environment that promotes inclusive insurance and innovative risk financing solutions such as the sub-sovereign parametric flood risk insurance and engaging with various stakeholders to build a robust ecosystem especially for disaster risk management.

The UNDP/IRFF initiative in Ghana involves multiple stakeholders such as Government, Insurance Companies, Financial Institutions, NGOs, Community Groups and other International Organizations to ensure comprehensive and effective implementation for key impacts such as increased financial inclusion, enhanced resilience, sustainable development, empowerment of vulnerable populations, and a strengthened insurance marketplace. 

Commitment to Leave No One Behind

By addressing the unique challenges faced by vulnerable populations in Ghana, the UNDP/IRFF initiative strives to create a more resilient and inclusive society where individuals and communities can thrive despite the risks they face. For these concepts to be effective, they need to be integrated into broader risk management and development strategies. By focusing on inclusivity and accessibility, these approaches help bridge the protection gap and ensure that vulnerable populations have the financial tools necessary to manage risks effectively. With access to financial inclusion and risk financing, other Sustainable Development Goals are enhanced as communities gain increased social protection.

Despite the progress in advancing financial inclusion in Ghana, it's crucial to recognize that there is still work to be done. As a developing field, the work around financial inclusion and risk financing requires further resources and innovative financing to scale up.

UNDP in its lead and expertise on the subject matter, is poised for partnerships to further accelerate the support in developing and promoting the uptake of inclusive insurance and risk financing within Ghana and beyond to pave way for a more inclusive and prosperous society.

As we look ahead, lets us work together to build on and expand access to inclusive insurance and risk financingpromote financial literacy, and foster innovation towards the inclusion of the excluded in the Ghanaian financing space, in support of financial freedom for optimum wellbeing.

As we look ahead, lets us work together to build on and expand access to inclusive insurance and risk financing, promote financial literacy, and foster innovation towards the inclusion of the excluded in the Ghanaian financing space, in support of financial freedom for optimum wellbeing.