Analysis: LEINA GABARAANE
FINANCIAL literacy is one of the key factors to achieving universal financial inclusion in Zambia. From the capability survey report launched by Government in collaboration with the World Bank last year, we learned that Zambians with low financial literacy tend to be less financially included and often opt to use informal financial services and products compared to those with higher levels of literacy.
Today, about 60 percent (from 78 percent in 2009) of adult Zambians remain financially excluded despite the commendable progress made over the last decade according to a recent FinScope survey.
This is particularly concerning because excluded individuals and/ or businesses must rely solely on their limited earnings for investments thereby restricting growth at all levels of the economy and exacerbating the negative effects of downturns in natural economic cycles.
This is what makes the financial literacy week important as it is a vital tool to driving growth in financial knowledge and by extension financial inclusion. However, there is need for stakeholders to start taking financial literacy beyond the financial literacy week and make sharing of such knowledge a daily activity if we are to sustain and raise the rate of inclusion.
MORE THAN JUST ECONOMIC GROWTH
Financial inclusion enables citizens, including those in the low-income bracket, to borrow, save, invest, and manage risks through insurance and create a better future for themselves – which appropriately enough was the theme for this year’s financial literacy week.
Government must be commended for consistently taking a leading role in driving this initiative and creating a standard that all stakeholders must live up to. In November last year, Zambia launched its National Financial Inclusion Strategy 2017- 2022 (NFIS) and Financial Sector Development Policy alongside the Capability Report to strengthen the development of the financial sector as well as reduce the rate of financial exclusion from 60 percent to 30 percent by 2022.
A stronger financial sector will not only create an environment where all Zambians can benefit from formal financial services but also help the country harness the vast economic potential in its natural resources to reduce unemployment, poverty and achieve sustainable economic growth – bring Vision 2030 that much closer to reality.
Financial institutions must align their social investment policies with the objectives of the NFIS and provide every Zambian with an opportunity to improve their economic standing through savings, investments and appropriate risk protection for their assets among other formal services.
Sector players must work to increase the number of access points for their services especially in rural areas. Digital technology has aided this process by making certain banking services portable and accessible from just about anywhere at any time. However, more still needs to be done to reach most of the unbanked population and education, as in all things, is key to achieving this.
Strong commitment from banks and other service providers is needed to advance the level of financial education in local communities. For instance, Stanbic Bank has been running several outreach initiatives including First Lady for a day and Mutanda day as way of getting financial education to the community.
Under the first lady for a day, which has been running for over 10 years, the bank brings 10 pupils from each province on an all-expenses paid trip to Lusaka for financial literacy lessons. The programme is run in partnership with Junior Achievers and Forum for African Women Educationalists of Zambia (FAWEZA). The pupils spend a day at Stanbic headquarters going through several financial inclusion and literacy sessions lead by the bank’s senior management and specialists. The programme ends with a day’s visit to State House where the pupils get to meet and interact with the Republican President and First Lady.
Lutanda (Light) day, was launched in 2016 as an outreach programme where each Stanbic member of staff goes out into the community to provide financial education. During the first Lutanda Day, the bank and all its branches remained closed to give its workers the opportunity to go out and train people in various townships across the country. In the first year, over 5000 people benefited from the training while 2017 saw nearly 10,000 people reached – among them pupils, students and civil servants.
Such initiatives if emulated by all stakeholders could significantly improve the financial inclusion rate.
With concerted efforts from all stakeholders, financial literacy and inclusion can be a key driver of economic growth in Zambia. To achieve this, financial institutions must improve the accessibility of their products and services outside major cities and the line of rail. In 2016, the International Monetary Fund (IMF) estimated that about 60 percent of the country’s total bank outlets are in Lusaka and the Copperbelt while 18 percent of all districts remain without formal financial service. One of the major hinderances to the growth of the financial sector is the lack of confidence in financial institutions from the public which is in part caused by a lack of knowledge.
This therefore calls for improved commitment from sector players and Government in making sure appropriate policies and strategies are developed and implemented to promote equity in distribution of investments as well as education so that no one is left behind in the quest for universal financial inclusion. Stakeholders must coordinate and align their activities to focus on increasing the number of access points such as ATMs, Point of Sale (POS) systems and bank branches among others in all areas of the country.
Creation of customer-focused products will also improve the attractiveness of financial products and services to potential clients thus make them more willing to leverage opportunities and benefits that come with formal banking.
Financial institutions must also improve their communication with clients and take the time to understand their needs and explain their products as a way of improving confidence in the system.
While banks and other sector players take steps to join Government in driving financial education in Zambia, it is important for citizens to also take a stand and participate in spreading financial education. They must not only be open to learning but must also actively go out and seek and apply the knowledge they receive to better their lives. We all have a part to play.
The author is chief executive of Stanbic Bank Zambia.
Analysis: LEINA GABARAANE