December 6, 2012
Exploring the Challenges of Financial Education Across Emerging Economies
Remarks from Hope Ewing
I would like to thank Secretary Nicolas for joining us this afternoon. I would also like to thank the team at Citi Foundation and Financial Times for organising such an important event, as well as the people willing to listen to me while they're trying to eat.
I know many of you are familiar with Visa's commitment to financial literacy – we have been working in this area for fifteen years, and today have financial education programs in more than 30 countries around the world. In fact are working with a number of you in this room on local programs in your home markets.
We have reached millions of people with our programs, educational materials, school curricula and online outreach through social media, our practical money skills websites and online Financial Football game – which many of you would have heard about at the Sydney summit in 2010.
Many of you may also recall that Visa made a pledge at the Clinton Global Initiative Conference in 2008 to reach 20 million people worldwide with our financial literacy program by May 1, 2013. I am delighted to say that in May this year – a full year ahead of schedule – we achieved that target. And our long-standing commitment to financial literacy does not end with the successful achievement of our CGI pledge. To quote our Chairman Joseph Saunders on reaching that 20 million goal: "Driving financial inclusion and education is in the very DNA of Visa. We will continue to devote our intellectual and financial resources to bringing ever more people into the financial mainstream and ensuring they are equipped to succeed."
This commitment is why Visa commissioned the Global Financial Literacy Barometer, which is a global financial literacy yardstick and ranked 28 markets, to help understand where the gaps in the application of financial literacy knowledge are.
And there are a number of other gaps. For instance:
The report is at www.practicalmoneyskills.com if you would like to see the market rankings.
So it is clear that not only do we need a range of strategies and programs to tackle the challenge of financial literacy, but we also need to be sensitive to cultural differences as well as aspirational diversity.
Last year in Jakarta, we sat down with the FT team to discuss how Visa could help expand on the work done every year at this Summit, and help to move financial literacy forward across Asia Pacific, as well as Africa and the Middle East, where financial education is an increasing focus.
And that's when the Visa-FT Financial Literacy Forum Series was born. The Forums were created to be small, invitation only meetings where a panel could share their thoughts and experiences in local financial literacy program, and we could help identify key themes and best practices that could be shared across all markets. And – perhaps more importantly – they would be a chance for people to get together. For people to brainstorm, share ideas and build a network of contacts that could come together to discuss and shape future programs.
For the first year, the forums were scheduled to take place in Mumbai, India, Nairobi, Kenya and Dubai, UAE, and we thought to explore the challenge of financial education across emerging economies.
As you may have noticed in the discussions over the past day and a half, there are a lot of ideas, a lot of opinions and a lot of programs. But the one thing very thin on the ground is any sort of consensus. On any issue. Classroom versus ‘real world' – we heard all about that yesterday! – primary school versus secondary/tertiary, even measurement is source of discussion and debate.
It seems the only thing everyone can agree on is that financial education is vital. And – no surprises! – that's exactly what we found in the Visa-FT Financial Literacy Forums. I'll give you a brief summary of each here today, and you will see copies of the summary report on your tables if you would like more information.
At the first Forum in Mumbai, the keynote speaker, the Deputy Governor of the Reserve Bank of India, Dr K.C.Chakrabarty, said financial literacy, along with financial inclusion and consumer protection, formed a triad that had a vital bearing on the stability of the financial system. He said: "In India, the access to products itself is lacking, hence the scope (and he was talking about financial literacy efforts) differs." He went on to say that financial literacy for the resource poor would involve addressing deeply entrenched behavioural and psychological factors that acted as barriers to participating in the financial system. And he said financial service providers needed to offer appropriate products at an affordable cost and in a fair and transparent manner.
Jayshree Vyas, Managing Director of the SEWA Bank and Executive Director of the Indian School of Microfinance for Women, said a study of customers showed they had a short-term through horizon and lived from crisis to crisis on a day-to-day basis. So, she said, they make impulsive financial decisions and borrow for life-cycle purposes. Institutions are now coaching them to change their behaviour and think long term.
The group could agree that while they might be singing from the same song book, there were too many messages and not enough focus.
Summing up the subsequent panel discussion, Uttam Nayak, who is Visa's Group Country Manager, India and South Asia, said the important learnings from the Forum were the need to provide access and a basic understanding of financial literacy programs and products, phased standardisation and adoption of best practices. Ultimately however, he said, results would come from implementation and if all stakeholders focused on this, and collaborated in a meaningful and sustainable way to drive financial literacy efforts, wonders would happen.
At the Nairobi Forum, Visa's Group Country Manager, sub-Saharan Africa, Hannes van Rensburg, who is also the founder and Chief Executive of Fundamo, a Visa Company that is the world's largest specialist provider of enterprise mobile financial services software, said financial literacy was extremely relevant in a continent that is the second fastest growing region in the world but where a large percentage of the population did not have the financial skills to make the most of modern financial systems.
In the keynote address, the Assistant Director, Bank Supervision, at the Central Bank of Kenya, Matu Mugo, said central banks had begun to drive financial inclusion efforts as they realised that their primary goal of price and financial stability could not be achieved when a majority of people had limited access to financial services.
He said: "We believe that Kenya has achieved access goals … but there is a long way to go as far as usage and quality are concerned and it is only by driving these up that we can translate increased financial access to economic development."
It raised the ‘chicken and egg' debate of which comes first – the financial education or the financial access/products/services.
The Group Chief Executive of Kenya Women Holding, Jennifer Riria, said financial programs needed to ensure access, financial justice and financial education and said the finance industry needed to investigate why certain groups or communities were financially excluded. She said social media could be a potentially strong medium in Kenya as most young people, even in rural areas, had mobile phones and were in touch with social media sites.
The Senior General Manager of the Socio-Economic Growth and Development Division at the Banking Association of South Africa, Fikile Kuhlase – hi, Fikile! – said her country was still characterised by dualism and a second economy consisting of a marginalised population that continued to face challenges of poverty, inequality and unemployment. The country also had a low savings rate, low literacy levels and high indebtedness. She said each country needed to identify which stage of the financial literacy continuum it was at and devise financial education and inclusion interventions accordingly.
At the Dubai Forum, panel members said there was a need to address deeply-rooted social values in order to promote financial education in wealthy economies like the UAE.
In her keynote speech, the CEO of the Dubai Schools Agency, Fatma Al Marri pointed out instances of poor financial practices in daily acts like shopping. "I notice our kids never look at the price tag on anything they want to buy – they just pick up what they want and parents happily pay for it without discussing the price. As a result of such behaviour, today's youth is not aware of the value of money."
Nima Abu-Wardeh, Founder, Cashy and Campus Cashy, said social media platforms promoting financial literacy in the Arab world are "about catering to (people's) needs as opposed to pushing information we think they must know." She said that successful financial education in UAE would mean redefining generosity, wealth and love. Deeper issues of social ethos need to be addressed in order to bring about financial awareness and wellbeing.
She said schools also did not give financial education the importance it deserved. A narrow range of topics, infrequent lectures and lack of an evaluation system were areas for concern. Teachers need to be trained, counsellors appointed and a long-term policy adopted.
Clare Woodcraft, the CEO of the Emirates Foundation, said that since financial literacy was about broader societal issues, the Foundation had shifted from short-term grant-giving to long-term social investment programmes. It was also looking at launching a national platform across the UAE to "provide some glue" and bring together some existing initiatives like the Dirhami campaign – My Dhiram in Arabic - by the Abu Dhabi Islamic Bank and others by Visa.
In his close, Visa group country manager for MENA, Kamran Siddiqi echoed the concern that Fikile shared in Kenya – nothing will work if it is not designed with the local culture, stage of development and actual money management habits in mind.
So as you can see – each Forum hosted very different discussions, but I think there are three points that came through loud and clear:
That last point is the reason we have signed on with FT to continue the forum series again this year – and hopefully bringing in a market in Latin America as well as Asia, Middle East and Africa to continue the dialog we started this year, and hopefully strengthening local financial education networks in the process.
I look forward to seeing you all at next year's Citi-FT summit to share more highlights from this program.