The Reserve Bank of Malawi (RBM), a member of the Alliance for Financial Inclusion (AFI), has been increasingly proactive in the implementation of various initiatives to combat the financial literacy issues that plague the nation.
One of those recent efforts includes the conduction of a National Financial Literacy Week, held last December in collaboration with the Ministry of Finance and other key stakeholders. The event aimed to promote personal finance management through a focus on budgeting, savings and investing culture among specific target groups, generating a general awareness of services and products offered by a wide range of financial institutions, promoting awareness of the financial consumer’s rights and responsibilities, and creating awareness of existing complaints and dispute resolution mechanisms and procedures for consumers of financial services.
In a show of government support to improve financial literacy, as well as increase financial inclusion overall in Malawi, Deputy Minister of Finance Dr. Cornelius Mwalwanda launched the National Financial Literacy Week on behalf of the Minister of Finance. The launch was marked by several activities that included a school quiz competition, school drama, songs, poems, and a showcase of live trading by the Malawi Stock Exchange.
The week’s proceedings marked a coordinated push to remedy findings of a survey commissioned in 2008 by the government – with funding from the Department for International Development in the UK – to assess the demand-side of financial services and products in Malawi. That study, which was carried out by FinMark Trust, revealed a general lack of awareness among citizens of financial products and services, in particular personal and household finance management practices.
The survey also found that fewer Malawians had access and were using available financial services and products. While 45 percent had access to financial services, approximately 19 percent of the adult population had access to banking products while only three percent of adults accessed insurance services. The assessment established the limited access and usage of financial services due primarily to the issue of an overall lack of awareness. This lack of awareness focused on limited knowledge and skills to access and use services and products offered by the wide range of financial services providers. Furthermore, consumers lack confidence and understanding of their rights and responsibilities when dealing with financial services providers. This point highlighted the need for a comprehensive and robust financial awareness program in the country.
The Financial Literacy Week helped bring into perspective several important elements that should be incorporated into the overall Financial Literacy Program, starting with the financial literacy strategy itself. RBM, through the Consumer Protection and Financial Literacy Unit, has learned numerous lessons based on the experience gained from the event, including the importance to disseminate financial literacy messages in local languages, that the draft of the financial literacy strategy needs to be refined to incorporate public perception deduced during road storming events, and that most financial service providers have issues drawing a line between financial literacy and product advertising.
Madalitso Chamba is a Principal Examiner, Consumer Protection and Financial Literacy, at the Reserve Bank of Malawi. Eliki Boletawa is a Policy Manager at the Alliance for Financial Inclusion.
Categories: Measuring Financial Inclusion