A pivotal ladder in raising Botswana to the next level
Correspondent | Friday June 15, 2018 12:34
The famous quote by the Zimbabwean philosopher, entrepreneur and author, Matshona Dhliwayo, bears so much truth and addresses the current lack of financial literacy in Botswana. Many people in our country attribute most of their problems to lack of funds. However, the main problem is not insufficient funds, it is the lack of knowledge in managing the funds that one has - financial literacy. As described by Dhliwayo, we are imprisoned by our ignorance and lack of knowledge on matters of finances not only as Batswana but as Africans as a whole.
Over the years, research about financial literacy in our country has been performed, and efforts continue to be made in this space. A particular study by Trust (2004, cited in Republic of Botswana, 2009), found that 48% of people in Botswana did not use banking facilities. According to Jefferis (2012), this high percentage was mainly due to the lack of financial knowledge. First and foremost, then, we need to ask ourselves: what is financial literacy?
The United States Financial Literacy and Education Commission defines financial literacy as, “...the ability to use knowledge and skills to manage financial resources effectively for a lifetime of financial wellbeing.” Wellbeing, future, and prosperity – these are key terms and possibilities inherently linked to the ability to fully understand and practice sound money management. It has been argued that despite the fact that Botswana has rigorously mapped visionary ideals for a prosperous and wealthy Nation in the National Vision, it still failed to directly tackle the issue of financial literacy in the Nation, which was a key element in achieving this goal.
Financial literacy is not only a plaguing problem in our country but throughout our continent as well. Statisticians and academics have written papers and proven the necessity of financial literacy in Africa and its contribution to the African economy, from a socio-economic and financial point of view. The data is strong, and the opinions and expert commentary prolific, to say the least. What is to be done, and how to we truly gain traction in our efforts?
Our continent faces many challenges with financially illiterate societies but with boundless opportunities to advance. The International Monetary Fund (IMF) has estimated the 2017 global economic output at 3.7 percent and revised the forecast for 2018 upwards to 3.9%. It highlights that sub-Saharan Africa is expected to grow at 3.3 percent. What exactly do these numbers mean?
These facts prove that the time for Africa is now. Currently, we are at an even greater advantage to see greater economic growth, output and progress in the African continent than ever before! But one thing stands before us: financial illiteracy.
Perhaps we ought to start with understanding how important financial literacy is when it comes to policy and economic development. Firstly, financial literacy fosters financial stability. Secondly, financial literacy that includes an understanding of the Monetary Policy facilitates policy transmission: the more the public know about the Monetary Policy, the more likely healthier savings and borrowing decisions can be made. Additionally, the productivity of finance is likely to be higher where the community is financially literate and there is a disciplined approach to financial decisions and execution. As members of the community, both corporate and individual, we too bear some responsibility to make progress here; it is not up to our Government and her regulatory bodies alone. It is our responsibility to ensure that we are proactive in attempting to close the gap that threatens our economic growth as a nation. The Governor of Bank of Botswana, Mr Moses Pelaelo, during his keynote address at the Madi Majwana Season 4 launch said: “The productivity of finance is likely to be higher where the community is financially literate and there is a disciplined approach to financial decisions and execution.”
It is upon us as individuals and as corporate citizens to help not only those around us, but our communities, social groups and inevitably our Nation to truly become a financially educated and informed Nation. In his book Hustle: Small Money Big Dreams (2018),” local author, Sibusiso Kgosikhumo, said, “The African hustler understands that the overall growth of Africa is a result of cumulative effort and as a result of that, he has a moral obligation to help change the situation of his brother in a sustainable way.”
Let us ask ourselves: how can we ensure we are ever closer to attaining the remits of our National Vision and that of the United Nations Sustainable Development Goals? In many ways, it is about understanding, decided targets and milestones we wish to achieve, and most importantly, sustainable long-term efforts. There is no room for “flash in the pan” gestures or shortsightedness. The time to drive progress is now, and the prerequisites are strategic effort and sustainable thinking.
So, what are you doing to help the fight of financial illiteracy in our Nation?
(This editorial is part of a series by Barclays Bank of Botswana)