The Strategy and Framework for Financial Literacy in Guyana

May 28, 2017 News

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Dr. Terence Smith, Deputy Governor, Bank of Guyana

Vision, goals and objectives

To support consumers’ financial empowerment, governments and relevant stakeholders in

many countries have established financial education initiatives as a complement to financial consumer protection and regulatory reforms, as well as policies aimed at reinforcing financial inclusion.

In general, the national strategies are particularly designed and tailored to the financial literacy needs of individuals, including the most vulnerable. The vision of the Bank of Guyana’s Strategy for Financial Literacy is that Guyanese have the knowledge, skills and confidence to manage their and their family’s personal finances well.  But the ultimate aim is for Guyanese to behave in a financially capable manner.

The strategy will take full account of international best practices.  However, it will be firmly founded on the needs, culture and other circumstances specific to Guyana.  In addition, the strategy will be kept under review and adjusted as appropriate in the light of new developments.

Governance, management and implementation structures

The implementation, together with the future development, of the Strategy for Financial Literacy in Guyana is being led by the Bank of Guyana (BoG).  A broad range of stakeholders will be involved in implementing aspects of the Strategy.  The role of the BoG, as leader, is to spearhead the implementation and further development of the Strategy – not to attempt to do everything itself.

Based on a review of the literature and consultation with some initial stakeholders, it has been decided that the Strategy should focus initially on: 1. Schools, 2. Youth, 3. Indigenous and Rural Outreach, 4. Workplace, and 5. Media.  Within these strands there will be particular focus on the disadvantaged, including those who suffer from a disability.

The Strategy’s guiding principles

The guiding principles which will govern the development and implementation, of the Strategy for Financial Literacy in Guyana are:

• Working in partnership with stakeholders and community leaders;
• Working with other relevant institutions and connected to standards to promote financial literacy and public awareness;
• Using a broad range of methods and channels;
• Taking advantage of teachable moments;
• Learning from other countries, other sectors and other disciplines;
• Continually evaluating for effectiveness, including delivery;
• Communicating effectively; and
• Cost-effectiveness.

As we move forward in formalising and coordinating the approach to achieving financial literacy throughout the length and breadth of the country our strategy will also be guided by the following precepts:

• Financial education must start early. Children and young people must be a target group for financial education, they should be taught to use their resources properly at an early age, so as to avoid problems such as debt.  Parents should engage in regular, constructive conversations about money matters to give children a solid foundation for financial wellbeing.
• Teachers need the right training to provide financial education. A survey by the National Endowment for Financial Education found that very few teachers believe they were prepared to teach personal finance to their students.  Personal finance is an important life skill and equipping school children with this skill will not only help them to participate fully in society as they move into adulthood, but will also promote national development.
• One size does not fit all. Financial literacy rates vary substantially by age, race, gender, and socioeconomic status.  For example, people living in rural areas are particularly vulnerable to bad uninformed financial choices.  Their incomes are largely low and irregular, and thus any loss or impudent use of money has significant consequences for them.  In many of the indigenous communities, even the most basic financial information is lacking.

The Financial Literacy educational content standards

BoG’s Financial Literacy Strategy/Framework will include content standards that are considered best practices and used in many parts of the world.  The content standards are as follows:

1. Money Management – Guyanese consumers will learn to manage money effectively by understanding and developing financial goals and budgets.
2. Credit and Debit Management – Guyanese consumers will learn to make informed decisions about incurring debt and will manage indebtedness to remain both credit-worthy and financially secure.
3. Planning, Saving and Investing – Guyanese consumers will learn to understand the value, features and planning processes associated with saving and investing and be able to apply this knowledge to long term financial security and wealth.
4. Becoming a Critical Consumer – Guyanese consumers will learn to use available consumer resources and make responsible choices by applying economic principles in their consumer decisions.
5. Community and Financial Responsibility – Guyanese consumers will be made knowledgeable of the personal and social impact of their own financial decisions within the family, the local community as well as understand the ethical and legal issues related to income, profit, and personal wealth.
6. Risk Management – Guyanese consumers will understand the role of insurance in financial planning and be able to analyze and balance risk against benefits in financial planning.

Expected and intended outcomes of the Strategy

Managing one’s finances is a complex set of challenges requiring a combination of skills, judgement and resources.  Even the simplest of these decisions requires at least some basic financial knowledge and competency.  The road to financial freedom including retirement planning requires practice and discipline.  So, the intended outcome of the financial education is as follows:

• Improvements across the Guyanese population with respect to making ends meet, keeping track of one’s finances and planning ahead;
• Improvements in people’s understanding, and exercising, of their rights as regards their treatment by financial institutions; and improvements in people’s understanding of, and adherence, to their responsibilities to financial institutions;
• Increased levels of personal saving and lower levels of over-indebtedness;
• Increased use of insurance by consumers;
• Fewer people fall victim to financial frauds and scams.

Our nation needs its citizens to be able to manage their financial lives well.  To get there, we must make a commitment to raising the level of financial literacy among Guyanese.  This strategy when complete will establish a roadmap to achieve specific and predetermined objectives within a set period of time for this is an issue with broad implications for our nation’s economic health.

Next week we will discuss the importance of financial inclusion.  This is the delivery of financial services at affordable costs to sections of disadvantaged and low income segments of society, in contrast to financial exclusion where those services are not available or affordable.  Please send your comments to [email protected]

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