Financial education for a prosperous NepalNepal needs a national plan and a consensus to achieve the steps necessary to build a financially literate society.
Nepal has seen many chaotic and progressive events in the last decade that have shaped essential policies for the nation's overall development. The discussions in the political sphere have now pivoted from centuries-old political ideologies to economic growth. We can see an increase in usage of financial products, improved access to credit, and increased volume in financial transactions. However, there is a looming question, how will a country progress economically when the citizens are not financially aware and awake?
The post Covid-19 landscape has directed people toward having a secured cash flow for a stable life. In 2015, a similar disaster, the earthquake on April 25th, rocked the country physically and left its aftershocks in the personal finance of individuals. The earthquake highlighted the vulnerability of the majority of the households in terms of financial risks caused by unprecedented events. Five years to the earthquake in 2020, in the Covid-19 pandemic, we are again at the same spot in the wheel! Vulnerable, without many options and financial risk reduction measures, no emergency funds with individuals or organisations. This indicates that Nepal needs a robust structural framework on having a sustainable and secured financial education policy that can guide and help citizens on personal finance management.
After the liberalisation of the economy in 1991, many financial service providers started their operations. However, banks and financial institutions designed products from the supply perspective but overlooked the social responsibility of educating the masses on money matters. The lack of action back then has now snowballed to become an urgent need for financial literacy in different sectors for inclusive growth of the economy. Delaying it will create a vast disparity among people with access to financial knowledge and people barred from it.
Story of now
For sustained prosperity, the nation should educate and prepare the citizens to have a secured financial future. With the right approach to financial education, people can contribute more productively to inclusive growth and better life quality. A comprehensive financial education policy will activate concerned institutions to focus on the economic well-being of the individuals. It will enable people to learn about the value of money and resources, how they are acquired, and their utilisation.
Younger people presently face much more financial complexities than their parents had to. The financial products, services, and segments have developed vastly, requiring in-depth research on how to use it and choose the right products from a range of available competitive options. The employer-sponsored benefits have now shifted towards private defined contributions. It has turned the responsibility of saving and investing from the employers to the employees. This implies that the corporate ecosystem also makes individuals more responsible for their retirement and primarily responsible for their own financial decisions. Not knowing these issues will automatically place us behind in the race for financial security.
The growth in financial technology has revolutionised the way people make payments, deal with expenses and utilise credits. Seeking financial advice also has changed from the traditional official means like before to more digitalised and self-explanatory contents. The shifting landscape on financial education needs guidance that protects the right to education on such an important matter.
The rapid development of digital financial services and low level of financial literacy could mean an unbalanced financial behaviour among individuals, with chances of users spiralling into debt traps. We need to be clear that fintech is not an alternative for financial literacy, but it enhances the use and applicability of fintech.
Story of tomorrow
Nepal is not well prepared to provide financial education and literacy for children, women, entrepreneurs, and many other groups in our society. The government and political leaders need to understand that financial literacy and inclusion are aggregators for fast economic development. It is the indicator that determines the capacity of the population to use available financial products and expand the size of the economy, mainly by supporting entrepreneurship and innovation. The critical question we need to ask is, are we becoming a society that only knows the price of everything but the value of nothing?
Along with access to finance, financial literacy policy is a fundamental need to save the people from financial fraudulence and exploitations, helping to monitor and promote fair economic competitiveness among service providers. The gender-based gap in financing also necessitates a financial education policy that builds a foundation for equal access to finance for women.
We do not have a comprehensive view on developing a financial inclusion, and education policy as educational institutions, financial institutions and regulatory bodies are not in cohesion to work with an aligned vision of advancing financial education and inclusion. This requires a national plan and a consensus that binds every stakeholder to work and contribute positively to achieve the steps necessary in given time to build a financially literate society, which will make the lives of individuals in Nepal easier and more prosperous.
The financial awakening of individuals in Nepal is mainly determined by the policy that drives the interventions supporting financial education; it is the need of the hour!