Who Needs to be Educated for Us to Achieve Financial Inclusion?
Does the ambition of the Center for Financial Inclusion’s (CFI) Financial Inclusion 2020 initiative include reaching people with little income who live in remote place—places far from urban centers with their financial institutions and communications hubs? That’s what the website says; it states that (emphasis mine):
Full financial inclusion is a state in which all people who can use them have access to a full suite of quality financial services, provided at affordable prices, in a convenient manner, and with dignity for the clients. Financial services are delivered by a range of providers, most of them private, and reach everyone who can use them, including disabled, poor, rural, and other excluded populations.
So what would full financial inclusion look like to a poor disabled woman, living in a rural area, trying to support her four children with what she can grow on a small plot of land? What would she list as her main obstacles to accessing a “full suite of quality financial services”?
Let’s use our imagination a bit to participate in this woman’s experience and try to understand what financial inclusion might feel like for her. Managing money is something she thinks about quite often because she has so little of it and must make it cover so many different expenses. Her husband works in the city and sometimes sends her money. However, the amount she receives is quite a bit less than what he says he sends, and he claims that the people delivering the money can’t be trusted. She grows crops on her small plot of land, but because of her disability her harvest is rarely as fruitful as her neighbors’. Sometimes she is able to scrape enough money together to send her oldest children to school, but in the hungry season—the months before the harvest—she struggles to feed her children, let alone educate them. She tries to save money with her neighbors for the hungry season—and sometimes that works—but when her neighbors are just as desperate as she is, they cannot seem to find the money she stored with them. Last month her son came down with malaria. It took her several days to borrow enough to take him to get help, and the doctor told her she should have come earlier, because her son might now have permanent damage.
If we were able to visit our friend and interview her about the obstacles to financial inclusion that she faces, what do you think she would say? Do you think she would respond that what she needs most is financial education? I doubt it. And yet that is what all of us “experts” said was the biggest need when CFI interviewed us last year.If we did get a chance to talk with our friend, I think she would tell us that what she needs most to overcome these obstacles is access to appropriate products that are available when she needs them and do not require a long trip to get them. She would probably talk about needing a safe and quick way for her husband to send her money; a safe place to save her money so that it is available when she needs it; a way to finance her children’s education so she doesn’t have to take them out of school in the hungry months; and a way to access money quickly to handle unexpected medical emergencies. If these products were available to her, she might want some help in understanding how to best use them. And if someone she trusted offered to tell her how she could make her money go farther, she would probably be very interested. Financial education as a general topic might have little appeal to her, unless she can see how it will help her deal with the financial struggles she faces each day.
Maybe the first focus of financial education should not be at the client level. Maybe the appropriate starting point is for those of us employed by the microfinance industry to better understand our clients’ financial needs, capabilities, and aspirations. With this improved understanding, we will be able to provide the full range of financial services they need and deliver them in a way that makes them easy to understand and utilize.
So I agree that financial education is the greatest obstacle to financial inclusion, and it is time that we start educating ourselves. Only then will we be able to provide the financial services and education that have real value for our clients.
For questions about the “Expert Exchange: Building A Movement Toward Financial Inclusion by 2020” series, write to Sonja E. Kelly, Fellow, Center for Financial Inclusion at ACCION International.