Beyond the financial literacy week
From Monday December 9 2013, the Reserve Bank of Malawi in partnership with stakeholders in the financial services sector is holding the first-ever National Financial Literacy Week. The week will close on Friday, December 13 2013.
Why the National Financial Literacy Week? Basically, the main objective of the week is to sensitise Malawians on benefits of budgeting, saving, investing and knowing their rights in terms of financial products available on the market.
Several financial products abound on the market. For example, the country has 10 commercial banks, namely, National Bank of Malawi (NBM), Standard Bank (Malawi) Limited, FMB, Indebank Limited, FDH Bank, Malawi Savings Bank, Nedbank (Malawi) Limited, NBS Bank, Ecobank (Malawi) Limited and Opportunity Bank. There is also one investment bank trading as CDH Investment Bank.
Then there are short-term insurance companies, insurance brokers, insurance agents, life insurance companies as well as fund managers, stockbrokers and the Malawi Stock Exchange (MSE) itself. Besides, several microfinance organisations also exist too numerous to list down here.
Many people have heard about banks and insurance companies, but very few Malawians use their services. This is evidenced by results of the Finscope Survey of 2008 which found that only 19 percent of Malawians are banked or hold bank accounts whereas another 20 percent use informal products or systems, including katapila.
The situation is even worse in terms of insurance as the penetration rate in the country stands at around three percent.
There are several efforts being undertaken to increase access to banking and other financial services. For example, the World Bank through the five-year $28.2 million Financial Sector Technical Assistance Project (Fstap) is supporting the country to increase access to finance for the currently unbanked, but bankable population.
For their part, commercial banks have tried their best to take banking to the people by opening points of representation in several towns hitherto unbanked across the country. The 2012 International Monetary Fund (IMF) Financial Access Survey database showed that commercial banks in the country tripled to about three branches per 1 000 square kilometers, thereby improving their accessibility.
Investment in other avenues such as shares, treasury bills, bonds and unit trusts still remain a pipe dream for many Malawians, both the illiterate and the highly educated.
It is a fact that financial literacy is different from being literate in the conventional way we understand literacy. For instance, there are highly educated people who hardly know a thing about budgeting and investing money yet, at the same time, there are illiterates, who use their thumb print as a signature, but are well informed about managing their finances. That is the irony about finances and investment!
Financial literacy also means the consumer of a particular financial product knowing the terms and conditions attached. If one gets a loan, for example, one needs to read the conditions, though still being printed in irritatingly small prints, before putting pen to paper. Yes, you are giving the bank or lender business, they are not doing you a favour, hence, only sign when convinced and in agreement with the terms.
Briefly, allow me to share a case of one customer of a major commercial bank in town whom I feel was treated unfairly after her bank account was defrauded of her hard-earned money after she lost her automated-teller machine (ATM) card. Upon discovering her money was missing, the customer reported to the bank where she was advised to obtain a police report for a search. Sadly, she was told the bank only stores records for two weeks, hence she cannot be assisted. Isn’t this conspiracy to defraud customers? I advised her to report to the Bankers Association of Malawi (BAM) or the Reserve Bank of Malawi’s Consumer Education and Complaints Handling Unit.
The same thing applies to insurance policies, whether short-term or life. Get to understand the terms and conditions.
Many times I have observed a gross lack of customer service or customer care in most of our service providers, including players in the financial services industry. Generally, many employees of the service providers behave like they are doing the customer a favour forgetting that, in fact, the customer is their boss!
