Financial Education Conference – Jakarta 28 & 29 November

CITI and the Financial Times organised their 8^th conference on financial education on November 28 and 29 in Jakarta. The main focus of the conference was Financial Education and Financial inclusion for the disadvantaged, as a way to empower them.

The conference started with a sad example how some very low income families consider their children as assets, and will sell them if in dire straits (the example was in Nepal, but could be in other countries).

Over the two days, speakers from various banks, microcredit and NGO operating in Asia but also Kenya and Peru presented their personal finance and entrepreneurship programmes. The most common formats included trainers’ guides but it can also include comic strips, video clips and mentor’s guides. Financial Education programmes tend to cover the same topics (spending, debt, savings, planning and banking products) but the focus depends on the organisation and the clients’ types. Banks and microfinance institutions tend to focus more on banking products while NGO may include topics such as “how to say no to family” or “how to communicate with family about money.”

What about financial inclusion? Financial inclusion is to have a bank account and understand the main financial products. Yves Moury from Fundacion Capital (Colombia and Peru) introduced how his organisation promotes the financial inclusion of very poor Indigenous rural people in Peru. Very low income people already save – especially women, but traditional savings instruments don’t allow any anonymity (the entire village knows how many cattle they have), animals are not divisible and there is more pressure especially from the spouse to sell the animals and spend the money. Mr. Moury insisted that bank accounts would not replace traditional saving tools (mostly animals or tools) but be used as additional instruments. They also include Financial Education in their programmes but one big issue is the cost of organising and running live training. So, they plan to use other delivery modes like mobile phone with “nudge” SMS, tablet devices in banks for self-education, and tablet computers in villages for peer learning in communities. More on www.proyectocapital.org

On the second morning, several speakers introduced their programmes for children. An Australian teacher who created a curriculum for schools said how important it is to embed Financial Education in curriculum and in daily life reality. A Financial Education programme must include practical problem solving, be designed as progressive learning over years and include parents. Impact assessments showed that one-off courses have a zero retention rate after a few years. Plan Indonesia who partners with other organisations and the government, offers a youth economic empowerment programme. They made an interesting market research in 2010 on how 16 year old girls spend their money. The first group was single girls attending school: their main expenses were cosmetics, mobile top-up, jewellery, fancy hand phones, motorbikes; the second group (married 16 year old girls out of school) spend on food for family, children education and to pay back debt. More interestingly, when asked why non-married girls spend mostly on cosmetics, their answers were to get married and get out of the village… YWCA Korea built their own curriculum and send volunteers to selected schools to run courses during maths and social studies classes. To ensure the programme is successful, YWCA involves school principals and teachers. The programme also includes a field trip, a one day festival, a money camp, club activities, a mentor programme and one meeting with parents. They insisted that more sessions increase effectiveness. To conclude, they compared money to a knife: we need to prepare kids to use this dangerous tool by explaining why money can be dangerous and about values. Indonesia Central Bank declared their intention to integrate Financial Education in the school curriculum.

Old people also have specific Financial Education needs. In Indonesia, Women’s Resources Development sponsored by Tsao Foundation run a programme called “Financial Education for Mature Women” which includes topics such as financial planning (especially for retirement), better relationship and communication with family members, sense of compassion and care between generations and how to keep healthy at old age.

Habitat for Humanity and Mercy Corps presented how they include Financial Education in their disaster and post-conflict relief and not just in their livelihood programmes. Knowing Financial Education basics is crucial in order to take the best possible decision, especially to finance a new shelter or repairs (Habitat couple it with technical knowledge), enhance the importance of savings, and planning and how to protect money, understand products (insurance, remittance, transaction, loan…) and new technologies (ATM, mobile money…) and fraud. These two organisations too insisted that the two success factors of a Financial Education programme are 1. Repetition, 2. Immediate application (“REPEAT, DO, REPEAT, DO…”). As disasters are more and more frequent, preparedness has become very important: topics like savings, keeping papers safe… should be included in all Financial Education programmes. Mercy Corps also showed
how useful “Financial Diaries” are to get useful data on how target clients use their money.

Whatever the target, traditional training remains costly, especially the design part. We need to find new models to reduce the cost of traditional delivery. Another challenge is training the trainers– an Indian microfinance institution select trainers with the same background as their clients and uses a mix of live training, monitoring, refreshment programme and online programme to train them. A third challenge is to get clear measures on training effectiveness, but a few findings seem clear: 1. one-off courses do not have an impact– the retention over time is almost zero. 2. Trainers are key. Most speakers said it was important to have a broad approach and include different stakeholders (bankers, consultants, NGO, consumer protection agencies…).

More than in any previous conference, banks and microfinance institutions made it clear throughout the two days that by “embedding Financial Education in their marketing strategy”, they can gain more clients, retain their existing ones and enhance their product portfolio performance. This really gives food for thoughts on the neutrality of Financial Education programmes run by banks. There is definitely room (and need!) for purely informative and non-commercially biased Financial Education providers such as a+b=3 which goal is only educational and low income people’s empowerment. Besides, with the endemic crises of the Western financial system since 2008 and the banks’ roles, there is need for other views.

In the first evening, Tri Mumpuni gave a very inspirational speech on how we use our brain too much, and not our heart which leads to a “moral short-circuit”: our brain and heart are disconnected. In her speech she said that this disconnection leads people to become self-important and our education system creates this malfunctioning: education asks us to use logic only and not our social skills. We are too self-centered and don’t learn how to spend money to have an impact and help others. I also think that money is a tool… and not a goal; this reminded me of the discussion we had with trainers last October in Phnom Penh about the objective of Financial Education- to learn to use money according to one’s personal values… and not let money become our lives’ value.