Adult financial literacy must be addressed: Bakani

There is a need to strengthen consumer digital financial literacy and awareness given the low levels of adult financial literacy in the country.

This was outlined by the Central Bank Governor, Loi Bakani while addressing participants today at the Improving Digital Financial Literacy workshop.

The two-day workshop is funded by Australia and co-sponsored by Papua New Guinea and New Zealand, and endorsed through the Finance Ministers’ Process on April 2, 2018.  

Bakanai said with the high illiteracy rates and low technology innovation and penetration, financial literacy and consumer awareness must be improved to drive usage of digital financial services and products.

He said Institutions and financial regulators have the opportunity - and indeed the responsibility - to prepare consumers for both the risks and the rewards of the digitization of financial services.

“The existing “bricks and mortar” banking system does not work for poor people. This is partly because most of their transactions are conducted in cash. Handling cash transactions is costly for banks, utility companies and other institutions, which pass along the costs to their customers.

“This takes the services beyond the financial reach of consumers.”

Mr Bakani said the global revolution in mobile communications, along with rapid advances in digital payment systems, is creating opportunities to connect poor households to affordable and reliable financial tools through mobile phones, and other digital interfaces.

However, he stressed that digital financial services should be suited to customers’ needs, and delivered responsibly, at a cost both affordable to customers and sustainable for providers.

He went on and gave the three key components of any such digital financial services which are: a digital transactional platform, retail agents, and the use by customers and agents of a device – most commonly a mobile phone – to transact via the platform.

The specific objectives of the two-day workshop are to:

a) identify and review strategies, initiatives and actions that currently contribute to digital financial literacy in PNG;

b) examine examples of digital financial literacy initiatives and actions from other economies;

c) based on PNG circumstances, develop options to improve consumer digital financial literacy and awareness and identify priority actions; and

d) formulate a plan to adopt the appropriate actions. 

Digital financial inclusion (DFI) is defined as digital access to and use of formal financial services by excluded and underserved population; this phenomenon has emerged as a new wave in the hope that it will reach the last mile consumer in the most convenient and affordable manner.

Freddy Mou