Financial Literacy and Savings Mobilisation

 

MOBILISATION OF FAMILY SAVINGS

Papua New Guinea cannot afford to continually rely on the use of foreign credit facilities.

Usually, people are not short of money. People are short in knowledge and application of the accumulation and use of money.

The EDTC Personal Viability Programme has an in-built system to assist families to accumulate and use their own money for livelihood projects. The development of correct habits (with regards to money) is likely to result in an increase of entrepreneurial activities to encourage local production which will in turn assist the national economy.

In addition, this section of the programme tends to mould together a stronger family unit where each member contributes to the well-being of the family.

 

DEMAND DRIVEN FINANCE

The demand driven approach is based on people development first to create demand for credit. Without an entrepreneur class in PNG, it is highly unlikely that sufficient demand for credit can be generated in the micro or informal sector to sustain a micro bank. This means human development takes priority especially holistic human development. Holistic human development is about the development of a person, which includes the physical, mental, spiritual, emotional and financial. The accumulation and use of money is just one by-product of holistic human development where we teach financial literacy. Unfortunately, no other training institutions in PNG teach financial literacy.

 

SAVINGS

There is approximately K1,000,000,000 domestic savings in PNG. This represents K200 per person.

In 1980, Switzerland boasts the world’s biggest savers with an extraordinary $16,644 in the bank for every man woman and child compared with $1843 in New Zealand.

Clearly, developing countries like Papua New Guinea have a long way to go in terms of financial literacy and savings.

PV HomeSchool

ECONOMIC IMPLICATIONS

There are not likely to be any adverse economic implications.

The PV HomeSchool is likely to bring considerable development in rural PNG because it focuses on the development of the 80% rural people and the development of their resources for their benefits.

The PV HomeSchool is likely to mobilise domestic savings on an unprecedented scale because core subjects include FINANCIAL LITERACY and FINANCIAL INTELLIGENCE, neither of which are taught in PNG.

The PV HomeSchool is designed to train people to become self-reliant and financially independent, the twin pillars of sustainable development. A country is highly unlikely to sustain itself unless the people are self-reliant and financially independent.  It is no wonder many institutions are unsustainable without external financial assistance.

 

FINANCIAL IMPLICATIONS

There are not likely to be any adverse financial implications because the PV HomeSchool is designed to help alleviate poverty.

PV HomeSchool owners shall reap the benefits of their own sweat and viability because their income is directly proportional to the income of the people they are serving.

 

MICRO FINANCE IMPLICATIONS

A paper on banking services for the grassroots has already been included earlier (see pages 7-12). PV HomeSchools are well placed to be “intermediaries” of rural banking services, in isolated areas where traditional banks (even Rural Development Bank) cannot reach because they are obviously unsustainable.

Secondly, micro credit schemes are unsustainable unless the borrowers are viable. This means people need to be developed to become human assets before they have the capability to handle credit. The PV HomeSchool is specifically designed to develop human resource into human assets with lessons on Financial Literacy and Financial Intelligence.

In PNG, political interference is one of the causes of “bad debts” where loans are given to borrowers through political pressures. Political interference shall be minimized if banks adopt the policy that loans must be given only to those people who are human assets, that is, people who have achieved a Personal Viability Grading.

Finally, the PV HomeSchool is likely to create the demand needed to sustain a micro bank.

see also PV HomeSchool