Is a financially literate population key to Guyana’s success?

With the World Bank projecting GDP growth of more than 20% this year, it's easy to get excited about Guyana's future. However, the prospect of a rising tide lifting all boats does not always follow.

Certainly, with growth rates like this, financial wellbeing should improve across society as infrastructure develops, social spending increases and wealth trickles down. But for private sector growth and individual wellbeing, another plank needs strengthening: A financially literate population will be key to Guyana’s success.

What do the financial literati look like? Don’t mistake me: I’m not talking about the financially successful. Financial literacy is not a measure of wealth. It is the ability to make good financial decisions.

Consider the profile of a financial literate: We can assume that this person has at least a basic understanding of the concept of inflation, and how rising prices nibble away at their savings. They know that handling inflation means investing for returns that beat the inflation rate over time. They are familiar with the concept of investing for retirement.

They also understand that lines of credit come at a cost, and they are savvy (and disciplined enough) to manage those costs with an eye on their income. They understand that credit is a tool that can improve your standard of living - by affording you a house, a vacation, a new car – or suck you into a debt trap. (The South Korean Netflix series “Squid Game” is a hit because it powerfully conveys the potential perils of personal debt in a free-lending society.)

The financial literate evaluates risk versus rate of return, with at least a basic understanding of their own personal investment profile.

Commercial banks have responsibilities in building a financially literate society. These start with our own criteria: A responsible lender strikes a balance between lending to all comers (considering the potential calamity of widespread inability to repay), and restricting loans so that marginal borrowers find it difficult to access credit. Increased diversity and availability of financial products must be accompanied by fair and honest appraisal of prospective borrowers.

Building a financially literate society begins with essential programs. The first generation financial literate has few mentors for early lessons on balancing a budget or saving for retirement. (Though I’m sure there are many who learnt their most important financial lessons from experienced household money managers, some of whom could accurately estimate the value of a heap of coins in the “scale” of an extended palm.)

Commercial banks are constantly asking ourselves how we can expand financial literacy. And how impartially can we do it. Over the years, Republic Bank Guyana has hosted and facilitated several financial literacy programs, mostly for commercial customers and small businesses, often partnering with the University of Guyana.

Recently, we’ve focused on female entrepreneurs through RBL Guyana’s Women Entrepreneurs Business Builder Programme. It’s a year-long, self-paced online programme that provides access to financial mentorship, aimed at helping women to grow their businesses.

Our partnership with the Cherie Blair Foundation is another sign of our commitment to women’s financial literacy, through the Women’s Road to Growth Programme in Guyana 2021.

And we are about to launch another initiative to assist SME growth through our partnership with Action Invest.

The library of the internet is vast and deep, but there are too many rabbit holes, too much misinformation, and too many agendas for the naïve and uninformed to fall prey to. To be fair, even financial sophisticates succumb to the wiles of conmen. The traps are numerous and the costs too great to ask an entire society to self-educate. The lure of pyramid and Ponzi schemes and volatile investment platforms are too powerful.

Few in Guyana will have forgotten “Accelerated Capital Firm”, which collected an estimated $27 million from 17,000 people, and whose principals were subsequently charged with operating a pyramid scheme.

Long-term financial success means separating your “serious money” from your “play money”. Money that you can’t afford to lose should never be speculated with. But it is too easy to mock the person who gets drawn into a financial scam. How can you deny the hope of a hard-working person who sees a neighbour collecting a handsome payout on a small investment? Even if they were aware of the likelihood of default, many hope that they can “win” before it all falls apart.

Regional regulators and police forces have recently stepped up social media education about the telltale signs of financial scams, and made it easier for citizens to report unregulated schemes through investor protection apps.

RBL Guyana recognizes that widespread financial literacy is important to Guyana’s future, perhaps as much so as the ability to turn squiggles of ink into intelligible language.

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