Private sector should take the lead in financial inclusion

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Over-indebtedness impacts consumers at all income levels and, as more people are brought into the formal economy, educating them on the financial skills they need to effectively manage their finances is ever more important, says Peter Tshiguvho, CEO of Metropolitan Retail.

The World Bank defines financial inclusion as individuals and businesses having access to useful and affordable financial products and services that meet their needs and are delivered in a responsible and sustainable way. “An important contributing factor when it comes to promoting financial inclusion is improving the financial situation of the greater population. This is being addressed by government as they make strides to free up public funds for development in sectors such as healthcare and education - by tackling cases of collusion, bribery and general maladministration. However, government is not the only party that can play a role here," he says.

Driving education

Speaking specifically to the financial services industry, Tshiguvho suggests that the private sector take the lead in driving education and encouraging consumers to approach, and build relationships with, financial service providers.

“Whether someone earns R1,000 per week or R100,000 a month, a financial adviser is best placed to advise on how to manage and optimise this income and can help develop a long-term financial plan and budget to help the client achieve their goals – whether this be high returns on a major investment or saving enough money to buy new school uniforms.”

“Being available to, and educating, previously unserved communities can make a significant difference to their futures. In addition, creating innovative new products that are designed to meet the unique needs of these communities can assist them in building their own sustainable wealth and eventually even create job opportunities for others, and positively contribute to the greater economy,” he adds.

One such product, explains Tshiguvho, is the one-day loan created for the entrepreneurial Kenyan market. “This enables a vendor to take a loan out in the morning to fund, for instance, wholesale purchases. At the end of the day, the vendor pays back the loan, with interest,” he says.

With more than half of South Africans (55.5%) living below the national poverty line of R992 per month, according to a World Bank report, Tshiguvho notes that South Africa’s efforts toward financial inclusion should be accelerated by all who are able to make a difference.

Financial literacy

Recognising the importance of building a foundation of financial literacy in communities from a young age. “Considering the current youth unemployment rates within the South African context, it is also our intent to show young people, who may not have the means to consider formal education post high school, that they have options and are able to achieve African success.”

“By cultivating the right financial habits, through education, the nation as a whole will be better informed when making financial decisions. Achieving this financial inclusion can only have a positive knock-on effect on our unemployment and poverty rates as well as GDP growth,” he concludes.