Financial Literacy Changes Life of Villager

April 5, 2010

Metuisela Moto, a semi-subsistence farmer, his wife and two children have seen dramatic improvements in their life over the last few years. Together they have been able to save part of their household earnings, deposit them in a joint bank account and pay for improvements to their home and farm – things which were much needed but could not be financed before. As a result the whole family now enjoys a better standard of living and financial security.
The reason behind these changes is a financial literacy course that was brought to their village by the United Nations Development Programme (UNDP)/ ANZ Financial Capability Initiative in Fiji.

Under this programme, up to 12,000 women and men in over 350 villages were trained on how to manage their personal finances, how to budget money, how to prioritize, make a savings plan and how to take advantage of the bank to achieve their family goals. The financial literacy training is delivered to complement the ANZ Rural Banking service which has opened around 60,000 savings accounts.

“I am very happy that the financial literacy training and rural banking was brought to our doorsteps,” said Moto.
The training took place in the village and is conducted in the vernacular by a trained facilitator. Women and men were invited to attend and each workshop was scheduled to fit into the daily routine of the community to allow maximum participation. “It has helped us save money and make all these improvements to our home and farm that I’ve wanted to do for a long time.”

Moto, lives in a far flung rural community on Viti Levu, Fiji’s main island. Moto, like most of his fellow villagers, plants rootcrops for sale at the Suva market.

He attended the financial literacy training in 2006 and opened up a rural banking account. By 2008 he had enough savings to change the roof of his house, buy new furniture that his wife wanted, and build a new lavatory. Last year, Moto bought four calves for FJD $600 (USD $300.00).

Moto’s success has inspired his fellow villagers and he has become a role model in his community. Now, many of the 60 villagers manage their money better, have rural savings accounts and progressively made improvements to their lives.

In 2007, UNDP Pacific Centre conducted a survey, in conjunction with Massey University (New Zealand) and the National Centre for Small and Microenterprise Development (NCSMED) to measure the impact of the financial literacy training and banking on the wellbeing of rural households. The survey, a first using a quantitative methodology, was conducted in 25 villages in the Naitasiri Province. The survey validated that households that attended financial literacy training and have savings account enjoy significantly higher standards of living and financial security compared to those that had no access or even access to just one of these two interventions. It also revealed that villagers who demonstrated more competent financial behaviour focused more on investment like improving or extending their farms, thereby generating more income. Moto is a perfect example of this.

The study showed that investing in financial literacy training that is accessible and convenient to women gives the greatest returns to rural households. Women accept the principal role in the management of household finances in rural Fijian households and are demonstrably more competent than men at managing household finances and at saving. Significantly more women that men prepare a household budget and women are able to save F$100 (US$50) more than men. Their role is, therefore, pivotal to improving the wellbeing of their householdsng and confirms that achieving financial inclusion must entail the inclusion of women.

Financial literacy, and more broadly facilitating financial inclusion is the objective of PFIP. UNDP and UNCDF have teamed up with the European Union and AusAID and through PFIP are working with other development partners to promote financial inclusion in the region. A regional approach enables PFIP to effectively and efficiently identify and remove impediments to financial inclusion that are common to the Pacific and support innovative approaches to reach the financially excluded.

PFIP works closely with policy makers, including ministers of finance and central bank governors, the Pacific Islands Forum Secretariat which also sits on its investment committee to ensure the needs of the Pacific Island countries are represented and donor partners. The Programme works predominantly in PICs with the largest unbanked markets, including 3 LDCs, (and works in partnership with a similar joint programme in Timor-Leste) and is on target to reach over 500,000 individuals by 2011 who would have otherwise no access to savings, money transfers, insurance and loans.

The Pacific region remains one of the most “unbanked” regions in the world – 70% of Pacific islanders are financially excluded. Both geographic and socioeconomic conditions specific to the Pacific nations pose additional challenges; low population density and large distances between islands make the provision of such services even more difficult. A number of innovative ideas are being tested on the ground: the Programme rolled out a pilot testing of Enterprise and Financial Education Curriculum in schools in Samoa; provided grants to the National Bank of Vanuatu to build rural banking operations through improved rural communications (with ADB); is testing a mobile banking solution in Papua New Guinea to build national cash-in/cash-out network. The Programme also has a strong policy, advocacy and coordination component aiming at enhancing regulatory environment to facilitate financial inclusion in the region.