Financial literacy and financial inclusion are becoming pressing issues in Papua New Guinea and receiving increased attention. In part, this is a function of global trends: financial literacy is vital to sustainable development and is actively being supported by the donor community and local governments. It is also especially a focus for PNG, where a combination of topography, geography and history means understanding of money and finance is limited outside the major cities.
“Improved financial literacy can increase economic participation and social inclusion, drive competition and market efficiency in the financial services sector, and potentially reduce regulatory intervention,” said Loi Bakani, governor of the central bank, at the National Financial Inclusion and Financial literacy Development Workshop in 2013. The push for financial inclusiveness is achieving considerable success, but greater understanding of money and savings is needed. Bank branches, mobile terminals and ATMs alone are not enough to achieve greater “inclusiveness”, as people need the skills and knowledge to utilise access points effectively and responsibly.
Women are a key target for financial education – representing half the population, but holding just 30% of financial assets in PNG. Promoters of inclusion believe bank accounts will increase opportunities for women, giving them more control of their finances and those of their families. According to a 2014 study by the mobile standards association, GSMA, most women in PNG get financial advice from other women (29%), followed by husbands (18%) and newspapers (13%). Advice on business comes primarily from local leaders (40%).
The central bank’s National Financial Inclusion and Financial Literacy Strategy 2014-15 has mandated a working group on financial education. The group is focused on encouraging institutions to create their own programmes and is making efforts to get financial subjects taught in schools. The central bank is also supporting the use of technology to raise literacy. International partners, like the UN Development Programme, the Asian Development Bank and the Australian government, make financial education a key component of their inclusion packages; the Centre for Excellence in Financial Inclusion considers financial education to be critical to its mandate; and the Microfinance Expansion Project (MEP) makes it a priority. The central bank is also focused on protecting the public from fraud, which has plagued PNG for over a decade; for example, it often issues releases warning the public not to get involved with unlicensed financial firms.
The major institutions are also making efforts to increase financial literacy. In 2014, BSP signed a memorandum of understanding with the central bank to undertake financial education as a part of the MEP. A one-week course was held in 2014, training 27 staff in budgeting, coping with financial emergencies, savings and mobile money. Another 93 staff were scheduled to receive the training in order to go on to train 60,000 customers nationwide. Westpac has made its Financial First Steps programme available since 2010, with workshops to teach money management and savings skills. Westpac also holds Business Basics workshops, which help entrepreneurs and small business people with accounting, record-keeping and planning. Meanwhile, ANZ’s MoneyMinded programme has been used in PNG to educate over 2000 people since 2010, and Nationwide Microbank is educating via its MiCash product and associated literacy programmes.
Inclusive efforts are not without challenges. Mobile money, for instance, poses problems for the unbanked, as users are not always comfortable with new technologies. According to a GSMA survey, 47% of women and 35% of men in PNG who wanted a mobile bank account did not open one because of concerns they would not understand how to use it. Language is also a bottleneck. Only two-thirds of people are literate and many are only conversant in local languages. Banks are working with mobile banking agents to circumvent this: store owners can use their bank-linked terminal and fulfil customers’ banking requests.