Financial Literacy Initiative MoU to Reign in Private Sector

A Memorandum of Understanding (MoU) was signed on Friday between the Financial Literacy Initiative (FLI) and its Platform Supporters in a ceremony held in Windhoek to reign in private sector players to the national program. Prominent Platform Supporters include the Namibia Financial Institution Supervisory Authority (NAMFISA), the Bank of Namibia (BON), Ministry of Education, Ministry of Trade and Industry, the Ministry of Youth, National Services, Sport and Culture (MoYNSSC) and Standard Bank Namibia. The FLI is a public financial education programme launched to serve as a catalyst for financial inclusion by providing consolidated financial education to the public. The Fourth National Development Plan (NDP4) summons the financial services industry to address the financial constraints for individuals, particularly in the lower income categories.

The MoU stipulates expectations from the FLI platform supporters and how the FLI will function in relation to its secretariat partners. The MoU embodies the understanding of the Platform Supporters with regard to a relationship of mutual cooperation, funding, management and common objectives of consolidated financial consumer education and consumer protection activities. Since its launch, the Financial Literacy Initiative has grown in scope and outreach, expanding from a core group of eight founding institutions, to over 40 cooperating institutions and extensive distribution network country-wide.

“The signing of the Memorandum of Understanding on FLI here today is a significant undertaking by the collaborating institutions to jointly design, fund and undertake targeted financial education and consumer protection initiatives in the country. By committing to pool resources and package interventions, this undertaking renders FLI as a truly national smart partnership among Government, the private sector and development partners to be emulated in other spheres of our socio- economic endeavour,” said Finance Minister, Saara Kuugongelwa-Amadhila.

The Finance Minister continued that access to affordable finance, even for small amounts of credit, can dramatically improve welfare, such as allowing the micro entrepreneurs being able to acquire small-scale equipment and establish income generating self-employment.

It is for this reason that the Financial Sector Strategy was adopted as a blueprint for the financial sector development and transformation.

Achieving financial inclusion is one of the key outcome areas of the Strategy. Part of the strategy is the introduction on a Basic Bank Account, which according to the Finance Minister, now boasts with over 96 000 clients since its introduction about two years ago. “The financial services industry, especially the banking industry should, however, be commended for making concerted efforts to provide innovative and increased service offerings to the consumer. The introduction of a Basic Bank Account targeting low-income individuals, adoption of zero cash deposit fees for SMEs, the evolution of cellphone banking, as well as the coming online of the e-Bank hold promise to expand banking services to the large number of the previously underserved segments of our population. Such product innovation creates demand for services and a business case for offerings down the pyramid,” noted Kuugongelwa-Amadhila.

The MoU signed on Friday provides terms of cooperation among the FLI support institutions, based on mutual trust to jointly design, fund and manage the undertaking of consolidated financial education and consumer protection activities.

And, as the FLI is not a legal entity, the support institutions have mandated the Ministry of Finance as the custodian of the initiative to open a Pool Bank Account to receive budgetary contributions and make payments for the agreed activities. The private sector contribution is envisaged to account for about 40 percent of the FLI budget, with the Government and parastatals accounting for about 60 percent of the budget due to the public content of the education programme.

“The coming into operation of the MoU offers a distinct conduit for the private sector to invest in consumer education and protection activities in a manner that reinforces objectivity, optimises synergies and economies of scale and avoids duplication of effort. In particular, the financial services industry through its Charter adopted five years ago has, among others, committed to spend 0.2 percent of its after-tax profit on consumer education. To date and mid-way through the Charter’s 10- year period, a verifiable Progress Report on compliance and outcomes has not materialised. It is thus of utmost importance that signatories to the Charter make use of this platform to aance the scorecard targets on the financial education and consumer protection front,” remarked Kuugongelwa-Amadhila.

The Financial Literacy Initiative was established to enhance financial education for individuals and micro, small and medium enterprises (MSMEs) in Namibia. Since its establishment in March 2012, the initiative has grown within the sector and now works with more than 50 supporters from the private, public and civil sectors with the aim of addressing and serving the needs in the area of financial literacy in a coordinated effort.

Source : New Era