My home country, Nepal, is dubbed a Least Developed Country marked by its slow economic growth, low-income levels and low Human Development standards. Historic social divisions and practices of exclusion are deep, anachronistically affecting thousands across the country. The traditional Nepali social structure is quite exclusionary. People are excluded in the social space on the basis of language, caste, religion, region and culture, which leads to disadvantages to certain communities. Social exclusion, no doubt, is the historical product of a discriminatory state system in Nepal. Urban areas offer the greatest access to opportunities; the sheer distinction in income and living standards between those in rural and urban areas is jarring.
As of 2018, access to financial institutions in Nepal has been on the rise, with the number of banks opening and people establishing accounts increasing. This past year marked a great omen for our future, but there is a lot of work to be done. Even with the increasing rate of account holders, 18% population is totally excluded from Banking system. Nepal’s financial access shows 61% of the adult population has access to formal financial services, of which 40% are formally banked and 21% use ‘other formal’ products. Of the remaining total, 21% of adults use only informal financial services, and 18% of the adult population use no financial services at all. However, when the overlaps in use of financial channels are considered, informal channels emerge as the most popular, with 57% of the adult population reporting uptake of products through informal channels.
Financial inclusion, meaning access to useful and affordable financial services, serves as a critical important tool for poverty alleviation and inclusive growth as it paves the way for a more equitable society. But to even achieve this financial inclusion, it is vital to educate the masses on financial literacy, a skill many take for granted. Financial literacy equips people with the knowledge necessary to effectively utilize their economic sources and make efficient, planned financial decisions. Even with several key initiatives instituted by the Central Bank of Nepal, financial literacy among the Nepalese people is still very low.
Nepal has a large youth population, with 20.8% between the ages 18-25, and it’s steadily growing, meaning our nation is moving towards a youth bulge; young people aged 18 to 40 will form the largest sect of the total population at 40.68%. With this change in demographics, the landscape of opportunities offered to them needs to change too. Young peoples’ financial knowledge is limited to savings and controlled spending only. Investing, stock market trading and other mechanisms of attaining financial security are lesser known, yet they provide viable avenues of growth for both themselves and the nation as a whole. Through my company FINLIT Nepal, we have developed a financial literacy curriculum that is based on the Nepalese context. We believe strongly in teaching basic financial skills that will empower students and especially women to save their money and ultimately become a part of the country’s financial system. Me and our team of 48 paid volunteers work with school groups to provide month-long lessons in financial literacy. The “School Bank” concept starts with a piggy bank which our students fill up and ultimately use to open bank accounts.
Financial literacy is often what divides the have and the have-nots. Many Nepalese are in the final stages of their higher education and on track to start careers, but to even aspire for such a life track requires the most basic understanding of how to manage finances to further their life prospects. It is no surprise then that Nepali students dominantly hail from urban centers. Rural students do not even have the financial ability to get themselves to study in higher education, thus creating this vicious cycle they are trapped in. Social mobility is hampered by this inequity.
Education is touted as a critical vehicle to eliminate poverty, and financial literacy is a cornerstone of this. Banking the world’s unbanked and welcoming them to formal economies is a noble cause, but we cannot skip ahead and forget to equip them with the most basic skills.
If we train young people to handle money at a younger age, imagine the support they could provide for their families.
Financially literate young people are the stepping stones to a better future with better jobs and living standards.
Money runs everything; it is better to know how to control it.