October 1, 2013

Financial literacy, entrepreneurship, and the growth of our economies

Tue Oct 01, 2013

Today is the first day of Financial Information Month (FIM), which is celebrated annually by the East Caribbean Central Bank (ECCB) in the month of October.{{more}}

This year, as was the case last year, the focus of FIM is on entrepreneurship. The theme selected for the month is “Reshaping Our Future Starting Now”. The ECCB is of the view that the task of “Reshaping Our Future” to ensure our long-term success will require: new thinking, new ideas and new actions to forge ahead in an increasingly complex global economy; and collaboration and strategic partnerships.

The ECCB’s theme could not be more timely, given the challenges of the global economy and the times in which we live.

The traditional literacy skill set includes the traditional literacies of reading, writing, speaking and listening. However, today, many more literacies are being identified as necessary for full participation in a modern society and success in today’s world.

Among the more important of these literacies is financial literacy, which is the ability to understand how money works in the world, and refers to the set of skills and knowledge that allows an individual to make informed and effective decisions with all of their financial resources.

If we ever doubted the importance of financial literacy, occurrences over the last few years, including the crash of BAICO and CLICO and the Building and Loan debacle, have erased such thoughts from our minds. Higher levels of financial literacy among our citizens would have seen fewer persons experiencing such catastrophic losses with these financial institutions.

But understanding how money works and learning how to manage it prudently are important, even outside of those devastating events. These days, keeping one’s money in a savings account in a bank reaps very little benefit, as those institutions have devised charges for almost every service, and give you interest rates so low, one wonders if it is we, the depositors, who are paying them, to make profits using our money.

Entrepreneurship and the development of small businesses are critical to the growth of the economies of the region and the prosperity of our people. Maybe, the disincentive to save offered by our commercial banks, coupled with rising levels of financial literacy, will result in more of our people being willing to step out of their comfort zones and invest in themselves.