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Why Join Financial Literacy Initiative?

In order to achieve the purposes of the financial literacy initiative, SAFE seeks the involvement and support of all relevant stakeholders such as the government ministries/departments, regulatory authorities, financial institutions, local & international donor agencies & institutions, non-governmental organizations, relevant communities and groups etc.

Why Regulators Should Join?

  • For regulators of financial services, helping people to make informed financial decisions is central to protecting consumers, promoting public awareness, and maintaining market confidence, and for enforcing stringent market conduct rules.
  • Financial literacy helps to improve the efficiency and quality of financial services.
  • Financially literate consumers help to reinforce competitive pressures on financial institutions to offer more appropriately priced and transparent services, by comparing options, asking the right questions, and negotiating more effectively.
  • Financially literate consumers increase the demand for, and responsible use of, financial services, help to underpin financial market stability, and contribute to wider economic growth and development.
  • Financial literacy efforts compliment the results of consumer protection laws and awareness campaigns.

Why Governments Need to Join?

  • Improved financial literacy could potentially play a positive role in boosting the low savings rates in the poorest communities.
  • Financial literacy could also result in better use of financial products for business transactions (for example, through loans to finance capital expansion and letters of credit to expedite exports and imports), better investment decisions, and improved household consumption through more responsible financing of durable goods, schooling, and investments for retirement.
  • Better economic decisions by individuals are known to lead to a more prosperous and stable economy, for which financial literacy is considered as paramount.
  • Collective welfare in a society is correlated to a better educated and financially literate population.

Why Financial Institutions should Join?

  • Financially literate consumers tend to increase the demand and the use for savings and investments products (such as saving accounts, insurance, stock and mutual fund investments etc.
  • Financial literacy also helps in the expansion of access and the availability of other basic financial products and services.
  • Financial institutions also stand to benefit from financial literacy as informed clients pose less risk and constitute a market for sustainable financial services.
  • Financial literacy efforts result in better understanding of financial products within the marginalized communities of the society (such as agri & rural populations, women, micro finance clients and other small business owners etc).

Why International Donors / NGOs should Join?

  • Since most of the International donor agencies deal with the agendas of supporting livelihoods, economic growth, sound financial systems, and poverty reduction, therefore greater financial literacy is considered important in helping meet these targets.
  • Financial literacy programs compliment the agenda for the community social development as these programs also promote the cause of greater access to the marginalized sections of society, the low income groups & rural populations etc.
  • World Bank, DFID, OECD, UNCDF, UNDP, EU and AusAID etc., are known to have supported the programs in various regions for promoting financial literacy and creating access to financial services to the most unbanked region of the world. 
  • Asian Development Bank’s Improving Access to Financial Services (Phase I) Program (IAFSP) for Pakistan was approved in December 2006. The program consisted of a $300 million program loan (Loan 2291-PAK) from ADB's ordinary capital resources (OCR), an SDR-denominated loan (Loan 2292-PAK) equivalent to $20 million from ADB’s special funds resources (ADF loan), and a $2 million technical assistance (TA) grant (TA 4894-PAK).The entire proceeds of the ADF loan were used to establish a 20-year endowment fund managed by the State Bank of Pakistan (SBP).
  • The Program Output of the Financial Literacy component is disheartening and indeed unfortunate in a country like Pakistan where statistics as well as ground realities indicate imperative and urgent need for a dedicated nation-wide financial literacy drive to promote financial inclusion of the underserved factions of society.
  • The IAFSP comprised of four components, the last of which was “financial and basic microfinance literacy”. This last component was to be funded by the grants from the Endowment fund created under the ADF loan being managed by SBP and administered by a committee composed of representatives of five stakeholders—SBP, the Pakistan Microfinance Network, the Pakistan Banks Association, the Pakistan Poverty Alleviation Fund (PPAF), and academia. (ADB acted as an observer to the committee.)
  • The Program Outputs as stipulated by the completion report of the program compiled and submitted in December, 2009 indicated the following:
    ItemAction Proposed Under the IAFSP Current Results of Action Taken
    Lack of education and literacy (basic and financial), especially among women and in rural areas Promote basic and financial literacy initiatives using income from the endowment fund created under Loan 2292-PAK None; the endowment fund has not yet disbursed any grants to support Financial literacy initiatives.
    Source: ADB Pakistan: Improving Access to Financial Services (Phase I) Program Completion Report December 2009 (Project Number: 39492)
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