Financial literacy: an emerging global literacy challenge

Boubacar Amadou Cisse

The process of learning has been a prominent stage in human evolution and history. Learning is a continuous practice. To this day, education is one of the key factors in our society. Formel learning in many fields of study is required to satisfy the need of modern societies. Moussa Traore, one of the former presidents of the Republic once quoted: "Non-education is obscurantism". This reflects how important general access to knowledge is crucial; the best approach to undertake and develop knowledge is through education. To reach macro and micro-economic welfare, we have made good use of the different economic and financial systems in place. However, as time goes on, the gap between the different social classes widens; there is information or education asymmetry between practitioners in the financial sectors and normal citizens. Therefore, the topic of financial literacy rises, and many people think it may surge into major problems in the society.

According to the Organization of Economic Co-operation and Development (OECD), financial literacy is a combination of awareness, knowledge, skill, attitude, and behaviour necessary to make sound financial decisions and ultimately achieve individual financial wellbeing. From this definition, we can derive that knowledge in finance, at least strong basic knowledge, is a necessity to all in a society. The periods when people used to keep money at home have evolved. Banks and other financial intermediaries manage our assets. However, it is important to be aware of how our money is being managed by these institutions.

So basically, financial literacy is a skill. It enables us to manage our assets efficiently and effectively. In the last decades, the financial service sector has introduced an array of financial products. Simple examples are credit cards, mortgages, investment vehicles, insurance etc. Financial literacy helps us understand these products and better use.

Of course, we may have some firm religious restrictions such as in Islam; the interests charged on loans and deposits are forbidden. It is called Riba, akin to usury. In other religious books like the Bible, the Hindu Sutra and the Buddhist Jatakas, there are many references to the payment of interest, where it is forbidden as well.

However, it is imperative, even for a religious person, to understand these practices. Besides, there are many other religiously lawful financial practices in all these religions, among which the share investment can be cited. Furthermore, financial literacy helps us better exchange and comprehend the economic system. It shows us the difference between saving and investing, helps spend less than we earn; it also allows us to prepare a better future for ourselves and our kids.

In today's complex and volatile economic system, developing financial decision-making skills is crucial. As we are striving to be financially independent and have a good life, avoiding financial distress could be a bit of sound advice. One of the best approaches we could, or should use, is to develop an interest in learning finance; that is at the individual level. Governments must also put in place frameworks enhancing financial literacy in societies.

Education and creating awareness of people about financial literacy is necessary. A popular Bambara proverb says: "The world is a horse whose bridle is in the hand of those who are knowledgeable about the systems". The world changes and so does everything around us; one of the most important things is to always understand how things work out and adapt to changes.