Money related Literacy

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Money related Literacy For Risk Management In Financing Agriculture Mr. Charles Mutua www.sccportal.org Expert Meeting Managing Risk in Financing Agriculture April 1 – 3, 2009 Johannesburg, South Africa

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SCC The Swedish Cooperative Center (SCC) was established in 1958 by the Swedish agreeable development. The general objective of SCC is neediness mitigation, which is communicated in the association's vision of "a world free from destitution and foul play".

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SCC's need divisions and cross-cutting topical zones Rural Finance Housing Finance Micro-protection Financial Education

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Presentation Outline What is Financial Literacy? What is Financial Literacy is not Why Financial Literacy? Avocation Importance What Risks? Money related Literacy along the Value Chain (VC) FL Methodologies & Approaches

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WHAT IS? Money related proficiency is "the capacity to prepare monetary data and settle on educated choices about individual back… " (Asian Development Bank) Financial Literacy is a circumstance which " engages customers to settle on educated choices" (aptitudes, mentalities, information and comprehension) empowering the purchaser to act in like manner Financial education/training "tries to reinforce and change practices that prompt to expanded salaries, better administration and assurance of rare resources, and compelling utilization of budgetary administrations… " (Microfinance Opportunities) It utilizes Adult learning standards and practices Brings learners claim experience to a learning occasion

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What is definitely not! It is not Marketing (exposure, deals or publicizing) Financial Literacy is not simply raising of mindfulness and giving data

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Why Financial Literacy? Legitimization: Kenya for instance: 38% of the populace is avoided from money related administrations (unbanked). Just 19% uses budgetary administrations from formal establishments like banks, 8% utilizes semi-formal foundations (SACCOs) while 35% utilizations casual frameworks (ROSCAs, ASCAs and so forth) (Financial Access in Kenya 2007, FinAccess) South Africa: Only 34% of study respondents knew the right word to depict 'yearly cost increments'. (ECI Africa 2004, FinScope) Formal 19% Formal Other 8% Informal 35% Excluded 39%

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Why… Cont'd "An educated client is a decent client" Importance: At the individual level - the absence of budgetary proficiency makes individuals more helpless to the decimation brought on by crises, over-obligation, over-fanatical retailers or fake plans At the institutional level - the absence of monetary education produces falsehood and question of formal money related administration suppliers Misinformed buyers make poor customers, who thus speak to expanded hazard for money related foundations and add to a weaker primary concern . At the market level - clueless buyers can't play a formative and checking part in the market to weed out terrible practices and suppliers. "Money related proficiency is a win-win recommendation for customers and organizations"

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What Risks? Characteristic Risks in Financing Agriculture Associated Risks Non Compliance/Client Integrity Customer Performance Risks Transactional Risks/Payment Risks Country/Political Risks Warehouse Merchandise Risks on esteem, quality.. Creation Risks Credit dangers Payment/Sales Contract Risks Price Risks Currency Risks Diversion Risks Buyers Risks

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Financial Literacy Along the VC Flow Finance and Supporting Services Medium and Large Exporters and Wholesalers Savings Investments Credit Banking Services Risk Management (i.e. Protection) Planning Etc. Processors Financial Literacy Collector/Traders Farmers & Producer Groups Input Suppliers

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FL Methodologies Awareness and Information Learner-Centered Study Circles Organized visits to budgetary establishments Involvement of multipliers (e.g. ministers, exchange unions, educators) Training of coaches Mentoring, utilization of corporate volunteers E-stages Speeches and discourse gatherings Radio and TV programs Articles and promoting effort Print material (notices, flyers) Competitions Expositions School occasions Road appears

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Learner – Centered Methodology: Key Principles that must be considered Learners learn best when drawing all alone information and experience Learners must have the capacity to apply the new adapting instantly Relevance Respect Learners need to feel regarded and like equivalents Immediacy We recall 20 percent of what we listen, 40 percent of what we hear and see, 80 percent of what we listen, see and do Dialog Learners need to get commend, notwithstanding for little endeavors Learning must be two-way Affirmation 20/40/80 Rule Cognitive, Affective, and Psychomotor Interaction Learning must include learners through talk, little gatherings and gaining from associates Learners need to feel that others esteem their thoughts and commitments, that others won't put down or disparage them Engagement Learning ought to include deduction and feelings and also doing Safety Adapted from: Adult Learning Principles and Curriculum Design for Financial Education, MFO, FH, Citigroup

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Approaches: At the Individual & institutional level Choose a supportable procedure (one-on-one, TOTs, think about aides and so on) Develop/adjust a pertinent educational modules e.g. Swedish Cooperative Center, Financial Literacy Study Circle Guide

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Cont'd… At the nation level Craft national procedures for money related proficiency Create organizations Integrate monetary instruction and protection in educational module of government funded training framework Code of Ethics, e.g. Uganda Microfinance Financial proficiency accentuation days/months utilizing a blend of instruments Target gather particular exercises (youngsters, youth, ladies, business people) Indirect learning as a component of different crusades (wellbeing, back as a rule

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Approaches: Kenya's Example (Adapted from: Financial Education in Kenya, FSD Kenya, MFO, 2008) Financial Education Partnership (Public/Private Partnership) Actors Government (Ministries) Regulators and bosses Public learning foundations Parastatals Roles and Responsiblities Policy advancement Policy requirement Facilitate section (to schools) Disseminate data Assess affect Staff time and subsidizing Actors Industry players and their systems Civic establishments (NGOs, houses of worship, shopper assurance affiliations) Roles and Responsiblities Leveraging customer base Incorporate FE activitites into administration conveyance Host FE Programs Staff time and financing (CSR) Finance FE battles Vision • Champion FE activity; • keep up solitary center; • keep up impartiality & validity; • quality control on substance; • advertise FE to partners; • strategy promotion; • recognize and co-ordinate working gatherings, • encourage research and observing and assessment exercises

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Cont'd… At the worldwide level International Network on Financial Education www.financial-education.org Yearly meeting: www.FinancialEducationSummit.org Global Training Program: www.GlobalFinancialEd.org Financial Education Fund (FEF) - FEF is another reserve which will bolster inventive undertakings in Africa that enhance budgetary capacity: www.genesis-analytics.com Working gathering "Protection instruction" www.microinsurancenetwork.org

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Merci! Gracias! Ke a Leboha! Ngiyabonga! Ndoliboa! Nakhensa! Much obliged to You! Mr. Charles Mutua Senior Program Officer – Financial Services Swedish Cooperative Center & Vi Agroforestry Regional Office for Eastern Africa P.O. Box 45767 – 00100, Nairobi, Kenya Tel: +254 20 4180201/37 Fax: +254 20 4180277 Web: www.sccportal.org Email: charles.mutua@sccroea.org

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