Filipinos See Financial Education as Best Response to Brexit, Trump Votes
By Right About Money Staff Report
January 11, 2017
Prosperity and financial literacy go-hand-in-hand, according to Philippines officials at a recent summit focused on building the domestic economy. They view financial education as instrumental in light of the Brexit vote and election of Donald Trump, which signal a global movement toward nationalism that threatens the international aid Filipinos have long enjoyed.
Financial access is a big part of the nation’s push. A third of municipalities have no bank offices, according to the Status Report of the Philippines Financial System published by Bangko Sentral ng Pilipins. Requiring banks to expand geographically has been part of the strategy for financial inclusion. Yet one insight emerging from the Philippine Economic Society’s annual meeting late last year is that this may be precisely the wrong approach.
The physical presence of banks doesn’t guarantee that people will use them. So bank expansion into new markets may not only be costly, but pointless. Other research supports the notion that many of the unbanked globally are that way by choice, not circumstances.
The panel thus concluded that financial education must be part of the national solution, so that individuals understand the value of modern financial products that can give them easier access to emergency funds and let them borrow at lower rates. The panel endorsed a large-scale effort to promote financial literacy that aims to lead individuals to smarter banking habits.
As part of the effort, under way for a few years, the government passed the Economic and Financial Literacy Act of 2015, which established an “economic and financial literacy week” and requires all government agencies to promote economic and financial awareness among individuals. The nation’s Development Authority is planning financial literacy activities. Its Information Agency is giving air time to programs and materials that promote economic and financial awareness. The Philippines Department of Education, and all universities, now have programs to promote financial literacy among students in public and private schools at all grade levels.
The hope is that a higher level of financial literacy will stimulate markets, stoke competition and lead to greater opportunities to save and invest. Saving more is being viewed not only as healthy for the individual but patriotic. Savings fuel investment and strengthen the nation’s finances, which leads to better roads, buildings, bridges and other infrastructure.
“The payoff will be huge,” Gil Beltran, undersecretary and chief economist of the Philippines Department of Finance, said at a conference in the U.S. last year. In his homeland, a more financially literate population would add 4 percentage points to GDP, Beltran says.
This is exactly the kind of investment in the domestic economy the government wants to see. It would provide a bulwark against the nationalism now threatening to spread around the world, panelists agreed. They concluded that financial literacy can help break a culture of dependency on foreign countries and empower people to build their own economically secure nation.