FINANCIAL LITERACY AND TECHNOLOGY ENJOY SYMBIOTIC RELATIONSHIP KEY TO SMES’ GROWTH

KAMAYOYO Kelvin, a Zambian Economist and Scholar who is also Chief Technical Advisor and Strategist for BuyZed Campaign has observed that financial literacy can be an effective catalyst and remains key to the growth of the small and medium enterprises (SMEs) in Zambia.

According to Jason Fernando (2022),
Financial literacy is ‘‘the ability to understand and
effectively use various financial skills, including personal financial management, budgeting, and investing.

The meaning of financial literacy is the foundation of your relationship with money, and it is a lifelong journey of learning. The earlier you start, the better off you will be because education is the key to success when it comes to money.’’ Unfortunately, financial literacy is said to be generally much lower among poorer populations. In the McGraw Hill Financial Report Financial Literacy Around the World, ‘‘the countries with the highest rates of financial literacy are Australia, Canada, Denmark, Finland, Germany, Israel, the Netherlands, Norway, Sweden, and the United Kingdom, where at least 65 percent of adults are financially
literate’’.

Kamayoyo argued that financial literacy and technology tend to enjoy a symbiotic relationship and if harnessed properly can lead to improved access to financial products, reduction in income inequality and contribute to poverty alleviation in the country. He noted that the era of cutting- edge technological advancement has fortified the symbiotic relationship between financial literacy and technology. Acquiring financial literacy becomes an asset because an individual who is financially literate knows how to earn, manage and invest money. Fortunately, this synergy provides a conducive environment for most SMEs and other domestic firms to avoid experiencing ‘‘stunt entrepreneurship growth’’ which is induced by financial illiteracy or lack of financial skills and knowledge to get their business off the ground or to the next stage of growth.

SMEs play an important role in the Zambian economy and are in large numbers in terms of head-count economic actors.
Kamayoyo observed that financial literacy is currently a growing concern among the developing countries as they continue to experience increased access to financial services. It is somewhat demonstrating that the world is about to say good bye to the challenge of financial access but instead begin to confront the problem of financial literacy. According to Daniel F. Runde (2015), ‘‘Financial access, formerly a serious problem in developing countries, is rapidly being achieved as geographic, technological, and national barriers are eliminated. Mobile phone technology, urbanization, the growth of microfinance, and the prevalence of remittances all ensure that even poor, rural populations can easily access a bank account from a mobile phone or Internet connection.

Encouraging financial participation and providing access without creating literacy programs will create problems for new bank account holders who do not understand how to invest and budget their savings. Increasing financial literacy in developing countries is a public good and a potential function of foreign assistance in partnership with financial service companies, civil society, educators, and financial regulators.’’ Kamayoyo argued that Zambia is not an exception to the problem of financial illiteracy and as such its high time the financial pandemic is confronted with the proportionate skills, energy, cooperation and financial education at all levels.

Kamayoyo said a lot needs to be done to increase financial literacy so that economic actors including the SMEs could sufficiently maximize the gains achieved in the financial sector especially efforts in increasing access to finance and digital financial services. “Money is one form of power. But what is more powerful is financial education”- Robert Kiyosaki. To achieve this one needs financial literacy. He observed that lack of financial literacy could undeniably
According to Financial Sector Deepening Zambia and Zambia
Invest (2017), ‘‘in Zambia, (MSME’s) contribute approximately 88% of employment, account for
about 97% of all businesses and generate significant domestic and export earnings’’.

negate improvements recorded so far in the areas of financial inclusion and effective utilization of innovative products made available through advanced digital financial services in many parts of the country. He referred to the FinScope 2020 Survey whose findings revealed that ‘‘the national financial inclusion is estimated to have increased to 69.4% (2020) from 59.3% in 2015 sampled out of the country’s total population of 17.9 million with a total adult population estimated at 9.5 million. The report attributed the growth of 10.1% to increased uptake of mobile money services to 58.5% from 14.0% in 2015.’’ This attribution demonstrates a strong causality between financial literacy and technological capabilities.

As BuyZed Campaign, we earnestly take the message during the official address at the World’s Children Day by His Excellency, Mr. Hakainde Hichilema, President of the Republic of Zambia that “we recognised and fully appreciated the importance of technology and school subjects such as Mathematics and Science in the early curriculum of our children, but we emphasised that entrepreneurship and financial literacy must be included as critical tools for learners, and that Mathematics and English should not be used as an only barometer to measure the intelligence of our children.” BuyZed is therefore committed and ready to work with the commercial banks, educators, ICT service providers, financial regulators, civil society, youth groups, and cooperating partners to rollout national wide dissemination programme aimed at raising awareness about financial literacy and financial inclusion at all levels of our society and target both the young and the elderly. We also wish to take this opportunity to call upon the organisers of the Financial Literacy Week (FLW) which is an annual global financial education campaign to consider introducing regular quarterly Financial Literacy events and spread them across the country in order to have a wider coverage or outreach on financial knowledge dissemination.
We also want to encourage our local communities especially at household levels to embrace this phenomenon of financial literacy because doing so would help individuals to make more assertive and efficient decisions in the monetary context of their lives. In fact, financial literacy can enhance the citizens’ skills and abilities to make more informed choices and ultimately lead to a positive financial behaviour. Most importantly having the right financial skills can make a person make smarter decisions that could prevent one from encountering avoidable devastating mistakes, improves a person’s bank deposits and savings patterns, help individuals reach their goals, and invokes self-confidence.
Kamayoyo noted that while technological skills, for example, the use of computers or smart phone can be acquired easily even through unguided learning especially among our children and youths, financial literacy may require much more effort including benefiting from guided learning by way of introducing it in our national educational curriculum starting at infancy level. It is therefore critical that as a country, in particular, the different stakeholders in the financial sector hastily respond to this call and undertake to come together and launch a robust national wide financial literacy campaign programme in order to increase financial understanding and financial inclusion among the citizens.
He noted that the low levels of financial literacy in an economy like Zambia could negate entrepreneurship growth especially the SMEs. Zambian entrepreneurs ought to acquire more financial skills to be able to graduate from the bracket of an elongated business life expectancy as SMEs to becoming large commercial corporate entities with a strong brand name on the domestic market and beyond. Kamayoyo further stressed that it is clear that financial literacy is not just about counting the Zambian Kwacha or the US Dollar which is often used in commercial transactions as a ‘‘vehicle currency’’ but it goes beyond to even include the ability to understand the financial sector institutional arrangements, legal and regulatory frameworks, market practices and consumer behaviour. We further believe financial literacy can help Zambian SMEs to become more financially disciplined and increase productivity and production of their goods and or services they are currently producing.

Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy of Melo Media Zambia.