An essential pillar of any consumer protection programmes is Consumer Education through ‘financial literacy’, defined as “the possession of knowledge and skills by individuals to manage financial resources effectively to enhance their economic well-being”.
It is only when the vast majority of the Nigerian population is financially literate that they can participate in the formal financial system, by becoming aware of and taking advantage of its opportunities, get financially included and thereby contribute to the financial and economic development of Nigeria.
The Rationale For Financial Literacy/Capability
- Globalization/Evolving Market Place
- Innovation in financial products and services
- Market Sophistication
- Information Asymmetry
- Market Power Imbalances
- Market Indiscipline
- Unsophisticated Consumers (low levels of knowledge & Understanding)
- Shift of Financial Management risks from Governments to individuals
- Weak or non-existing Consumer Protection regimes
- The quest for Financial Inclusion
Benefits Of A Financially Literate Nigerian Population
Financially literate consumers would be beneficial to themselves, the financial institutions/providers and the larger economy in the following ways;
- Better equipped to make optimal choices in the use of financial products;
- Pose lower credit and default risk;
- Constitute a market for sustainable financial services & Products;
- Reinforce competitive pressure on FIs for better products & services;
- Promote Financial System Stability by Increasing market demand, and responsible use of financial services.
* Culled from the Central Bank of Nigeria website