There has been much discussion of financial literacy in recent decades. But if innumerate users of financial services must rely on their children or MFI staff to know if their financial records are correct, how can financial literacy courses help? If people don’t have access to a direct flow of financial information they feel they can trust, teaching financial literacy becomes an exercise in pouring water into a sieve and expecting it to stay there.
On the demand side
innumerate people know they can’t decode their passbooks, so they shy away from financial institutions and continue to use moneylenders. If they do open accounts they deposit very little savings; they use only loan services – and even there we have to move mountains to keep their rights as consumers protected.
On the supply side we face massive internal control problems in MFIs, cooperatives and SHGs, all due to the inability of members to hold their service providers accountable. Practitioners consulting with poor clients are lulled into the belief that poor people can’t plan for the future — when their problem is actually much more basic, much less morally tainted, and much more correctable.
In short, addressing the problem of basic numeracy should be at the heart of any strategy to build client capabilities in microfinance. It is not a descriptive feature of the landscape. Usability (the ‘human factors’ approach) has seen limited application in financial inclusion, but it is impossible to explain client behavior without it.