Blog Poll: Asia Needs More Financial Literacy to Ensure Future Prosperity
For over a third of the respondents, expanding financial literacy is crucial in Asia, where many poor people don’t use basic financial services because they don’t understand them properly.
In our September blog poll, we asked our readers which type of literacy—financial, digital, legal or vocational—they think we should scale up for a more prosperous Asia and the Pacific.
Over a third (37%) of the respondents said that expanding financial literacy should be the priority for developing Asia, where apart from the unbanked population there are many poor people who do have access to financial services but don’t utilize them because they don’t understand them properly.
Financial education has huge benefits for the poor, like prompting households to make long- rather than short-term investments.
Since Asia’s population is steadily aging, pension funds and life insurance policies are becoming increasingly important for self-protection after retirement. To access these services, we need to build the capacity of the population to fully understand how pension funds and life insurance policies work so they will not join the growing ranks of the elderly poor in a few years time.
Gaining financial literacy would make it easier for owners of micro-, small- and medium-sized enterprises (MSMEs)—which provide the lion’s share of employment in the region—to better manage their business and access credit from bank and non-bank financial institutions to expand their businesses. Financially literate small entrepreneurs can also help unlock the credit gap by boosting their credit worthiness with traditional financial institutions, which are often wary of granting loans to first time or unknown applicants.
For 27% of the participants in our survey, it’s time to boost technical and vocational education and training (TVET) to fill the huge skills gap in the job market and match skills with employer demands. TVET programs are widely available throughout the region, but have so far only recorded modest results and are not yet able to produce enough graduates with the necessary skills to enter the job market. To address this issue, ADB, for one, is supporting efforts by developing member countries to link TVET programs to workplace training, set industry-validated standards for programs, make on-the-job training and similar education permanent features of TVET delivery, and align programs with public sector policies and private sector needs.
A further 12% of ADB blog readers picked ICT skills, essential to benefit from today’s digital economy, as the most important form of literacy nowadays. Without basic digital literacy, even skilled TVET graduates will find it hard to carry out common tasks in a typical office setting, and risk becoming isolated from their tech-savvy colleagues. Finally, 8% chose legal education, which helps poor people better understand the justice system to defend their rights. For instance, the ADB-supported Access to Justice Program helps the poor learn how they can access the courts to file complaints and demand accountability from public service providers. Legal education can also combat domestic violence, land disputes, and unfair employers among others.
We ran the poll throughout last month to mark World Literacy Day on 8 September.