A Fi­nan­cial Lit­er­a­cy and Fi­nan­cial In­clu­sion Sur­vey con­duct­ed by the St Kitts-based East­ern Caribbean Cen­tral bank (EC­CB) has found that fi­nan­cial lit­er­a­cy in the East­ern Caribbean Cur­ren­cy Union (EC­CU) is gen­er­al­ly low, but low­est in St Vin­cent and the Grenadines.

“In a re­gion which boasts high lev­els of adult lit­er­a­cy (high 90s), fi­nan­cial lit­er­a­cy is lam­en­ta­bly low and lugubri­ous,” said EC­CB Gov­er­nor, Tim­o­thy An­toine, at the launch of the sur­vey re­sults.

“How do we ex­plain the fol­low­ing? Per­sons en­gag­ing in hire pur­chas­es ig­no­rant or in­dif­fer­ent to ef­fec­tive in­ter­est rates with some as high as 35 per cent. The pro­lif­er­a­tion of pay­day loans which es­sen­tial­ly means at­tempt­ing to ride up on a down es­ca­la­tor—a ver­i­ta­ble debt trap,” An­toine said.

He al­so asked why high­ly cre­den­tialed per­sons are clue­less about man­ag­ing their per­son­al fi­nances, not­ing al­so that on­ly one in 25 per­sons (four per cent) in the EC­CU are in­vest­ed in the re­gion­al and in­ter­na­tion­al cap­i­tal mar­kets but sev­er­al per­sons are now pur­su­ing in­vest­ments in high risk cryp­tos.

An­toine said that peo­ple are spend­ing their lim­it­ed in­come on wants while beg­ging fam­i­ly, friends and gov­ern­ment for their ba­sic needs.

The fi­nan­cial lit­er­a­cy score was ob­tained by adding the scores of fi­nan­cial knowl­edge (range from 0 to 7), fi­nan­cial be­hav­iour (range from 0 to 9) and fi­nan­cial at­ti­tude (range from 0 to 4).

The de­rived fi­nan­cial lit­er­a­cy score ranges from a min­i­mum val­ue of 0 to a max­i­mum of 20, with a score of 20 sug­gest­ing that an in­di­vid­ual has ac­quired a ba­sic lev­el of un­der­stand­ing and use of fi­nance.

The EC­CU mem­bers are An­guil­la, An­tigua and Bar­bu­da, Do­mini­ca, Grena­da, Montser­rat, St Vin­cent and the Grenadines, St Kitts and Nevis and St Lu­cia. The EC­CB serves as a cen­tral bank for these.

The Fi­nan­cial Lit­er­a­cy and Fi­nan­cial In­clu­sion Sur­vey found that over­all fi­nan­cial lit­er­a­cy score across the cur­ren­cy union was 12.2 out of a max­i­mum of 20 or 61 per cent.

In the EC­CU, the fi­nan­cial lit­er­a­cy score ranged from 11.7 to 13.1, with An­guil­la achiev­ing the high­est score and the low­est score by St Vin­cent and the Grenadines. The oth­er six coun­tries scored be­tween 11.8 (St Lu­cia) and 12.7 (An­tigua and Bar­bu­da).

“There is a need for im­prove­ment in fi­nan­cial knowl­edge, be­hav­iour and at­ti­tude in the EC­CU,” the re­port said.

The EC­CU fi­nan­cial be­hav­iour score was 4.4 out of 7, rep­re­sent­ing 62.2 per cent of the max­i­mum pos­si­ble score. Three in five adults met the min­i­mum tar­get score of six out of nine for fi­nan­cial be­hav­iour.

The EC­CU fi­nan­cial knowl­edge score was six out of nine, rep­re­sent­ing 66.5 per cent of the max­i­mum score pos­si­ble. Half of all adults met the min­i­mum tar­get score of five out of sev­en for fi­nan­cial knowl­edge.

The EC­CU fi­nan­cial at­ti­tude score was 1.9 out of four, rep­re­sent­ing 47.6 per cent of the max­i­mum score pos­si­ble.

On­ly one in five adults met the min­i­mum tar­get score of three out of four for fi­nan­cial at­ti­tude.

The sur­vey al­so found that fi­nan­cial prod­uct aware­ness was rel­a­tive­ly high while use was rel­a­tive­ly low across the EC­CU.

“Fi­nan­cial In­clu­sion pro­vides in­sights in­to the ex­tent to which re­spon­dents are ac­tive fi­nan­cial con­sumers. In this ex­er­cise, fi­nan­cial in­clu­sion is mea­sured by re­spon­dents’ aware­ness, hold­ing/choice and use of fi­nan­cial prod­ucts,” the re­port said.

Prod­uct aware­ness was rel­a­tive­ly high across all coun­tries; how­ev­er, the use of these prod­ucts was rel­a­tive­ly low.

The sur­vey re­sults show that 88.3 per cent of re­spon­dents were aware of at least five of 18 fi­nan­cial prod­ucts, while 54.5 per cent chose at least one of these prod­ucts in the two years pre­ced­ing the sur­vey.

Prod­uct aware­ness was high­est in Montser­rat and low­est in St Vin­cent and the Grenadines. Mean­while, An­guil­la had the largest num­ber of per­sons who re­cent­ly bought a fi­nan­cial prod­uct.

An­toine said the EC­CB com­mis­sioned the sur­vey be­cause fi­nan­cial in­clu­sion is a strate­gic pri­or­i­ty. Fi­nan­cial in­clu­sion refers to ac­cess to a range of fi­nan­cial ser­vices in­clud­ing bank­ing, cred­it and in­sur­ance.

He not­ed that In­vesto­pe­dia de­fines fi­nan­cial lit­er­a­cy as the abil­i­ty to un­der­stand cer­tain fi­nan­cial is­sues and use fi­nan­cial skills for per­son­al fi­nan­cial man­age­ment such as bud­get­ing and in­vest­ing.

“This lat­ter be­hav­iour calls to mind a re­mark­able ob­ser­va­tion by the late Mar­tin Luther King Jr who in the 1960s ob­served that many black peo­ple were spend­ing mon­ey on their wants and then beg­ging for their needs,” An­toine said.

“Against this back­drop, this sur­vey is no or­di­nary sur­vey and can­not be an aca­d­e­m­ic ex­er­cise. In­deed, ur­gent ac­tion is need­ed to ad­dress fi­nan­cial lit­er­a­cy and in­clu­sion in the EC­CU,” he said. (CMC)