By: Thandiwe Kubere

The Central Bank of Lesotho on Monday held a stakeholder engagement workshop, deliberating on how Basotho can attain financial stability through financial literacy and appropriate money management. The workshop presented Lesotho’s very first draft of the National Strategy for Financial Education (FE).

The National Strategy for Financial Education (NSFE) of the Kingdom of Lesotho, 2024-2029 has been developed as part of the country’s drive to transform the financial sector. It particularly seeks to achieve financial literacy and capability which are the necessary conditions for financial inclusion.

The over-arching goal of Lesotho’s NSFE is to achieve a financially educated population that is not only knowledgeable about the available products and services but also capable of making informed financial decisions. Hence, FE is considered critical to empowering the citizens and residents of Lesotho to make prudent decisions that fit their lives circumstances with their money. This strategy is, therefore, a high-level framework, which outlines a clear direction for the Kingdom of Lesotho, thus creating a coordinated approach to initiatives and helping.

Quoting a scripture from Hosea 4:6- “My people are destroyed from lack of knowledge. Because you have rejected knowledge, I also reject you as my priests; because you have ignored the law of your God, I also will ignore your children”, the event was opened on how significant it is for Basotho to be knowledgeable because the country has long suffered the adverse consequences of ignorance. Therefore, the Director of Corporate Affairs Adv. Napo Rantsane declared that NSFE aims to empower the urban and rural populations of Lesotho to wisely and safely make use of financial services and products, as an effort to reduce financial exclusion.

In his remarks, the Governor of Central Bank Lesotho, Dr. Emmanuel Maluke Letete, noted that the key to financial growth is having effective financial education. He noted it is important for the financial sector to often reflect on how far they have come and if they have positively impacted the lives of Basotho.

The 2024-2029 strategy is the outcome of wide consultation with a range of key stakeholders. As a result, a five-year action plan has been created, and its implementation rests on the partnership of all strategic stakeholders. In this way, there is hope the country will gain more value from the work it is doing to ensure that Basotho have the opportunity to benefit from FE and information based on the view, “it is the right of every Mosotho to have access to accurate and impartial financial knowledge, appropriate,  safe and affordable financial products and services”.

Since 2010, many countries throughout the world have increasingly recognized the importance of fostering Financial Inclusion through FE for their citizens. The Kingdom of Lesotho was not an exception in this regard. Studies conducted revealed that some of the challenges encountered in achieving that are barriers including cultural and psychological practices, women and youth were also found to experience financial exclusion. Moreover, Dr Letete stipulated that lack of effective communication channels for financial conversations, particularly for youth, was identified, and therefore, financial inclusion becomes quite difficult. He therefore urged stakeholders to collaborate in this agenda to find clear and effective communication channels for the interest of this country, and as well collectively protect consumers and ensure they get good services.

The NSFE, 2024-2029 is, therefore, a successor to the National Financial Education Interim Strategy (NFEIS) which was successfully adopted in 2014, and hoped to address those gaps. Serving as a framework, the overall objective behind the new strategy is for the people of Lesotho to gain the improved knowledge, understanding, skills, motivation, and confidence that will help them secure positive financial outcomes for themselves and their families. In other words, it seeks to enable people to make safe use of financial services by adopting safe habits, attitudes and behaviors, which encourages them in becoming more resilient to risks threatening their financial well-being. “In the end of the fifth year, we shall look back and be proud. Financial knowledge is a culture we are seeking to cultivate”, said Dr. Letete.

The drafted framework by the Financial Education Steering Committee (FESC) under the championship of the CBL aims to make people more aware of behavioural biases when accessing and using financial products and services through various physical and online platforms and help mitigate associated risks, such as impulsive buying, over-indebtedness, fraud, and cybercrime. Generally, the strategy is intended to support people living in Lesotho to improve their financial resilience and well-being. By instilling more trust and confidence in financial services, it is also expected to benefit the financial system and ultimately contribute to the inclusive and stable monetary and financial system.

Additionally, Member of FESC Mr Ephraim Moremoholo, enlightened a financially educated population has better access to, and more appropriate use of financial services; is able to make more informed, conscious, and responsible financial decisions resulting in an ability to choose products and services that best fit their needs and better cope with the increasing sophistication, complexity, and rapid innovation within the financial industry in the contemporary world. He assured financial education and literacy will help Basotho in obtaining better access to accurate, reliable, and comprehensive financial information, be more aware of consumer rights, responsibilities, and redress procedures to become less-likely to fall victims of fraud.

“With ‘your money, your responsibility, your personal wellbeing’ theme, Financial Education seeks to help Basotho of all ages adopt financial capability, which is the ability to apply financial concepts such as budgeting, saving and investing, to also have appropriate management skills and behaviours of finances, and to understand, select and access financial services and products which best fit their needs”, he said.

A number of factors have influenced the growing importance of FE on a global scale. Firstly, the ever-changing labor market that requires workers to be more competent and flexible to cope in a highly competitive job market and ever-changing and complicated financial and economic landscape. In this regard, the financial industry has also witnessed greater complexity of financial products and services. There is also an issue of current trends in technology and digitalization, which are transforming the way in which all players in the financial sector operate. The digitalization of financial services has given greater opportunities to individuals to access finance, manage their personal finances, and plan their financial futures through their mobile devices.

This exposure cannot only undermine the financial resilience and well-being of consumers due to direct financial losses and loss of trust but can also lead to new types of exclusion for certain groups of the population, notably those with low digital skills or those who do not have access to digital tools. Furthermore, transacting via digital channels may lead some financial consumers to make impulsive financial decisions, given the speed of access to financial products and services.

This may have serious consequences, such as greater indebtedness. At an aggregate level, these negative outcomes can damage trust and confidence in some financial services and products, financial systems and innovation.

Thirdly, the world is witnessing the rapid growth of new methods of payment, investments, and access to credit. These have also been in response to COVID-19 which has created demands for new products to cater for emergencies and retirement for instance. Trends towards greater digitalization have been further accelerated by the response to the COVID-19 pandemic which saw many people making greater use of digital tools (such as programmes, apps, or other software available on a digital channel to help people manage their personal finances) in order to abide by social distancing or lockdown requirements. Many consumers began to use digital channels to carry out their daily financial operations for the first time, even those less familiar with new technologies.

At the same time, greater digitalization has introduced greater complexity, new challenges, and risks for financial consumers. New players (e.g. FinTechs) and products (e.g. crypto-assets) have entered the market, sometimes operating on a cross-border basis. It has also increased consumer exposure to online fraud and scams such as pyramid schemes, as well as digital security risks like account hacking or data theft.

Furthermore, the rising levels of unemployment and inflation requires children, youth, and elders who are well-equipped with personal financial management skills. Those abilities include, but not limited to: understanding the benefits and risks associated with money; developing personal resilience; and improving abilities to take personal responsibility.

Therefore, to help fill those gaps the CBL and stakeholders will undertake initiatives under four pillars; providing financial education and literacy to children, youth, work places and people of all ages.

Initiatives of the first pillar, which focuses on children will ensure that financial education is integrated into the primary, secondary, and high school curriculum or all grades in Lesotho. “Co-curricular initiatives that either focus on personal finance education or that include some elements of personal finance education (for instance, entrepreneurship programmes and clubs) will continue to be encouraged. The supplementary materials (teacher and learner guides) will be developed, tested, revised, printed, and distributed to all schools. Also, training will be rolled out to NCDC officials, inspectors, and teachers who teach subjects that include elements of FE.” He mentioned FE will also be provided to out-of-school children through various channels of communication.

Under the second pillar, Lesotho will implement the following initiatives: financial education will be provided through career guidance; the curriculum for technical and vocational institutions will be broadened to incorporate personal financial education; savings and credit cooperatives (SACCOs) will be established in tertiary institutions and communities to provide financial education to their members. Provision of FE through student representatives, clubs, and informal self-help groups will be facilitated and encouraged; FE will also be delivered through youth resource centers and sports clubs; and partnerships shall be formed with recognized FE trainers and community-based organizations to ensure increased reach.

Under the third pillar, which focuses on Workplaces, FE will be provided to adults with a particular focus on farmers and MSMEs— by a broad range of trusted intermediaries. It will be provided to employees in workplaces through, among other methods, presentations and training-of-trainers methodology. For inclusivity, FE will also be provided to members of informal occupations, for instance, street vendors and taxi drivers.

And lastly under the fourth pillar, which was said to be challenging, a broad range of FE resources for use and/or adaption in FE programmes will be developed and made available to all stakeholders. It will be disseminated through multimedia platforms e.g. print, broadcast, interactive, and electronic media. In this regard, a financial education website, social media platforms, and Apps containing resources for consumers and stakeholder will be developed and launched.

Closing the workshop, First Deputy Governor Mr. Lehlomela Mohapi, declared a good society is built from ground up, from individual, to families and then reputable members of society. “So therefore, let us not miss out on financial inclusivity and reach out to those who were identified”, he said.