Financial literacy or Financial enablement?

Recently, I had the privilege of travelling to India as part of my MBA studies. The itinerary of the trip was as broad as an MBA course, and at a scale unlike Aotearoa. There were many ‘aha’ moments, however, I was most surprised to identify parallels with Māori regarding financial enablement.

During the colonisation of India by the British, their economy was stagnant.  Since India’s independence in 1947 it has continued to grow and is now the world’s fastest growing economy – Mana Motuhake hard. However, with this rapid growth comes social inequality. As a developing nation, India faces many complex issues. This blog focuses on one area and I by no means intend to trivialise the challenges India faces by doing so. During the trip, we met a range of experts in the field of economics and finance. A reoccurring concept was financial enablement where financial exclusion is: no savings, no assets, no insurance, no affordable credit, no money advice and no bank account. Indian Prime Minister, Narendra Modi’s controversial demonetisation move was one of several policy initiatives to increase financial enablement. While the verdict is still out regarding the real motives and effectiveness of this decision, I was left in no doubt that the Government understood the impact financial enablement has on social inequality.

Return now to Aotearoa. Over the past several years, the government has pushed financial literacy initiatives. Financial literacy are skills and an understanding of how to navigate the financial system. These initiatives would lead us to believe that the financial hardship that face Māori is simply down to not being able to balance a checkbook. The issue with the concept of financial literacy is that it puts the onus on the individual and not the system. While I don’t argue the value of financial literacy initiatives, more onus needs to be placed on the financial system. The government needs to focus on enabling Māori financially at a whānau, hapū and iwi level. This means that economic legislation and policy needs to better reflect the needs of Māori. So, what does this mean in real terms? No savings—why are Māori kiwisaver opt out rates so high? (see Stuff article) No assets—why are Māori homeownership rates so low? No insurance—why do few Māori have insurance? No affordable credit—how do Māori Land owners access capital? Why do high interest rate lending companies line the highstreets of our most vulnerable communities?

Many people describe visits to India or any developing nation as “confronting”. For me, I left India feeling humbled and reflective on the areas of financial exclusion we are yet to address in Aotearoa.



One Comment

  1. Amber Nicholson

    Very thought provoking blog. Do you think the financial enablement initiatives are working in India? Is there a place for replication in Aotearoa?


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