Young man using digital services to withdraw cash during the COVID-19 pandemic, Nigeria / Shutterstock

28 May 2021

Financial knowledge, skills, attitude & behavior in a pandemic

By Sulita Levaux, Senior Policy Analyst, AFI


Shortly after Iya Bukki, a 51-year-old widow and mother of five from Nigeria, opened her first-ever bank account, she excitedly made a deposit of NGN3,500 (USD9) earned selling petrol and gari, a local food made from ground cassava. New tiered Know-Your-Customer (KYC) requirements had made it easier for her and other disadvantaged persons to access formal financial services that had been previously out-of-reach due to, among other things, a lack of necessary documentation.

But when it came to withdrawing her money, she was told to come back with an ID card or driving license as proof of identity, neither of which she owned and would cost roughly four times more to make than all the money in her new bank account.

Iya Bukki’s story, voiced by Central Bank of Nigeria Assistant Director Stephen Ambore during an AFI webinar, is sadly far too common and highlights the importance of better implemented regulations, with a focus on financial literacy and awareness to achieve financial inclusion that truly benefits those most in need.

Now, imagine the additional challenges Iya Bukki faces in the current global pandemic. The COVID-19 crisis has had swift and wide-ranging effects on financial consumer behavior, empowerment and resilience. These have been felt hardest by the most vulnerable segments – women, youth, older people, forcibly displaced persons, disabled people and small-scale entrepreneurs – who are at greater risk of losing their incomes, experiencing difficulties paying bills, scams, fraud and over-indebtedness.

Financial capability and the pandemic multiple impacts

By looking at 2017’s Financial Capacity Barometer (FCB), regulators can help people like Iya Bukki avoid similar misfortune. The FCB outlines financial capability as a combination of financial knowledge, skills, attitude and behavior that someone would need to be correctly informed, make responsible decisions and take better actions over their personal finances.

It identifies seven competencies central for national financial education programs and strategies: economic impact, budget management, savings and long-term planning, debt management, shopping around, rights protection and safety. Many of these must be understood and analyzed to maintain trust in financial systems, particularly in a crisis.

COVID-19-related movement restrictions, for example, led to a rush of customers making transactions over mobile and other digital platforms for the first time, exposing them to risks that many were ill-equipped to face. Last year, a growing number of financial consumers fell victim to scams and fraud, resulting in millions of dollars lost due to bogus text messages, unsolicited calls and emails.

As reiterated by Central Bank of Seychelles Deputy Governor Christophe Edmond, financial education offers the “best protection” against rising levels of financial fraud. When extended to financial capability efforts, this means that people not only know the kinds of financial fraud that exist and are able to detect them, but also value information related to financial fraud, do not trust suspicious financial messages and reject seemingly attractive financial offers from unknown sources.

Also targeting most-impacted individuals and businesses were short-term regulatory responses taken globally that focused on increasing access to funds and liquidity, deferral of payments, changes in repayment terms and extension of loans without additional costs. But these responses also brought higher risks of over-indebtedness, requiring quick reactions from both authorities and service providers to increase financial awareness and capability efforts.

This way, individuals who benefited from extended loan repayments will be able to better understand new loan conditions and their future implications, monitor their debt repayments and potential changes and resist obtaining additional non-essential loans due to temporary, more lenient rules.

Financial capability of and for the most vulnerable groups

Many great examples showcase the importance of focusing on financial capability not just as a response to a crisis but also in mitigating potentially negative impacts before they arise. Among them is Fiji’s Meena Gounden, an award-winning poultry farm who used her financial literacy and management skills to keep her business running despite severe COVID-19-related shocks.

Her testimony and others emphasize the need to balance policy interventions and financial capability programs that are adapted to specific target groups. For example, promoting and enhancing financial capabilities will help youth populations to build resilience against economic shocks. Enhancing levels of financial capability for women can act as an enabler in a recovery phase, as they are more likely to teach their skills to their children, friends and other relatives and will be more able to participate in new forms of economic activity.

“The higher level of financial capability of Filipino women may also be a contributing factor [to the Philippines’ gender gap in favor of women, who] are four percentage points more likely than men to understand the primary purpose of insurance products as a risk management tool, suggesting that the women have higher financial literacy than men” – Mynard Bryan R Mojica, Acting Deputy Director, Bangko Sentral ng Pilipinas wrote in a 2017 blog


We must also not forget about the importance of digital financial services (DFS) both as a significant enabler in the financial inclusion of the vulnerable and for the reforms needed to protect consumers against digital exploitation. Here, we can look to two key recommendations from AFI’s recently published Policy Model on Consumer Protection for DFS.

First is the need for a set of direct crisis responses, including prompt interventions towards the coordination of key stakeholder responses, the launch of awareness campaigns and ensuring that emergency interventions meet consumer protection principles.

Second, we need prepared, long-term responses, such as business continuity plans, periodic demand-side surveys to assess the financial capabilities, demand-driven and evidence-based financial literacy and capability interventions and capacity building for regulators.

While it may be too late for Iya Bukki, her story acts as a cautionary tale. As Ambore told his fellow regulators, “If Iya Bukki knew all the complications surrounding the opening of her bank account, would she really have opened it?”.

Undeniably, AFI members are increasingly involved in financial capability initiatives from taking part in related training to leading the development of guideline notes that share their extensive experiences and improve the reach of financial capability and its positive impact during a crisis. Several have been developing soon-to-be published knowledge products – including a National Financial Education Strategy toolkit and guideline note – and recently published a guideline note that analyzes the growing need to strengthen digital financial literacy (DFL) across AFI member jurisdictions through initiatives that address relevant needs and gaps, and mitigate related consumer risks. These efforts will build towards designing and implementing policies and regulation that is inclusive to all.

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