THE ROLE OF MEDIA IN PROMOTING
FINANCIAL LITERACY AS A TOOL FOR
ENHANCING PUBLIC CONFIDENCE
Presented by
PHILLIP ISAKPA
EDITOR
BusinessDay
OUTLINE
 The
power of media in the 21st century
 Growing importance of financial literacy
 Media and financial literacy: the complex
nexus
 How media enhance financial literacy and
confidence
 What has media done so far?
 The task before us
THE POWER OF MEDIA IN THE
21ST CENTURY
MEDIA IN NIGERIA
Media refer collectively to all media technologies,
including the Internet, television, newspapers, film
and radio, which are used for mass communications,
and to the organizations which control these
technologies.
Size of Nigeria’s media apparatus (2000 Estimates)
Number of Television Sets
7.9million
Television Sets per 1,000
59
Number of radio receivers
43.5million
Number of individuals with internet access
Over 500,000
Number of newspapers in circulation daily
Over 250 thousand copies
Source: www.pressreference.com
THE POWER OF MEDIA



A recent study by the National Endowment for
Financial Education (USA) found that just 10 hours of
financial literacy instruction will prompt most
teenagers to start saving.
We saw in recent times the role media played in the
revolutions in Egypt, Libya and other Middle East
nations
Research has found that employers who provide
financial education in the workplace are repaid up to
3 times the cost through reduced absenteeism, less
time spent at work dealing with personal financial
matters, and increased productivity.
THE POWER OF MEDIA
An OECD Survey conducted in a number of
countries confirmed that people want to learn
economics and finance from mass media or new
media. The reason being that they have access to
mass media channels, use them on a daily basis
and it does not require much effort on their part.
GROWING IMPORTANCE OF
FINANCIAL LITERACY
SOME DEFINITIONS
DEFINING



FINANCIAL LITERACY
Financial literacy is the ability to make
informed judgments and informed decisions
regarding the use and management of money.
The US Financial Literacy and Education
Commission defines it as “the ability to make
informed judgments and to take effective
actions regarding the current and future use
and management of money”
Financial literacy is the ability to understand
finance
A FINANCIALLY LITERATE INDIVIDUAL HAS …




the capacity to know when to seek professional
advice and what to ask, and the ability to
understand the advice given by professional
advisers.
an understanding of the benefits and risks
associated with particular financial decisions
the ability to understand basic financial concepts,
including the main attributes of different types of
investments and other financial products
basic numeracy skills, such as the ability to
calculate rates of return on investments
WHY DOES FINANCIAL LITERACY MATTER TO
INDIVIDUALS?



Financially literate consumers help to reinforce
competitive pressures on financial institutions to
offer more appropriately priced and transparent
services
It helps to improve the efficiency and quality of
financial services.
For regulators like NDIC, helping people to make
informed financial decisions is central to protecting
customers, promoting public awareness, and
maintaining market confidence.
HOW DOES FINANCIAL LITERACY AFFECT FINANCIAL
SYSTEMS’ SOUNDNESS AND EFFICIENCY?




FL facilitates a more prudent management of household
balance sheets, it could reduce lending risks for banks and
other providers of credit.
Improved FL could result in more discerning choice of
investment and other financial products by consumers.
This strengthens the incentives for financial institutions
to respond innovatively to consumer demand, leading to a
more dynamically efficient financial system.
FL exerts stronger market disciplines on financial service
providers by exercising greater scrutiny over the risks of
particular financial institutions and their products,
Well-informed investment decisions, based on a high level
of FL, could be expected to result in a more productive
allocation of resources through time, reflecting a more
discerning approach to the balancing of risk and return.
ANY INDICATIONS
FROM RESEARCH ON THE LEVEL OF
FINANCIAL LITERACY?



An OECD survey (2005) found that individuals
generally over-estimate their level of financial literacy.
A 2003 survey in German found that, 80 percent of
respondents reported that they were confident in their
understanding of financial issues. However, when
tested on their financial literacy, only 42 percent were
able to answer half of the survey questions correctly.
Similar results have emerged in the US, the UK and
Australia. If this is the case with the developed world,
what is the case with Nigeria?
WHAT IS THE RELATIONSHIP
BETWEEN FINANCIAL LITERACY
AND THE MEDIA?
MEDIA AND FINANCIAL LITERACY
MEDIA AND FINANCIAL LITERACY
“ In a world of escalating financial complexity,
there is an increasing need for financial
knowledge and at least basic financial skills
(Morris L Wang 2001)”
Well tailored media satisfy this need and reduce
the complexity in understanding the financial
landscape
MEDIA STAND AS A SOURCE OF INFORMATION FOR
MULTIPLE USERS AND STAND AS A TOOL FOR
INSTILLING CONFIDENCE
HOW DOES MEDIA AFFECT
PUBLIC CONFIDENCE?
ENHANCING PUBLIC CONFIDENCE
ENHANCING PUBLIC CONFIDENCE


There is need to bring simplified financial
reporting to the forefront of all aspects of media.
This will boost financial literacy and enhance
public confidence
WE MUST TAKE SOME NECESSARY
STEPS…
NECESSARY STEPS



The financial message should jump to the front page. It
is not enough to reach out only to those Nigerians who
already read the business papers or those who watch
the financial news networks.
Media should educate and not just titillate. We should
provide tips for investing wisely and avoiding fraud.
We should develop educational material to accompany
financials and risk disclosures for financial institutions
NECESSARY STEPS…
The educational system, government agencies and
research institutions should work with business news
media to heighten public understanding of financial
matters
FINALLY
Thank you