Obinna Chima
Writes on efforts to improve financial inclusion by imbibing the habit of setting aside some portions of income for future utilisation
Having a store of ‘rainy day money’ can increase a low-income family’s resilience and enable it to cope with better and unexpected shocks, a report has stated. In addition, storing up assets could increase opportunities. For example, it provides the funds for families to support children when they go to university or to pay for training.
The report by the Institute for Public Policy Research, titled: “Saving and Asset Building in Low Income Households,” showed that behavioural economists believe that saving can be increased through a combination of incentives. The most effective savings products for low income families combine making saving as easy as possible, while providing an incentive for savings to be retained.
Clearly, one of the best ways to take charge of your finances in today’s uncertain economy is to develop a healthy savings culture. Although seemingly not a priority early in life, experts believe everyone (especially young people) should make it a priority to save and invest early.
In fact, Dr. Barbara O’Neill, in “The Benefits of Saving Money,” cited a report that revealed that savings is linked to increased happiness.
Actually, what the study found, according to O’Neill, was that people who are “planners” and do future-oriented things such as setting goals and taking steps (e.g., saving money) to achieve those goals feel happier, and better about their lives, than those who don’t make plans.
On a related note, the Consumer Federation of America found a strong relationship between having spending and saving plans and maintaining emergency funds. Particularly for low-income individuals, those with a spending plan with goals were far more likely to have saved money for emergencies than were those without a plan.
Economists and psychologists attribute findings like these to the sense of control that people have when they plan ahead and know what they need to do to get from where they are now to where they want to be, O’Neill stressed further.
It is well established by research that people who feel a sense of control over life events are often happier, cope better, and are more resilient in times of stress than others.
Conversely, people are especially unhappy in situations where they perceive themselves to have a lack of control. That is why encouraging people to develop and implement a personal saving plan is very essential for wealth creation.
In Nigeria, the federal government as well as the Central Bank of Nigeria (CBN) have continued to stress the importance of financial literacy and developing savings culture.
CBN Governor, Godwin Emefiele, recently pointed out that financial literacy remained a great importance to the bank.
“We are concerned about the level of financial inclusion because individuals and households lacking adequate access to affordable and convenient formal financial services would be severely constrained in participating fully in the economy.
“This will imply that the financial sector would be constrained in terms of expansion, as the disposable income in the hands of excluded persons could constitute greater savings and wider deposit base for banks.
“To address our financial inclusion challenges, we have continued to implement various initiatives to ensure that as much of the eligible target population has the opportunity to access a variety of financial services,” he explained.
Emefiele said for consumers to fully utilise these services, it was important that they increase their financial literacy skills, complemented by consumer protection measures of the CBN.
In line with this, the federal government recently approved the Financial Literacy Curriculum at basic and senior secondary schools level, which would commence at the beginning of the 2017/2018 academic year.
Promoting Savings Culture
It is no longer news that millions of Nigerians are still excluded from Nigeria’s formal financial system. Also, the size of the country’s informal sector is frighteningly and has not been adequately captured.
The reasons are not far-fetched and varied. With Lagos as an example, the bus driver, motor-cycle or tricycle rider who has no form of interaction with any bank, just like the petty trader, truck pusher, or even the petrol attendance, whose only known form of banking has remained the thrift or Esusu collector, who shows up in his or her shop daily or weekly.
This class of people is also comfortable with ‘Ajo’, the famous contributory scheme, whereby a number of people contribute a specified amount daily, weekly or monthly and take turns to collect the bulk sum at regular and agreed intervals. Such people have also over the years become comfortable with these arrangements, despite the well documented incidences of fraud and bad faith exhibited by some of the stakeholders in these schemes.
Reward for Loyalty
Therefore, in line with its resolve to encourage families to save, Access Bank Plc recently unveiled a savings scheme tagged ‘Family Savings Scheme.’ It was initiated to give its customers a boost in their savings. The exercise was in line with the bank’s commitment to promoting savings culture among the populace.
The ‘Family Savings Scheme’ is a savings scheme designed to encourage families to save together and enjoy exclusive privileges such as high interest rates and family rewards while they continue to enjoy the confidentiality of their banking relation and manage their accounts as unique individuals.
The scheme provides access to people who are presently excluded from financial services whilst promoting capital accumulation and investment boom.
Under the scheme, a minimum of four family members are encouraged to bank with Access Bank and enjoy exclusive value propositions. Eligible family members include partners, children, parents, aunts, uncles, cousins and grandparents.
Recently, the bank rewarded 120 families that had signed up to the scheme in the monthly draw of the promo tagged: ‘Family Fortune Promo,’ that took place in Lagos. A breakdown of the items won by customers showed that while 50 families that signed up for the promo won DSTV decoders each; 30 other families were rewarded with N50,000 shopping vouchers respectively, while 20 others emerged winners of Samsung mobile phones.
In the same vein, while 10 families won home theatre, five other loyal customers were rewarded with 42 inches LED television and another five were rewarded with sets of sofa respectively.
According to the bank’s Executive Director, Personal Banking, Victor Etuokwu, the scheme comes under new segment in the Bank - Family Banking Segment. “This is not a new product but a new segment in the bank. We have basically pulled together the various products we offer to unique family members under this segment,” he added.
Etuokwu listed some of the value propositions of the savings scheme to include education advisory services, deals and discounts, higher interest rates, insurance, school fees advance and home loans.
He implored the existing and prospective customers to take advantage of the ‘Family Savings Scheme’ to save and more importantly for economic development.
Therefore, as part of efforts to reward its customers,
The Group Head, Inclusive Banking, Access Bank Plc, Ope Wemi-Jones, expressed appreciation to the customers for their loyalty and trust in the bank, adding that the promo was initiated to add value to customers, who continued to do business with the Bank.
“Some people have asked us: why are you encouraging people to save when there is recession and all that? The simple answer is that savings has never been a respecter of what you earn. It is a habit you need to imbibe, whether you are rich or poor.
“So, what it means is that if you learn to save when you don’t have so much money, when a lot of money comes, you will still continue with that habit. So, what Access Bank is doing is to encourage our customers and Nigerians to imbibe a savings culture. A savings culture that is not limited with what you have, but based on the habit you have imbibed over time,” she added.
Also, Wemi-Jones said the scheme was designed to reward the collective savings habit of families with grand prizes and competitive interest rates while they enjoy the confidentiality of their banking transactions as individuals
“The nationwide savings promo, first of its kind in the industry with over 100,000 gifts to be given away, targets the family units with weekly, monthly and the mega random selections,” she added.