Improving Women's Financial Literacy, Worldwide

Are the 70 percent of the developing world's adult population with no formal bank account doomed to a life of economic uncertainty and financial illiteracy? If a woman's culture dictates that she should always put her family's financial needs ahead of her own, can she learn to set aside money for her own retirement without feeling guilty?

These are just some of the complex issues raised at the seventh annual Financial Literacy and Education Summit hosted by the Federal Reserve Bank of Chicago and Visa Inc. Renowned U.S. and international financial experts and journalists led a lively discussion – and fielded Twitter questions from roughly 2,000 participants – around the theme, "Improving Women's Financial Literacy & Capabilities Globally."

Details of the discussion included:

• Richard Cordray, Director of the U.S. Consumer Financial Protection Bureau, noted that "a large majority of K-12 teachers say that personal finance should be taught in school, yet less than a third say they've taught lessons about money, and more than half feel unqualified to teach their state's financial literacy standards."
• Linah Mohohlo, Governor, Bank of Botswana, emphasized that it's not only important to teach women about money management, but also to teach them activities to avoid – such as Ponzi schemes or lending money to people without setting repayment and interest terms.
• Bernie Ripoll, Parliamentary Secretary to the Treasurer, Australia, added that women should feel empowered to ask questions or say no if they're asked to invest in something they don't understand.
• According to South African Financial Journalist Maya Fischer-French, among the biggest financial hurdles an overwhelming number of women in her country face is their status as single mothers – around 56 percent. Of those, only about 21 percent can rely on financial help from their children's fathers.

On the question of whether financial literacy hinges on access to traditional bank accounts, Egyptian Journalist Amira Salah-Ahmend said roughly 90 percent of the Egyptian population is unbanked, meaning most of their transactions are unregulated and therefore more risky.

Mexican Journalist Adina Chelminsky added that many third-world people have much easier access to credit through informal lending channels than to bank products. "The idea is not to formalize all this informal lending, but rather for banks and governments to think outside the box and develop new products that cater to women who have minimal savings," she said.

The panelists shared some alternative financing methods that are already in place and thriving:

• Microfinance, where organizations like Kiva make small loans to people who can't get credit from traditional banks, is helping women achieve financial stability in many underdeveloped nations. For example, a young woman in Pakistan or Mexico can now take out a microloan to buy a sewing machine, thereby creating her own thriving business.
• Also in Pakistan, a large telecommunications company has partnered with a microfinancer to provide "branchless banking" via mobile phone technology to people far removed from banks. "We've got 45,000 agents transacting this kind of business now compared to only 13,000 in the branch network," explained Yaseen Anwar, Governor, State Bank of Pakistan.

Bottom line: Women throughout the world face unique economic and financial literacy challenges. The key is for governments, financial institutions, educators and entrepreneurs to work together to devise financial tools and educational materials that can reach the female half of the world's population – the younger, the better.

To watch a free webcast of the 2013 Financial Literacy and Education Summit and reactions from panelists, visit www.practicalmoneyskills.com.