March 7, 2016/CBN

Financial literacy may be defined as the possession of knowledge and skill by individuals to manage financial resources effectively to enhance their economic well-being. It also enables financial service providers to better understand their products, the associated risks and the needs of their customers. It includes trust, confidence and participation in the formal financial system. Financial literacy, also referred to as financial capability, is an outcome of financial education.

The Organisation for Economic Co-operation and Development (OECD) defined financial education as “the process by which consumers/investors improve their understanding of financial products, concepts and risks, and through information, instruction and/or objective advice, develop the skills and confidence to become more aware of financial risks and opportunities, to make informed choices, to know where to go for help, and take other effective actions to improve their financial well-being”. Financial literacy occupies a center-stage in the quest to achieve financial inclusion, financial stability, economic growth and development. Inclusive growth in the economy can only be achieved where a larger proportion of the population participates in the financial markets. For this to happen, it is essential for the populace to know, understand and develop the ability to evaluate financial products and services as well as participate in the financial markets.

Financial literacy is also an essential requirement for consumer protection in the financial sector as it creates better awareness and understanding of policies, financial products, prices, and practices. A Consumer Protection Framework has been developed to ensure the institution of redress mechanisms and provide strategic direction in promoting fair pricing and market conduct by providers of financial services.

This framework provides a roadmap for enhancing financial literacy to achieve financial inclusion in Nigeria and ultimately the attainment of the goal of Financial System Strategy (FSS) 2020. It is designed to reach all segments of the society with emphasis on specific target groups. The document is divided into ten sections:

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