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Why Investor Education is Critical To Boosting Financial Literacy


Tuesday, May 12, 2020 / 10:00 AM / Bukola Akinyele for
WebTV / Header Image Credit: Ecographics

 

CEO of Stanbic IBTC
Nominees, Mr. Akeem Oyewale, recently spoke on the need for deepening investor
education to boost Financial Literacy and investment in Nigeria.

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Speaking on investor
education and its importance to an economy, the investment manager described
investor education as a means of enlightening the population about making
informed investment decisions and planning life cycle cash flows to support
sustainable and meaningful lives.  

For Nigeria with its large
population,  Oyewale noted that investor education is critical when
assessed against the backdrop of current poor investor knowledge. He was of the
view that the art and science of converting savings into investments are
crucial to the quality of life people live over time. Proper investment
planning enables people to achieve permanent streams of income that support
their consumption and non-consumption needs.

According to him,
financial literacy deepens financial inclusion which would lead to the gradual
migration of people from the informal to the formal sector of the economy.
Oyewale was of the view that Nigeria has a dominant informal sector and
education about financial management needs to start from the primary schools to
tertiary institutions, thereby preparing youths for the financial literacy
needed for the emerging labour market.

Explaining the difference
between investor education and financial Literacy,  Oyewale explained that
investor education and Financial literacy are similar, while investor education
is more purposeful like enlightening people on mutual funds, financial literacy
is generic in making people understand the value of money.

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The StanbicIBTC Nominee
boss explained why Nigerians fall victim to  Ponzi schemes. He said,  “we don’t have a lot of financially literate people and people are anxious
about getting rich very quickly which makes them fall into Ponzi schemes, the
market has developed to give people a lot of well-regulated options such as
money market mutual fund which allows a person to benefit from a relatively
higher investment yield than by putting money in a savings account”
.

Oyewale commended the
Chartered Institute of Bankers of Nigeria (CIBN), FMDQ OTC Exchange and the
Nigeria Stock Exchange (NSE) for their effort at financial education of
Nigerians and improving retail investors access to the capital market.

Speaking on the advent of
technology to advance investor education particularly for millennials and an
older generation of Nigerians, Oyewale said capital market regulators and
operators currently use technology to disseminate financial information across
social media platforms in such a way that anybody eager to learn about the
capital market can easily gain access to the required information.

According to the CEO of
Frontier Africa Report, Mr. Boason Omofaye, there was a need for even the
traditional media to serve as a means of communicating financial information in
Nigeria as these mediums still form a large part of how several Nigerians
receive information and education.

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Speaking on the
partnership between National and Sub-national authorities on investment in
terms of policymaking, decision making and planning, Oyewale said there is a
proper handshake between the Capital Market Committee and governments at
different levels such as using the initiative of SEC to meet the members of the
legislator and for them to understand the importance of the capital market and
financial literacy as a whole.  He explained that the Committee reaches
out and educates the community leaders who in turn extend the education to
their communities.

On the part of innovative
ways the capital market could build retail investor confidence, Oyewale said
the retail market was large, “we make investors understand that investing in
the equities market is a long-term play and we educate them on the kind of
investment that would be appropriate for their age and risk appetite”
.

Considering the prospect
of retail education beyond 2020, Oyewale was of the view that financial
education and financial literacy was important and needed to be embarked upon
continuously. He said the Securities and Exchange Commission (SEC) had invested
in different jingles to explain the capital market in plain language the
average person could understand. He said that local Languages were very
important in creating retail market awareness and would go a long way in
propelling greater inclusion of smaller-sized investors.

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