Financial literacy in Pakistan

Ranked the lowest in terms of financial access rate with 100 million unbanked adults

Sehrish Fatima April 13, 2019
The writer is an Associate Manager Monitoring and Evaluation (NFLP-Y) at National Institute of Banking and Finance. She can be reached at

Financial literacy has been referred to as possessing the knowledge, skills and abilities on financial matters to confidently take effective and responsible decisions and to make appropriate use of financial resources. Financial education is a lifelong skill that plays an important role in providing the socio-economic benefits to the citizens resulting in improving their financial state. According to UNDP’s 2018 National Human Development Report (NHDR), 64% of Pakistan’s population is below the age of 30, whereas 29% is between the ages of 19 to 29 years. The population of youth always has to face both challenges and opportunities. According to World Bank’s 2017 Global Findex database, Pakistan has been ranked the lowest in terms of financial access rate with 100 million unbanked adults.

Financial inclusion is generally classified as access to formal financial services. This article aims to highlight the issues in financial literacy while suggesting measures to increase financial education leading to increased financial inclusion in Pakistan.

Pakistan has the lowest financial access in the world among the developing countries. About 100 million (50% of population) adults in Pakistan have no access to formal and regulated financial services. Even worse is the inclusion of less than 5% of women in the formal financial sector, as compared to South Asia’s average of 37%.

Pakistan falls under lower ranks of various financial inclusion indicators such as savings and investment including insurance penetration and participation of pension and mutual fund. In this backdrop, improved financial literacy may build public confidence in financial institutions, leading to more savings and long-term financial investment. Financial literacy rate in Pakistan is low to the extent that only 13% of Pakistani adults have formal bank accounts; Pakistan is positioned at 16 among 26 nations ranked by Brookings Institution with an overall score of 69%.

As measures to increase financial literacy, any successful strategy to enhance financial literacy requires concerted efforts from different stakeholders such as telecom, education institution, etc. However, the role of financial institution is critical as they would be the immediate beneficiaries of financial literacy. The Government of Pakistan has recognised the fact that the ongoing financial inclusion programmes needs to be accompanied by enhanced efforts to improve financial literacy. Therefore, under the directives of the State Bank of Pakistan, in order to support and enhance the financial literacy eco-system in Pakistan, the National Institute of Banking & Finance has launched National Financial Literacy Program for Youth (NFLP-Y).

Basic aim of the programme is to impart essential financial literacy education to Pakistani youth and school-going children for strengthening their money-management skills and understanding of financial matters. The NFLP-Y is expected to serve as a medium to connect youth with financial institutions that offer banking products and services. The programme will primarily target three age groups — children in school-going age 9-12 years; adolescent age 13-17 years; and youth age 18-29 years — across 45 selected district of Pakistan including G-B & AJK.

Pakistan is in a dire need of robust financial planning and support to strengthen its trembling economy. The project like the NFLP-Y is a stepping stone toward financial inclusion at the national level which will impart knowledge and understanding of financial concepts, banking/financial products and services among youth and children. Making people (children and youth) financially literate will help in development of skills and attitudes towards budgeting, savings, investment, debt management, financial negotiations and improved financial management. Furthermore, steps should be taken to include basic financial literacy in the curriculum so that children and youth would be able to plan, secure and improve their financial future.

Published in The Express Tribune, April 13th, 2019.

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