Inclusion and Financial Literacy, Keys to Reducing Gaps in Latin America and the Caribbean

Inclusion and financial literacy, two key issues to establishing guidelines to help foster development, are part of the work agendas of Latin American countries. For this reason, CAF—development bank of Latin America—partnered with OECD to publish a study titled National Strategies for Inclusion and Financial Literacy in Latin America and the Caribbean: Implementation  Challenges, which compiles and analyzes the most significant challenges facing the region in terms of implementing public financial inclusion and financial literacy policies, while presenting lessons learned and success stories. 

The first step to understanding the issue is defining the term “National Strategies,” which are policies that establish implementation guidelines in different areas of action. For example, actions focused on financial inclusion should concentrate on promoting greater financial access, as well as greater use of quality financial products and services, while national strategies oriented toward financial literacy seek to articulate and coordinate efforts for the deployment of programs aimed at developing financial capacities, namely knowledge, skills, attitudes and behaviors of specific groups of the population.

Under this definition, the objectives of the CAF and OECD study are mainly to establish a theoretical framework that allows for a broader dialogue on the challenges facing a series of public policies applied to financial inclusion and literacy and their international guidelines, as well as promote the gradual and effective integration of multisectoral collaborations to implement such strategies.</>

In Latin America and the Caribbean, while financial inclusion levels have increased over the past ten years, about half of the population in the region still lacks access to formal financial services. 

Financial inclusion levels are expected to continue to increase in the near future thanks to the momentum of various initiatives implemented in the region, which are related to the digitalization of financial channels, products and services. On the other hand, a variety of surveys conducted have helped countries identify challenges and progress over time, as well as the separation by population groups, a factor that has helped identify each segment’s behaviors and needs, encouraging officials to take more appropriate actions depending on each environment.

In the field of financial literacy, the strategies with the most impact in the region are those that allow the coordination of educational, informative and communication actions between public and private sectors, academia and civil society . Study participants also brought attention to the importance of using traditional media, such as television, radio and the printed press as part of the countries’ outreach plans. The use of these channels is key to reaching all segments of the population.

Some of the most important challenges for the implementation of financial inclusion and literacy strategies are a poor allocation of funds, as well as ensuring the policies’ long-term sustainability and their independence from political cycles, the lack of baseline instruments to allow for more rigorous diagnostics to prioritize and segment the population according to their specific needs, and the lack of monitoring systems. 

Although the processes for implementing national strategies vary widely and depend heavily on the particular context of each country, we may identify common elements arising from the extensive use of international guidelines, the regional exchange of government guidelines, and the advisory services of international organizations for the design of public policies. 

National Strategies for Financial Inclusion and Financial Literacy in Latin America and the Caribbean explores the phases to design national financial inclusion and literacy strategies in Latin America and the Caribbean, including diagnosis, goal identification, prioritization of target populations, leadership and coordination, and monitoring and evaluation systems. The study identifies the main implementation challenges for each phase, and points out good practices and lessons learned by a variety of countries in the region. 

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