Friday, January 22, 2021

When it comes to spending, Millenials are a lost generation

BY MPHO KUHLMANN

Botswana millenials are more educated than previous generations but this has not helped their spending priorities. And it gets worse: Most are living beyond their means and are forced to borrow to finance their lavish lifestyle. They have a huge appetite for faster money quicker without thinking of the longer-term ramifications.  This has spawned a multi-million Pula industry as switched on entrepreneurs scramble to cash in on this financial recklessness.

It is almost an article of faith that if you threw a stone in Gaborone, it is likely to land on a pawn shop or a micro-lenders shop testimony to the proliferation of high interest lenders who have found a happy hunting ground among free spending millenials.

Dr Sethunya Mosime, senior Sociology lecturer at the University Of Botswana says it’s easy to blame the millennial and younger generations yearning for instant gratification and reliance on technology for not being financially proficient. But it’s much more of an education issue. “This is especially true during a time when life is proving more complicated for a generation in which debts, lower incomes and ballooning housing costs force many to live paycheck-to-paycheck. Whether people have money to spend or money to save, it takes some education to learn how to manage it. It’s a skill many have to learn, much like driving a car. Only it’s hard to find a place for students/kids to obtain that skill. The problem sometimes is that parents don’t want to share their mistakes and might assume schools are teaching their children basic financial skills when they’re not. Parents of today’s young adults also didn’t experience the same economical conditions their kids are experiencing, sometimes causing a financial disconnect between the two generations.”

A research by University of Botswana academics Gosaitse E. Solomon, Trust Nhete and Burman M. Sithole “The Case for the Need for Personal Financial Literacy Education in Botswana Secondary Schools”  published earlier this year reveals that, “Although Botswana has ideals of a prosperous and wealthy nation enshrined in its national vision, Vision 2016: Towards Prosperity for All (Republic of Botswana, 1997), it fails to speak to issues of financial literacy more decisively. The national vision voices the need to reduce abject poverty and sees the way to prosperity as coming mainly through investment in entrepreneurial activity and diversification of the economy (Republic of Botswana, 1997). This perhaps explains why financial literacy programs have a stronger leaning toward financial management for entrepreneurship to the neglect of personal financial management (Xu & Zia, 2012). This means the vast populaces, who have no entrepreneurial mind-set or intentions, are left out in the lurch. The neglect of PFL is such an incredulous oversight especially that financial literacy may have a bearing toward achieving such a glorious envisioned future.

“PFL is an invaluable survival skill in the 21st century (Hite et al., 2011). Therefore, teaching of PFL as a lifelong skill must cut across all the domains of human survival just as is the mandatory teaching of HIV awareness in secondary schools. Contrary to common belief, PFL is a not a business subject that is offered to students who are interested in pursuing careers in the world of business and entrepreneurship. Rather, PFL must be treated as a survival skill for every human being who lives in a monetary economy. PFL avails every individual the opportunity to manage and control their own personal finances irrespective of their position, career, and status in society. Depriving students these skills during their secondary school days may result in consumers who fall prey to predatory marketing gimmicks of retailers and financial institutions. In this article, we take the position that PFL should be made a compulsory subject in secondary schools, offered either as a separate subject or at the least, infused into other subjects, taught to all students irrespective of their subject choices. Through the review of literature on the subject, this study has the following objectives: to identify the content that should be included in PFL and discuss factors that make it necessary to teach secondary school students about PFL, to assess the extent to which the existing secondary school business education curriculum imparts financial literacy, and to suggest a possible approach to offering PFL at secondary school level in Botswana.”

The problem is so serious that the Bank of Botswana’s Monetary Policy Statement 2017 warned that ‘household loans, with a share of 60.1 percent at the end of December 2016, continue to dominate commercial bank credit.the policy statement projected that growth in personal incomes will continue to be restrained.

Bank of Botswana has called on corporations to play a bigger role in financial literacy to reduce household debt. The first to heed the call was Botswana Life Insurance Limited (BLIL) which embarked on a financial literacy campaign aimed at sensitising locals about making informed financial decisions with their investments. BLIL was followed by Liberty Life which went a step further and launched a financial literacy program ‘mind my money’. The program is meant to educate the public about money matters so that they are able to make informed financial decisions.  Liberty Life Managing Director, Lulu Rasebotsa pointed out that household debt in Botswana has grown and Batswana continue to be engulfed by debt. Botswana Organisation of Financial Literacy, a nongovernmental organisation later joined the campaign for financial literacy.

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