Justice David Batts, citing Michael Manley’s Jamaica: Struggle in the Periphery, wrote that at the time of Jamaica’s Independence “some 40 per cent of Jamaicans were functionally illiterate”.
The high court judge, who was describing the history and evolution of the island’s legal system, did not explain how ‘functionally illiterate’ was defined.
Harvard University’s sociology professor, Orlando Patterson, and former special adviser to Prime Minister Michael Manley, also discussed literacy in his book, The Confounding Island: Jamaica and the Postcolonial Predicament. Writing 61 years after Independence, he quoted 2016 World Bank data, which showed that the country’s literacy rate was 88.7 per cent. Expressed differently, more than 11 out of every 100 people could neither read nor write.
This indicator applied to the population “15 years and older who can read/write and understand a simple sentence of everyday life”. In 2008, Barbados’s comparative literacy rate was 99.7 per cent.
Former education minister, attorney-at-law, and principal of St Michael’s College at The University of the West Indies, Rev Ronald G. Thwaites, argued last Monday that Jamaica’s “low literacy is one major cause of anti-social behaviour, below useful work skills, and limited scope for productivity and economic growth … more than half a million people of working age who are outside the labour market, cannot read and write well enough to function in a real job. This is also true of a third of those engaged in petty employment”..
“In the global marketplace for workers, we are trying to win the 100-meter race without legs. It took the World Bank last week to tell us what we should have known about ourselves – that the problem of underdevelopment stems in large part from a dysfunctional education system which operates way below world standards. We are going nowhere until we fix this problem,” Rev Thwaites wrote.
The March 31, 2017, Financial Gleaner, reported that then Finance Minister Audley Shaw announced the implementation of a “state-backed plan, the National Financial Inclusion Strategy, to protect the vulnerable”. NFIS was conceived to create an enabling environment for citizens to save, invest, do business, and obtain relevant products, and information.
Absent from the announcement was any mention of a historical review of the educational system, the long-standing literacy and numeracy problems that have confounded the country since the early postcolonial days or details of planned measures to overcome barriers that, in Rev Thwaites words, contributed to the problem of underdevelopment.
Financial inclusion describes actions that are taken to make financial services accessible and affordable to all individuals and businesses, particularly those who are excluded from the financial system. The aim is to ensure that everyone can use financial products and services to improve their economic well-being and quality of life.
NFIS was created by 15 government ministries, departments, and agencies. Private sector interests and non-governmental organisations were also part of the group. The strategy was built on four pillars, namely financial access/usage, financial resilience, financing for growth, and responsible finance. Targets were tied to each pillar and were to be achieved by 2020. Action items covered eight areas. Consumer protection and financial literacy were among them.
Financial, insurance literacy
Fast-forward to 2025. Is it unreasonable to have expected that policymakers and technocrats would be familiar with the country’s history and educational system, learned from the 1990 financial sector meltdown, and acted more decisively in protecting SSL customers’ interests?
Would those things have prevented or minimised the impact on the elderly woman who lost about $60 million that she entrusted to that company for investment? Can policymakers and technocrats escape, at the very least, moral responsibility for that mess? What is the status of NFIS?
Beth Carter, a US life insurance practitioner, writing in the prestigious International Insurance Society magazine, defined financial literacy in the context of that industry: The lack of financial and insurance literacy makes it difficult for individuals to understand the role of life insurance and its value. If people don’t understand the risks they face, or how insurance can protect them and their loved ones, how can they be expected to purchase life insurance (that is suitable for them and their families)?
‘Low financial literacy can impede interest in life insurance. Insurers must take steps to increase consumer knowledge. Increasing financial and insurance literacy can positively impact penetration and reduce the current need-gap.
That meaning can be applied to all types of financial services.
Financial literacy is defined as the ability to understand basic principles of business and finance. It is measured using questions assessing basic knowledge of four fundamental concepts in financial decision-making: knowledge of interest rates, interest compounding, inflation, and risk diversification.
A person is defined as financially literate when he, or she, correctly answers at least three out of four questions about financial concepts.
A survey found that one in three adults, worldwide, show an understanding of basic financial concepts. Financial literacy is higher among the wealthy, educated, and those who use financial services. Billions of people are unprepared to cope with financial changes.
Carter also discussed insurance literacy: While there is a wealth of information available on financial literacy, little is available on insurance literacy. However, when insurance is considered part of financial literacy, insurance ranks among the least used, and least understood, of any common financial product.
Citizens of small Caribbean islands should also understand that hazards from geography, geology, climate change, and ecosystems are crucial to properly appreciating the concepts of financial and insurance literacy.
When Hurricane Gilbert made a direct hit on the island nearly 40 years ago, the world was a very different place. “Concessionary flows” from friendly neighbours were expected to fund the recovery process.
The rapid dissolution of USAID and its many programmes worldwide, and the vitriol associated with the termination of most of its 10,000 employees, suggest that it would be unreasonable to expect the same level of flows if a similar event were to occur now.
Cedric E. Stephens provides independent information and advice about the management of risks and insurance. For free information or counsel, write to: aegis@flowja.com or business@gleanerjm.com
