> Posted by John Gitau, CEO, Kenya Financial Education Centre
I was once a seminarian. Had I followed that path successfully, I would most probably be a Catholic bishop today. I blame my wife for the failure, though she never admits it. She instead boasts of 27 years of successful marriage complete with two adults and a teenager as offspring. She says, in jest, that marriage is celibacy tweaked. I don’t like her bravado, especially when she recalls how she crafted the fall that felled me. Before you can throw a stone at her, know that we always unite against a common enemy.
During my seminary days and perhaps since time immemorial, religion was about preparing the soul for eternal life. It is a way of life, complete with doctrines, laws, dogmas, liturgies, beliefs, and ethos, all meant to cultivate spirituality. Most religions profess the existence of a deity and a final heavenly place where the souls of the departed rest in eternal peace. Religious orders were givers of hope and takers of monetary offerings.
Today, religious orders are working to change the perception that they are mere purveyors of hope and recipients of offerings. They are increasingly creating programs meant to empower their members in many ways, including economically.
Before we delve into what religion is doing for financial capability, it is important to understand some definitions. Monique Cohen and Candace Nelson in their paper Financial Literacy: A Step for Clients towards Financial Inclusion have given clear definitions of the constituent elements of financial capability as follows:
- Financial literacy is the ability to make informed judgments and to take effective actions regarding the current and future use and management of money. It includes the ability to understand financial choices, plan for the future, spend wisely, and manage the challenges associated with life events.
- Financial education is the process of building knowledge, skills, and attitudes to become financially literate. It introduces people to good money management practices with respect to earning, spending, saving, borrowing, and investing and helps them shift from reactive to proactive financial decision-making.
- Financial capability is the bringing together of informed clients with appropriate products in the marketplace. It is the combination of knowledge, skills, and attitudes with the opportunities to apply them, which requires input from multiple sources including those that educate the consumer and those that sell the products.
Evidence of religion’s role in financial capability
One can be excused for assuming that religion is only about spirituality and life after death. We in the financial inclusion space hardly think of the important contribution religion is making and its potential in advancing financial capability among the poor it so effortlessly reaches. Most of the time, we erroneously consider religious orders as reactive behemoths, contributing too little too late during calamities. Their support for the poor is considered half-hearted at the least and pretentious at best. Such perspectives are based on ignorance.
To start with, religious orders are development leaders in education, health, and housing across the globe. Unlike corporates that shout from the mountain tops whenever they make puny contributions during disasters, burnishing their images as leaders in corporate social responsibility, the bountifulness of religious orders percolates unnoticed in the poor neighborhoods. Their economic and social empowerment outreach within the urban and rural low-income neighborhoods is near perfect. Churches, mosques, temples wherever located, are conspicuous by action.
Many religious orders are already key players in financial capability efforts, albeit quietly. Of course, given the expansiveness and outreach, religion has a wider capacity and influence than perhaps education or political institutions.
The Islamic religion with a global following of over 1.6 billion people is increasingly creating impact in financial capability through their Sharia law based Islamic finance. The first Islamic Development bank was set up in 1975 to promote acceptable financial practices. Since then, there has been a deliberate growth of Islamic banks across the world that serve the low-income segments of the society.
The Christian religion with over 2.2 billion followers has as many financial capability programs as their many denominations. Some examples of such denominations and programs are:
- The Catholic faith, with over one billion followers, runs a Catholic Charities Program and the Catholic Financial Life-Youth in Financial Education, two programs in the forefront of financial capability.
- The Charismatic and Pentecostal faith movements are teaching financial prosperity and abundance principles. Motivational teachers trace their two controversial statements “God wants us to be rich” and “It is a sin to be poor” to the Evangelical movement and their prosperity gospel.
- The World Evangelical Alliance, a global network of over 600 million serving evangelical Christians, offers practical support in promoting financial capability with renewed belief that the church has a role to support those in debt and at risk of losing their possessions, encouraging savings, and promoting good money management practices as part of a holistic service to communities. The evangelical church is known for prosperity gospel, playing a crucial role in empowering the poor through hope, inspiration, and teaching the principles of abundance.
- The Lutheran faith runs programs through The Lutheran World Federation. One such program is Sustainable Livelihood Programs that work with the poor and marginalized. They provide access to savings and credits schemes, and they create markets for the communities where they operate.
- The Anglican and Episcopal Churches comprise over 80 million members, with member churches spread across 160 countries. The Anglican and Episcopal communions run separate programs that promote financial capability. The Anglican communion for example runs an Affirmative Investing Program with a goal of encouraging their financial resources to be preserved in financial institutions that serve underserved communities and which provide financial services such as savings, credit, and investing to the poor. Indeed, they have an Economic Justice Loan Program that on-lends funds to organizations that support the poor in enterprise and credit. The program provides loans to communities and groups that lack full and equal access to financial resources. Their loans are issued below market rates and on a non-commercial committal basis.
- The Mormon Church with over 14 million members across the world runs an educational fund known as Perpetual Education Fund that provides finances for education to the youth in secular and spiritual training as well as in economic empowerment through cheap business loans.
- Many other Christian denominations such as Presbyterians, Methodists, Mennonites, and Baptists have their unique financial capability invigorating programs reaching most of their followers.
Hinduism, as the third-largest religion with over a billion followers, teaches its adherents the principles of thrift, savings, and investment and is strong in community cultivation of financial education associated with enterprise development and wealth building.
Apart from the religious orders and their denominations, we have strong religious-based institutions contributing immensely in the field of financial capability.
A leading example is the Chalmers Center a Christian institution led by professor Brian Fikkert. In addition to propagating financial education, the center encourages Christians to form savings and investment groups and has a program that reaches out to churches in the world to help empower their followers economically. The Chalmers Center is part of the Covenant College and has, in addition, a Faith and Finance Training program, a financial education program for low and moderate-income people. The program, available to all Christian churches across the world, offers context for low and moderate-income people to learn best practices of financial literacy including savings, expense tracking, and building productive assets.
The Islamic religion has solid and expanding institutions that propagate financial education. One such institution is Silatech Communication that trains youth on faith and financial management with a special focus on financial literacy in the Arab world.
Religious orders, given their financial influence, outreach, and contact with the poor, make a deep impact in financial capability.
John Gitau is an independent financial education consultant and trainer and is the CEO of Kenya Financial Education Centre, an independent centre that supports and promotes financial inclusion efforts among the Kenya poor living in low-income neighborhoods. He does that using his home grown financial literacy curriculum, Practical Financial Literacy Counseling (P-FLC) adopted from the Global Financial Education Program (GFEP) developed by Microfinance Opportunities, Citi Foundation, and Freedom from Hunger.
Image credit: St Mary Magdalene Willowick
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Leveraging Religions for Financial Capability
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May 21, 2014 at 1:41 pm
Susy Cheston
John, thanks for this look at how faith and faith communities can help with financial capability. The Christian Bible has over 300 verses on poverty and social justice and over 800 about money–famously, more verses than talk about love. As you point out, this focus on justice and mercy for the poor and oppressed and on ethical economic systems is true of all the major world religions. It can be hard to interpret some religious texts, and there is room for disagreement about interpretations. (For instance, I personally don’t buy into the “prosperity Gospel” as practiced by many.) That said, religious leaders can be powerful voices calling for financial inclusion for all as part of a focus on justice and care for the afflicted and oppressed, and faith communities can play a vital role in building financial capability. Susy
May 21, 2014 at 2:36 pm
Joshua Goldstein
Great piece, John. We don’t think enough about the ways we might be able to collaborate with these religious orders to advance inclusion and reduce poverty. Much to think about here. Josh
May 22, 2014 at 4:39 am
Mabulara
A great piece John, and very funny too! While I cannot dispute the importance of religion in our societies,especially the poor households it can as easily be misused. In politics, religion has become both an adversary and proponent of good governance; it is very effective in advancing civic education programs and promoting public participation! However, your analogy on the roles by religion in advancing financial capabilities is based on independantly organised programs, but aligned to these religions. the same strategy used in eucation, health etc. It is a bit different to teaching on “prosperity’ and building a savings and credit program within a church sect. People become less discerning in religious issues, hence may easily be defrauded. Religion may not be subject to regulations and limits to ensure appropriateness and relevance of messages provided, but poverty reduction is part of the eternal wealth. As such, although it may be a useful platform, caution should be practised.
May 22, 2014 at 5:40 am
John Gitau
Thank you Susy for pointing out the biggest challenge that distorts religion thus obfuscating its bountifulness-religious texts interpretation. That should be left to philosophers and hair splitters.
Religion’s primary product is hope(we should be excited they have accepted to sell our product-financial capability). Hope is perhaps the best intangible asset on earth. It can be sold, leveraged, pawned, mortgaged, hired, lent. It has monetary value. We educate our children based on the hope that they will make careers out of education. We buy property and hope to gain in appreciation. Stock markets are about hope for capital gains and dividends. Any cash flow projection is based on hope. The poor hope tomorrow will represent better cash flows prospects and what we call their resilience is just abundance of hope. Indeed, all the wealth religious orders are endowed with is reward for selling hope successfully. Like in every business, success is determined by the size of customer base. The religion followers numbers you read herein is evidence of success, even before you start evaluating the wealth generated therefrom.
There is every reason for us to be excited now that religion is embarking on financial capability. Indeed, if the religious orders embrace it as their second product, we might witness a transformation within the poverty landscape. Of course they will not deliver financial capability for free. They will make much more from it than they ever made from hope. The reason is that when their followers get empowered economically, they will earn more from them in tithes and offerings( they must be wondering why it took them such long to see this opportunity). They will have entered a new paradigm of hope-plus. In the value game, it has so far, for them, being hope for money. Now it will be hope-money for money. The payoff will be unimaginable.
Now, we in the financial inclusion space better be careful. We have created and packaged financial capability product and are giving it to religion on a silver platter. Religion with take and run with it. No problem if we are serious that all we want is economic empowerment for the poor, and it doesn’t matter who delivers it. Let’s hope we shall not be envious as religious orders become wealthier alongside their followers, majority of whom are poor.
This is not theory. In my country, most Christian denominations already have savings and credits cooperative societies(Saccos) for their followers. They are thriving and providing capital for businesses to their members at very low rated (12% APR) part of which is income at the end of the year as dividends. Some are buying land for their members and helping them put up commercial and residential houses. There are financial literacy classes for the youth and followers of all ages. Due to numbers, most of the saccos are awash with cash for lending and other income generating ventures( we have saccos in transport business, agriculture, real estate development and education, generating good incomes for their members who are still engaged in their day to day personal economic pursuits).
Religion has a religious following and now with financial capability which comes loaded with a promise of financial empowerment, we might have a religious following of financial capability.
I hypothesize that no government or financial services providers can deliver financial capability better and faster than religious orders. They have the advantage of mobilization ability and being listened to by their followers at their so many touch points, the basic being four times a month for most religions( Christian denominations have it daily nowadays). With the whiff of more money, financial capability become even more appealing to religious leaders. What I have highlighted in this post is just a tip of the iceberg. So much is going on behind the scenes.
So, Josh, you are right we need to take this seriously. It will not be cowardly to give our baby for adoption. It will be a mark of care and wish for the best for our poor we may not be able to feed and cloth.
June 10, 2014 at 9:25 am
Larry Reed
Thanks, John, for bringing up the role of religious movements in promoting financial capability. I recently returned from Mexico (since our Summit will be there September 3-5) and while I was there I learned that most of the savings and credit cooperatives (the SACCOs that you talk about) were started by Catholic priests and workers in rural areas.
I did some research on this a while back and found that religions that promote the dignity of each person and the caring for people in poverty usually develop some sort of financial services for those in need. For example, in the Middle Ages the Franciscans developed Montes de Pietati (Funds of Piety) to lend to people whose financial emergencies had led to them becoming indentured servants. These Montes still exist throughout Europe and many other parts of the world.
The earliest program of this type I can find are the Buddhist and Hindu temple loan systems from around 400 CE. Monks would turn all their worldly possessions over to the temple when they joined, and the temple leaders used these funds to provide loans to struggling small scale farmers in the surrounding areas.
And, of course, the earliest version of the Smart Campaign and Client Protection comes from the Hebrew Scriptures, which do not allow usury or collection practices that would harm the livelihood of the borrower.
June 11, 2014 at 3:08 am
John Gitau
Yes indeed, Larry and thank you for your sharing your observations. It is these sort of financial services amplification through financial capability that we are lauding religion for. Otherwise, before, beyond giving hope, religion was seen as a system of mopping the little cash the poor had and channeling it to developments benefiting the rich such as good schools, hospitals, universities, residential and commercial real estate property. Now with the financial capability interventions religious organizations are promoting more aggressively, the poor will benefit materially and through appropriate tools and systems help themselves out of poverty.
June 13, 2014 at 9:40 am
Larry Reed
You’re right, John. In fact, there is a cautionary tale in some of the examples I gave about how tools developed to assist people out of poverty become deployed to exploit them instead. In China, the Confucian revolution was in part a rebellion against the economic domination of the temples. The Montes developed by the Franciscans later became pawn shops. Whether religious or not, we humans have a hard time keeping the interests of the excluded and powerless above our own self interest.
June 15, 2014 at 7:52 pm
The Microcredit Summit Campaign
Reblogged this on 100 Million Ideas and commented:
John Gitau, CEO of Kenya Financial Education Centre, writes on the Center for Financial Inclusion blog about “the important contribution religion is making and its potential in advancing financial capability among the poor it so effortlessly reaches.” Larry Reed shared his own observations and some historical context for religion and financial inclusion in the comments. What do you think?