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10 February 2017

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The problem of financial literacy, or the lack of it, is not confined to PNG.

Here in Australia, it is thought that more than of half of the population, despite the apparent advantages of a good education system and well developed finance and banking sector, have a perilously poor level of financial literacy.

So, for example, about 60% of small businesses fail within the first three years of operation.

Mostly, this is due to inadequate capitalisation or because the business idea was a bad one to start with. In other words, the business owners either didn't understand how much it would cost to start up and get established in the first place or simply pursued a non-viable business strategy right from the start.

Given the additional handicaps faced by people in PNG, it is no surprise to me that financial literacy is seriously under developed.

The extension of easy credit to Australians has been both a blessing and a curse. On the one hand, it has allowed many people to do and achieve things that would have otherwise been impossible.

On the other, it has allowed people with very poor money management skills to get themselves into a great deal of financial trouble.

We have people in Australia doing the equivalent job to that being done by Diane Mirio. I'd be amazed if they have not had pretty much the same experiences she has had, having to explain the financial facts of life to people with little idea of how to turn their dreams into a concrete reality.

Where financial literacy is concerned, it seems that the situation in PNG is not materially different to that applying in much of the rest of the world.

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