Financial illiteracy affecting growth of many companies – ZIBFS

The Zambia Institute of Banking and Financial Services (ZIBFS) says there is need to empower institutions with financial education to eradicate the illiteracy that has been affecting the growth of many companies.

At a media briefing today, ZIBFS acting CEO Victoria Mumba disclosed that her organisation had partnered with the SME Accounting Services Ltd to hold a training programme for non finance executives to give insights on the financial management principles.

“Knowing that numbers are a part of everyone’s job, this finance for non-finance executives training programme is designed to sensitize non-finance senior executives/managers to the financial implications of their actions and also provide an understanding of financial management principles. The training which is practice oriented comprising lecturers, case studies and group discussions, is modelled at keeping non finance persons in mind. You may be an inspired engineer, journalist, a banker, marker or a doctor with a heart for the masses or even a great sales person that may be terrific with customers. But if you don’t know finance or numbers, then you are operating at a disadvantage in the word of business,” Mumba said.

She noted that there was an urgent need to equip organisations with financial intelligence in order for them and their staff to adequately manage their financial resources at different levels.

“There is a crying need for organisations to be financially intelligent. For sustainable growth, financial intelligence must percolate across all levels within the organisation. It is an established fact that financial mismanagement is the single biggest cause of business failures the world over. Ladies and gentlemen, we need to ask ourselves why so many businesses suffer on account of financial mismanagement, the answer is very simple; it is because very little management happens in the finance department and much of what happens there is financing,” Mumba said.

“Finance management or mismanagement is happening 24/7 in every action or individual so by the time the finance person comes into picture, the good or damage has already been done. Therefore, it is important that everyone learns numbers, people might start to work in alignment with strategies and goals of their organisations because it is imperative that everyone in an organisation understands how their actions impact on the profitability and sustainability of an organization. Financial intelligence comes about as a result of experience and education, you can’t cram your way to financial intelligence without understanding the concepts.”

Meanwhile, Mumba called on the Human Resource (HR) personnel in all types of organisations to encourage their staff to understand finance so that they could also work in line with the organisations’ goals and strategies.

“In most organisations, skills and talent development is a responsibility of the Human Resource department so the HR has an important role to play in transforming companies into financially intelligent organisations. I therefore implore HR departments in all types of organisations to encourage their own staff to understand finance so that they too, are aligned with the organisations’ goals and strategy,” said Mumba.

And SME Accounting Services Ltd Chief Executive Officer Munkonki Mukonkela said she believed that the training would help in giving knowledge on finance management.

“Experience has shown that there is so much financial illiteracy in so may business including corporates and from my own personal experience having worked with corporates, you would know this from management meetings. If you are part of the management team at a company you would find that the accountants will be presenting the financial report while everyone else is just quiet and they won’t ask questions but after the meetings they will start asking themselves what the accountant was talking about in their report, but why? It’s because they are afraid to ask in the meeting because they don’t want to come out ignorant in public when everyone knows that this person has a PHD or an MBA,” said Mukonkela.

“So we do believe that there is a lot of financial illiteracy in that line. We will have to conduct this training just to share knowledge on finance. It’s the basics, simple things like what a balance sheet is and how you can read it. Things like why a company will be recording profits when their bank account is dry. People without finance or an accounting background struggle to understand and that is what this training will endeavour to address. But more importantly, we are trying to drive a lesson that your actions matters on the profitability of your company of whatever nature. So financial illiteracy is really out there and its what prompted us to conduct this training and we hope to make this an annual conference and training event,” said Mukenkela.

The training programme which will be delivered from October 12 to 14, 2017 will be facilitated by Indian practicing Chartered Accountant, Author and Lawyer Dr Anil Lamba.

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