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HomeNewsLocal NewsSKN Cabinet Secretary expounds on Financial Education and Savings Program for Youth

SKN Cabinet Secretary expounds on Financial Education and Savings Program for Youth

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by Kevon Browne

St. Kitts and Nevis (WINN): During their recent appearance on WINN’s Island Tea on May 16, 2024, Cabinet Secretary Dr. Marcus Natta and Finance Consultant Davinia Tomlinson provided more details on the Financial Education Savings Program.

This initiative, spearheaded by the government with a task force to helm its implementation, aims to bolster financial literacy and cultivate sound saving habits among the youth of St. Kitts and Nevis.

“This is a three-pronged type of program, okay. So you have the financial, education, literacy, skills development portion, you have the savings accounts portion, and then you have the investment portion in terms of the shares. All of these will be done in phases, so everything won’t be launched at the same time.

“What we feel is a low-hanging fruit, so to speak, is opening a savings account. Each account access savings account, of course, [for] the children, this account will be held in trust for the program’s future [those] who cannot open a savings account until you’re 18, without a parent or a guardian. So, everything will be held in trust, which you cannot touch until you exit the program.

“So that’s one. As I mentioned, the education curriculum is essentially done, so we hope to roll that out, if not on day one in September of the new academic year, probably shortly thereafter, but hopefully within the new academic year. And the investment portion part is the more complex part that we are working through and we are nearing completing how we would actually do that, and Davinia is the expert in that area.

“So needless to say, I would not want to give a high date and say September 02, September 09, that sort of thing, but we’re gonna do a phased approach, and as I said, the savings account we see as the kind of easiest part to deal with, so we would want to roll that out, and we would make sure we put some communication out as to how you go about doing that.”

Every child aged 5 to 18 who is a citizen of St. Kitts and Nevis and attends school within the country will receive a dedicated savings account. These accounts will be initialised with an initial deposit of EC$1,000, with EC$500 earmarked for investment in shares of government-majority-owned entities such as The Cable. Around 10,000-11,000 children are the expected participants, which would make the estimated budget for the initiative EC$11 million.

Tomlinson explained why the start age is five.

“Children form their earliest money habits by the age of seven. That’s not my opinion, that’s based on studies. And what we want to do is to equip them with everything that they need early enough so that they can, you know, cultivate a good and positive relationship with money over their lifetime.

“Hence why we start with them early and we give them a really nice lead time in which they can learn or absorb all of that education and those literacy skills. I think with regard to the communication with parents, one thing that I think is critical to note is that we will be embarking on a Federation-wide community outreach program that will enable us to go out into community centres and so, you know, so people don’t have to feel like everything happens in St Kitts or everything happens in town.

“We will go to them, we will meet people where they are so that all parents can ask their questions, they can feel part of the program and part of their children’s financial education. And almost, I mean, I’m a parent myself, I have two daughters. Sometimes, you’re teaching them, and you’re teaching yourself at the same time.

“So I’m sure there are lots of behaviours that we all have as adults, financial behaviours that you think, oh gosh, if anybody saw me doing this, I’d feel shame. So we want to impart some really positive messages [to] those young people and get the parents on board in doing so. So it’s not a very, you know, top-down paternalistic approach.

“We’re just shoving things onto parents’ doorsteps and shoving things onto teachers who’ve already got a full plate. We want everybody to feel they’re part of the experience. So the community outreach will be a really important part of that.”

Questions have been raised as to how beneficial the program would be for older children. Natta explained how that concern is being considered by the task force.

“The 18 has a little asterisk on it for us, and we’re still in the process of figuring out how we want to approach that. Meaning if you are 16 right now and the program starts in December, officially, let’s say, then you’ll turn 18 in what, a year and a half, two years maybe. That’s not enough time, we feel, to get the true benefits from the financial education and literacy portion, as well as from the savings.

“I mean, how much interest can you get in the two years, as well as the shares component? So, we are trying to formulate a time frame and have a tiered set of time frames for persons within 5 to 18. Of course, if you’re 5, you get the full amount of time. But again, if you’re 17, we don’t want to keep you there for ten years because then you’ll be 27, you know, you’re a grown person and so on.

“So we’re going to try to figure out a nice window that we ask them to stay on the program and ask them not to touch the funds because, again, the savings, for example, you can’t extract from it until you exit the program and so forth. So for those older teens, so to speak, we are going to figure out a nice time frame that we think would be good, that they get enough benefit from the education component, from the shares, etc.”

Tomlinson shared that access to the accounts would be limited to the account holders, the children and not the parents.

“I know that there are some parents who, at the point at which they heard the announcement, thought, oh, a thousand dollars, that’s great like I can use that to, you know, support maybe, I don’t know, children’s expenses and different things and maybe feel that they can get access to the cash. And whilst I’m not suggesting that those intentions are in any way negative ones, I think it’s important to say that, ultimately, the child is the beneficiary.

“No adult, parent or guardian will be able to get access to those proceeds, and at the point at which the child, you know, matures in the program, the earliest point at which they can exit is 18. They are the only ones [who] will be able to get access to the proceeds, the growth in the investment, any investment returns and dividends and any interest that will be accrued on the cash deposits held at National Bank. That’s really important to say.”

The future of the program could include a diverse portfolio of investment options for the children.

“The goal is to diversify the portfolio and look at how we can include other companies. I mean, the Prime Minister has a vision as well of having publicly traded companies, new ones in terms of looking at SKELEC, maybe, you know, doing SKELEC as a company that the public can invest in, even looking at Water Services, as well as we, look at desalination plants and these sort of things. So, we’ll definitely try to diversify the portfolio, but initially it will be National Bank, The Cable, with the government investing.”

Why the Cable?

“Ninety-nine per cent of The Cable is owned by the government, and they are now looking at divesting their shares, right? Because those two entities are government-owned, essentially, even though SKELEC is a statutory corporation and so forth, then the Prime Minister and Minister of Finance chose those two.”

Tomlinson added, “It’s really about the availability of share capital to make sure we’ve got adequate shares for that pool and that we continue to have adequate share capital in future. You know, again, talking about future-proofing the programme, making sure that future children can also get access to those shares as well, not just in the Cable and National Bank, but in other companies in the pipeline.”

Dividends generated from the shares held in National Bank and The Cable will be reinvested into the accounts, fostering a culture of financial growth and reinvestment among the recipients.

A dedicated task force comprising experts from various sectors has been established to ensure the successful implementation and administration of the Financial Education and Savings Program. This task force is responsible for refining program details, coordinating with stakeholders, and overseeing the rollout of educational initiatives and savings account provisions.

The task force comprises the Financial Secretary, Hilary Hazel, representing the Ministry of Finance; Melvon Bassue from the Ministry of Education; the Cable CEO, Pat Walters; and the Chief Financial Officer, Sheldon Mitchell, St. Kitts-Nevis Anguilla National Bank Managing Director, Terrence Crossman, Senior Project Specialist at the Eastern Caribbean Central Bank, Sybil Welsh, St. Kitts-Nevis National Cooperative League Limited President Peter Jenkins, Ministry of Justice and Legal Affairs Crown Counsel Lashon K. Smart, Former Bankers Association President, Steve Farrier, new President of the Bankers Association, Pamela Herbert Daniel, the Country Manager for Republic Bank and Janisha Daniel, Audit Manager at the Inland Revenue Department on Nevis.

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