Financial education needs a coordinated and integrated approach and to be taught as early as possible. More and better synergies among all players in the financial environment- but not only- are needed, but it is also important to shift mentalities and develop a real entrepreneurial culture in Europe, were the main conclusions of a roundtable recently organised by ACCA and Barclays under the patronage of Othmar Karas, MEP
Financial education and broader enterprise skills play a crucial part in driving a culture of entrepreneurship across Europe, and are an integral part of the EU Growth and Jobs agenda. The 2013 EC Entrepreneurship 2020 Action Plan stresses that investing in entrepreneurship education is one of the highest return investments Europe can make, and the Italian Presidency priorities entail a clear focus on the inter-relation¬ship among education, employment and entrepreneurship education.
Recognising the importance entrepreneurs make to the growth of the European economy, ACCA (The Association of Chartered Certified Accountants) and Barclays recently organised a panel debate in Brussels, moderated by Frances Robinson from the Wall Street Journal, to discuss how to deliver more efficient financial and entrepreneurial education and to identify alternative approaches of providing the right skills and services to entrepreneurs.
The debate revealed that entrepreneurs, who often lack the financial literacy skills required for the complex business decisions they face, need to better understand their financing needs and options, and to be aware of the support and services available to them. The contribution of every player in the financial ecosystem - including European, local, and financial institutions, as well as accountants- to help reach that aim is crucial. Financial education needs a coordinated approach and to be taught as early as possible. It is important to integrate entrepreneurship throughout the whole formal education cycle, but also through training opportunities and mentoring. In addition, besides a suitable regulatory environment, a shift of mentalities is urgently needed to develop a real entrepreneurial culture in Europe.
Othmar Karas, MEP opened the debate, stressing that "Entrepreneurial spirit and basic economic knowledge needs to be already instilled in children and students. The earlier they learn about debt, savings and credit, the less likely they are to struggle in the future and the more likely they will become active and productive participants of the economy".
Manos Schizas, head of SMEs Affairs at ACCA said "The evidence on the effectiveness of financial literacy interventions is clear: success is elusive. What appears to work is private-sector-led, highly relevant content, crystallised into practical rules-of-thumb and administered regularly at "teachable moments". ACCA believes that the act of business planning is the ultimate "teachable moment" for entrepreneurs, and that good financial education built around business planning can help SMEs without over-emphasising access to debt or other financial products. As the most trusted financial advisors of Europe's SMEs, accountants are de facto financial educators, and the profession embraces this responsibility."
Richard Phelps, Managing Director at Barclays, pointed out that "there is a big difference between educating entrepreneurs to make them financially literate versus "teaching" entrepreneurialism, which is in your DNA and in your environment. At Barclays, we are thinking a lot about how we can best support entrepreneurs." Richard emphasised that "there is also a cultural component: our research shows that in developing economies, there is a far greater tolerance of failure than in developed economies. And in some locations, as is the case in Silicon Valley, failure can sometimes been seen as a badge of honour. This isn't the case in Europe. About 50% of all new businesses fail during their first five years, and to help entrepreneurs through this phase, banks can play their part in creating an ecosystem of support which goes beyond simple lending, such as providing a network of alternative investments like angels or venture capital."
Othmar Karas, MEP concluded: "Jonathan Hill, Commissioner designate for Financial Stability, Financial Services and Capital Markets Union, mentioned as his main priorities Banking Union, Capital Markets Union, and access to finance for SMEs. The latter point is also one of the main priorities of the new European Parliament. But the issue is not only about access to finance. We need to focus on financial literacy of the society as a whole, not just on the relationship between banks and their clients. We need a broader understanding of our economic world and the global situation. Regulating is seen as easy answer, but it is not necessarily the right one, and the problems of financial education can for instance not be solved with more regulation. Sometimes the problems lie outside European legislation, and are linked to other factors, like different taxation regimes. We must continue this debate. The Parliament and the Commission are very open to all the examples and experiences from outside and look forward to hearing from your input".
