1. CONSUMER FINANCIAL EDUCATION IN SOUTH AFRICA
South Africa has low levels of financial literacy. A baseline study conducted to assess financial literacy in the country, released by the FSB in 2012, revealed that the country’s overall financial literacy score stood at 54%[1]. The baseline report collected sample data on financial control, financial planning, choosing appropriate financial products and financial knowledge. This information was then used to calculate the financial literacy score for South Africa on a 0-100 scale.
The National Credit Regulator`s 2018/19 annual report[2], further revealed that out of the 25.70 million (39.48%) active credit consumers in South Africa, 10.15 million had impaired records by March 2019. This points to the need for effective financial education programmes that equip people to make informed financial decisions. Consumer financial education (CFE) plays an important role in improving the financial literacy and behaviour of South Africans.
Low levels of financial literacy may be a result of several factors. Historically, the South African school curriculum did not include any type of financial education. Upon completing school, many adults had not learned about basic financial concepts, which resulted in a limited understanding of the complexities of personal financial management, as well as limited financial proficiency.
In an effort to improve financial literacy in the country, the government included financial literacy in the school curriculum, via the Curriculum and Assessment Policy Statement (CAPS) of 2011. Financial concepts, including savings, income and expenditure, and budgeting are included in school subjects such as Economic and Management Science (EMS), Mathematical Literacy and Life Orientation. Although this is a step into the right direction, criticism has been levelled against the theoretical focus of the curricula, which don’t teach learners how to apply key financial concepts.
The government also established the National Consumer Financial Education Committee (NCFEC) in early 2012. The committee was established to develop the National Consumer Financial Education Strategy (NCFES); to oversee its implementation; and to review the strategy on an annual basis in order to ensure its relevance. The strategy defines target groups for consumer financial education, sets up appropriate action plans as well as key performance indicators to measure achievement.
The landscape of CFE service providers has since grown in the country. Various government institutions and departments, financial services providers, associations and multilateral and bilateral organisations are expected to annually invest a portion of their post-tax operating profit into CFE programmes[3].
DNA Economics has evaluated several CFE programmes offered by organisations in the financial sector over the past few years. Based on these evaluations, a number of key lessons have emerged.
2. PLANNING AND DESIGN
Planning is the most important aspect of any CFE programme, and if this step is done properly, the programme is usually able to run smoothly. During the planning process, organisations should consider a range of factors prior to programme implementation. One such factor is a needs assessment conducted among the target group. A needs assessment is important as it helps measure the financial beliefs of the target group; as well as their financial knowledge, skills, practices and behaviours; to determine where the gaps lie and the topics they require assistance with. Needs assessments can also be used to understand the different life stages of the target group, which will inform programming.
Some organisations have been found to design their CFE programmes without conducting a proper needs assessment. This has led to CFE programmes with content that is not aligned to the needs of the recipients. Similarly, many South African CFE programmes are designed on the basis of “one size fits all”. The programme design ignores the fact that people come from different financial backgrounds, and have different financial needs depending on factors like age, life-stage, employment status etc. It is important for CFE providers to develop programmes with the target consumers in mind.
Further, CFE programmes tend to be poorly monitored. Monitoring and evaluation should be planned for when designing a programme, to allow for the tracking of indicators and outcomes during programme implementation. This will allow for the collection of outcome data, allowing for the assessment of broader programme impacts, rather than relying upon simple output data (e.g. reach and attendance).
There is also a need to determine which modality to use to collect programme data. Previous evaluations have shown that using paper-based registers and surveys can be burdensome as these can easily get lost. CFE providers must look into either creating an app that participants can sign into when attending workshops, or for facilitators to take a laptop to the workshops and ask participants to fill in their surveys on that laptop before the start of the workshop. This could work best in community workshops where some people do not have access to smartphones or the internet. This option works best if facilitators are accompanied by teaching assistants to help with the administration of the course.
3. IMPLEMENTATION
Once the planning process is complete, implementation is the next big step. As mentioned above, a well-planned programme is more likely to be successful. The GN500, which is a document that details the standards required for CFE programmes, requires that 25% of the CFE budget is allocated towards training people living in rural areas.
However, having observed CFE programmes offered in rural areas, there are a number of challenges associated with this model, particularly with regard to resources. It can be challenging for organisations to get venues that are conducive for group sessions, which affects how programmes are implemented. Further, the implementation of programmes in rural areas can be affected by strikes in the community, and venues not being easily accessible by road. While some of these factors are unavoidable, they should be considered and planned for during the planning process.
4. MONITORING AND EVALUATION
Most of the CFE programmes DNA has evaluated do not have established monitoring systems, which is crucial for programme monitoring. There is a need to collect baseline data at the beginning of the programme and throughout the lifespan of the programme. This helps identify any challenges early on, that might affect the programme negatively, and can help to inform solutions around how the challenges can be addressed. Monitoring data is also required for evaluation.
The data collected during the monitoring process should also be used when the programme is evaluated. Evaluating a programme that doesn’t have monitoring data is difficult, and greatly diminishes the overall rigour and usefulness of the evaluation. Therefore, its essential for programmes to have a monitoring system in place that clearly defines the indicators that will be used both in monitoring and evaluating the programme.
5. CONCLUSION
Great effort has been undertaken by organisations to provide consumer financial education in an effort to improve the financial literacy of South Africans. More organisations are now adhering to the GN500`s requirement of getting independent evaluators to evaluate and develop monitoring systems for their CFE programmes, and this is a step in the right direction. However, there is still room for improvement. SA CFE providers need to collaborate, and constantly research ways of how to better meet the financial literacy needs of SA consumers.