Financial Literacy Scoping Study and Strategy Project
This paper begins by highlighting that financial literacy or the lack thereof has long been recognised as a major problem in poor households and communities. This is because of the generally lower levels of access to, and inferior standards of, formal education but also because of a lack of access to information.
The authors note that in South Africa – where their study is based – the formal education system has fallen short of achieving acceptable literacy levels (let alone financial literacy) among marginalised communities. They do also highlight, however, that the low levels of financial literacy in South Africa has been recognised by various community-based organisations, the financial industry, the government and other organisations, many of which have launched financial education projects. The financial sector, for example, has made a strong commitment to improving consumer financial literacy in the 2003 Financial Sector Charter by explicitly committing 0.2% of its annual after-tax operating profits to financial literacy projects.
The paper also notes that it is not only low income communities who demonstrate low levels of financial literacy in South Africa. However, lower income households and pensioners remain the most vulnerable to poor planning and exploitative schemes, as it is often more difficult for them to recover from financial shocks.
The specific objectives of this study were:
- Provision of a comprehensive listing and analysis of current financial literacy programmes in South Africa
- Development of a discussion document on implementation of relevant Financial Sector Charter Commitments
Although South Africa focussed, the contents of the report do provide an interesting discussion as well as a series of recommendations that may be useful for other geographies. It also includes an overview section on consumer financial literacy, which aims to provide a more in-depth understanding of the concept of financial literacy and the relevance of financial education, as well as a section covering global best practices that provides a summary of the core findings of international activities in the field of financial literacy and education.
The report is divided as follows:
- Section 1: Introduction and Methodology
- Section 2: Overview of Consumer Financial Literacy
- Section 3: Global Best Practices
- Section 4: Financial Education Programmes in South Africa
- Section 5: Key Findings
- Section 6: Recommendations
- Section 7: The Financial Sector Charter