Financial Literacy to Facilitate Access to Finance in Eastern Africa

Financial Literacy (FL) is an important prerequisite for coffee farmers to manage their business efficiently and to access productive credit. Financial literacy is therefore crucial element of farmer training in order to pave the way for increases in productivity, income and profitability and improved livelihoods. Yet, with regards to financial literacy, actors engaged in farmers’ training sometimes lack quality tools and even more often, they do not speak the ‘same language’ to farmers. Hence, training contents and quality levels are often not aligned, neither are they endorsed by the sector at large, including national governments. Pursuing an aligned and sector-wide approach to FL training in order to increase efficiency and to avoid costly duplication of efforts, the purpose of this study was 1) to clarify what is meant by FL, ie which elements FL training should entail, 2) to map actors active in FL training, and 3) to map and screen available tools, focusing on Eastern Africa. Study results show that perceptions on FL vary from being ‘just’ a general life skill on the one hand to advanced business management skills on the other. For a harmonized approach, FL training is recommended to contain the following subjects: • “Making ends meet”: ensuring that spending doesn’t consistently exceed income • “Keeping track”: knowing the details of one’s personal finances • “Planning ahead”: making financial provision for the future • “Choosing & using”: making sound and informed choices about financial products There are a lot of actors directly or indirectly involved in FL training in Eastern Africa. Most if not all of them expressed their interest in supporting the co-development a harmonized approach to FL training, be it on national or regional levels. The mapping and screening of existing tools show that an abundance of training material is available and publicly accessible . However, they vary in terms of comprehensiveness, geographical focus, target groups (farmers vs trainers) and commodity (coffee-specific or rather generic). This indicates that for a harmonized approach there is no need to newly develop training material, however, further screening and adjustment might be required on national levels, based on a joint understanding on focus and content. Hence, as a way forward, national or regional level platforms or working groups will need to agree on an understanding of FL and on the elements FL should include, depending on specific needs and country environments. Based on that and a further, more specific screening exercise of the pre-screened tools, harmonized sets of material may be assembled and endorsed by the public-private sector platforms.

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