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BUILDING AFRICAN FINANCIAL MARKETS

2014

Effective mechanisms for enhancing financial

literacy

Janete Nel, Marketing Manager ASISA

Point Person Consumer Financial Education SC

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Association for Savings & Investment SA

Launched October 2008

Represent the savings and investment industry in South Africa – have 120

member companies

Strategic purpose and mandate - to strengthen relationships with &

remain a trusted partner to key stakeholders in the industry

Role – to support the nation’s savings, development and transformation

initiatives & ensure that the industry remains relevant and sustainable

Mission – to work towards promoting a culture of savings and investment

in South Africa by playing a significant role in the development of the

social, economic and regulatory framework in which our members

operate & so assist our members to serve their customers better

o Part of our Mission – to develop and actively participate in

education, transformation and social development projects

Why do we need to conduct consumer

financial education?

Low saving rates

Increasing choice of products

Increasingly complex financial markets

Inability to evaluate appropriateness of financial products to suit

personal circumstances

Predatory lending and high levels of consumer debt

Prepare for life stage events – predictable & unpredictable

Protect vulnerable groups

Helps consumers budget and manage their income, save & invest

efficiently

Effective consumer financial education leads to empowering

consumers to improve their financial decision-making, promotes

proactive financial behaviour and protects against destructive

behaviour

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Financial consumer empowerment -

A trilogy

Global recognition of 3 components

G20 – OECD / INFE

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Financial

Education

Financial

Consumer

Protection

Financial

Inclusion

What is consumer financial education?

The process by which financial consumers/ investors

improve their understanding of financial products,

concepts and risks and, through information, instruction

and/ or objective advice, develop the skills and

confidence to become more aware of financial risks and

opportunities, to make informed choices, to know

where to go for help, and to take other effective

actions to improve their financial well-being.

(As defined by The Organisation for Economic Co-operation and

Development (OECD) and as adopted by National Treasury, the

Financial Services Board and ASISA)

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What is financial literacy?

It is people’s ability to understand finance, thereby

allowing them to make informed and effective

decisions through their understanding of finances. It

encompasses participation by people in economic life

that maximises life opportunities and enables them to

lead fulfilling lives

(As defined in National Consumer Financial Education Strategy &

adopted by ASISA )

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Mechanisms

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A national imperative

National policy - A safer financial sector to serve

South Africa better

National consumer financial education policy:

o Provides a framework for collaboration and co-

ordination of financial sector stakeholders

o Provides data and measurement for programmes –

determine whether policy and programme

objectives are being achieved

o Improved consumer financial well-being

Research – FSB/ HSRC conducted national financial

literacy baseline study in 2012

o 5-year (full) & 1-year (touch base) 8

Risk based approach

National strategy – identifies high risk demographic groups, across

4 domains:

o Financial control – managing current expenditure;

o Financial planning – managing future income & expenditure,

o Product choice; and

o Financial knowledge & understanding

Intent:

o All South Africans to be financially informed, capable and

confident, which increases their financial well being

o Achieve this by all stakeholders aligning their initiatives, with

intended result to have greater impact by increasing

consumer financial education and knowledge across all

domains, throughout South Africa

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South African Legislation

Transformation legislation:

o Financial Sector Charter Code (FSC)

Standards & guidelines

o Broad Based Black Economic Empowerment (BBBEE)

Act

Audience – to align with transformation legislation:

o Income proxy R180,000 / household / year

o 85% of activities to benefit black beneficiaries

o 40% of which must be black women

o 25% of funding to reach rural areas (i.e. outside

metropolitan areas)

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FSC Code - Standards & Guidelines

Defines target market

Defines the different methodologies – Interactive, i.e. face-to-face,

edutainment, radio & TV programmes where listeners engage; vs

Awareness, i.e. consumers provided with basic information of

financial literacy concepts – through media & other mediums. Max

spend on awareness projects = 40% of total annual spend

Measurement principles for qualifying projects – companies need to

spend a percentage of NPAT annually, 2014 = 0.40%

Specify minimum Standards: Physical accessibility, Appropriate - to

audience, Monitoring & Evaluation (M&E) by independent service

providers (separation between implementer & measuring entity),

Service Providers credentials; Branding – appropriate and not

overwhelm content; Affordable & Fair value; Understandable

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ASISA and its commitment to education

Report to Transformation, Skills Development & Education

Board Committee:

ASISA Foundation

ASISA Consumer Financial Education Standing

Committee

ASISA Academy – industry skills development and

Trustee Education

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At ASISA – ASISA Foundation

Foster the Future – The ASISA Foundation

ASISA Board mandated 2012

Purpose:

o For the industry to collectively address consumer financial

education needs of the country

o Demonstrate to Government what industry can do when it

works together and the value of pooling resources

o Facilitate immediate Financial Sector Code (FSC) points

recognition for contributors

Governance & legal structure:

o Trust registered 30 November 2012

o Comply to the FSC : Board of Trustees – 50% Black & at least

25% Black female & at least 50% independent

o Comply to statutory requirements of NPO, Income Tax and B-

BBEE Acts 13

Benefits to contributors

Participate in Foundation vision : implement

sustainable projects with significant impact on society

- realised by benefits of scale achieved through

pooling resources

Legal & governance structure facilitates immediate

FSC point scoring

Outsourced team focussed on delivery of project –

suited to savings and investment industry, aligned to

FSC and national strategy

ASISA member involvement by participation in

Consumer Financial Education Standing Committee

Regular reporting by Foundation

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Consumer Financial Education Standing

Committee

12 Committee members:

o Allan Gray Ltd, Absa Financial Services Ltd, Assupol Life,

Hollard Life Assurance Company Ltd, Liberty Group Ltd, MMI

Holdings Ltd, Old Mutual (SA) Ltd, Sanlam Ltd,

Complementary to ASISA Foundation

Adopt and promote National Strategy and work of FSB

Our work:

o Become a Centre of Best Practice for members & stakeholders

o Evaluate project proposals & propose projects to Foundation

o Project working team convened

o Motivate participation in Foundation projects

o Member surveys on their activities

o Invite presentations of their projects

o Communicate & give guidance

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At ASISA – Follow best practice

International – ASISA member of:

o International Forum for Investor Education – IFIE

o The International Network on Financial Education

(INFE) – OECD

Local:

o Represented on National Consumer Financial

Education Committee

o Work with FSB

o Members

o Stakeholders

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Pilot Project

Process for project implementation

ASISA Consumer Financial Education Standing Committee (CFESC):

o Requested x3 proposals from service providers early 2013

o Proposals considered ito fit to Foundation priorities

o Pilot project selected

o Evaluated ito criteria and submitted to ASISA Foundation

Trustees for consideration

o Received approval to proceed with project November 2013

ASISA Foundation:

o Evaluated x2 proposals for independent monitoring &

evaluation (M&E)

o Appointed:

Grounded Media – implementer

Genesis Analytics – independent M&E

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Project evaluation criteria

CFE SC:

Fit with priorities – age, race, location, % awareness; % interactive

Project costs – total, cost per head, added value for money

Content – quality of existing examples, ability to develop

appropriate content

ASISA fit – savings & investment focus, scalability of project

Approach – project design, training methodology, support material,

language skillset, participant profile, project sustainability,

creativity, messaging

Own M&E – appropriateness during execution

Experience & expertise – within financial services industry,

intended target audiences, methodology, adaptability to different

audiences, ie. communities / workplace / students

Company structure & capability – technical competence, trainers –

skill sets, accreditation, translators, national footprint

BBBEE – certificate level 19

Pilot project

Saver Waya-Waya (to save all the time)

Interactive, entertaining, relevant & practical – relate to the Phala

family (the characters in the story line) and their real life

experiences

Multi-dimensional methods of communication – reinforce key

messages

Hammanskraal, Gauteng province – combination of peri-urban &

rural communities undergoing a degree of urbanisation

o Represents cross section of different levels of urbanisation,

education levels & economic activity

o Can accommodate life stages approach

o Trainers and caterers from community

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Overarching goals

On completion of the intervention, participants will:

Plan with their money, understand basic financial concepts,

building savings & a financial surplus to achieve goals, not

spend more than they earn, better manage their debt, look

after their accumulated financial resources, know what

products can meet what needs, know where to go for help

Be aware of the different approaches that can be used to

improve their savings and reduce financial vulnerability

Improve their understanding of potential life stage risks and

how to mitigate against these

Test efficacy of a the life-stages based approach

Test efficacy of methodologies

Refine the content & methodology of interactions

based on successes & lessons learnt to enable the

model to be implemented in other areas across the

country

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Methodologies

Multi-dimensional methodology:

o Interactive workshops

o Interactive workshops with industrial theatre (edutainment)

o Community Radio – Moretele Community FM – x4 5-minute

radio dramas, promos & x4 SMS competitions

o SMS campaign – financial tips – x8 over 4 weeks

Audience - worksites, tertiary education institutions, NGOs,

church clubs

Tool kits – trainer manual, participant booklets, posters, playing

cards, budget sheets, CDs with radio dramas, certificates of

attendance

Used advocacy & outreach to assess the community, to reach

participants, to engage meaningfully & garner support -

councillors, local authorities

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Life stages approach

Discuss situations specific to various life stages & help identify and

mitigate associated risks

Apply to characters in story line the Phala family – savings and

financial discipline while facing their own financial challenges

Life stages:

o Young Adults (18 - 29 years old) e.g. to plan for their financial

future, access via FET colleges & youth organisations

o Young families, extended families and singles with dependents

(30 – 44 years old) e.g. to save for a deposit to buy a home,

access via worksites, Local Economic Development Forums,

NGOs

o Mature adults (45 - 60 years old) e.g. managing retirement funds

& looking at savings options that are available, access via

worksites, community forums, NGOs

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Involvement

Advocacy meeting in Hammanskraal with stakeholders

Planning meetings – full team approach:

o Grounded Media, Genesis Analytics, content developer,

Foundation, CEF SC, ASISA working group – member

representation (Absa, Assupol, Hollard, Liberty, MMI, Old

Mutual, Sanlam)

John Manyike, Old Mutual: in-studio radio interview

Session site visits

Project working group: hands-on approach, to fine tune all

before and during the intervention

M&E approach embedded throughout the journey

Regular status update meetings & round-robin email

communications

On-going advocacy & stakeholder engagement with community &

feedback

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Monitoring & Evaluation

Evaluating:

o Life stages approach

o Method of delivery

o Auxiliary strategies

Approach methods:

o Observations

o Informal discussions with trainers & participants

o SMS data analysis

o Participant surveys – workshops, industrial theatre & placebo

o Focus group discussions – participants / life stage & placebo

and trainers

o Interviews with Grounded Media team

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The project

Timeframes:

o Started work – February 2014

o In field after SA national elections - June 2014

o Sessions completed – August 2014

o M&E complete & reporting – anticipate end September

Target:

o 7,200 community members (actual 7,506)

o 144 workshops (actual 161)

o 28 workshops with industrial theatre

A first for ASISA, a pilot project – intended for wider roll out,

taking account of lessons learnt

Have encountered challenges and have had wins – need to

understand these and adapt

… it’s been a process of planning, implementation, monitoring,

addressing issues … we want to be true to the project and the

communities we interact with 26

Thank you

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