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Setting the course for modern King Solomon’s Mines

13 October 2016 Jonathan Faurie

Anyone who has ever spoken about Africa describes it as a continent that has immeasurable opportunities, but it’s also a continent which is defined by the challenges which countries fight to overcome.

In terms of the financial services industry, Africa is seen as the proverbial King Solomon’s Mines: an area of immeasurable opportunity. Africa is most certainly a former sleeping giant that is beginning to flex its muscles to take its rightful place on the global stage.

Six out of the ten fastest growing economies in the world come from Africa and many international investors are taking advantage of a growing middle class that has emerging spending power.

The need for change

Despite the fact that Africa is being seen as a land of endless opportunities, one of the biggest challenges that needs to be overcome by companies is the low levels of financial education which is endemic in Africa.

This is a situation which is trying to be resolved in South Africa through various initiatives which are being backed by government and the Financial Services Board (FSB). The success of these initiatives relies on the symbiotic relationship between government and the private sector through public private partnerships.

Speaking at the recently held seminar on financial education, Thabo Hollo – Head of Strategic Relationships and Consumer Financial Education at Nedbank – said that in some cases, financial education cannot take place without such partnerships.

“Nedbank recently rolled out a financial education programme at schools across the country, and the lessons we learned were significant to our future plans. One of the key lessons that we learned is that there can never be a one size fits all approach. Companies undertaking the issue of financial education need to tailor their message to their target audience because the challenges faced in one community differs from that faced in another,” said Hollo.

When reflecting on the programme itself, he said that in this day and age, consumer education should be a core strategy at any company that operates within the financial services industry. He also pointed out that companies who want to effectively carry out these programmes need to focus on building a model that encourages scale. “When we rolled out a financial education programme in 2015, we managed to reach over 200 000 people. However, only 1% of that population were able to get credit or earned enough to have debt. Scale is important when you are building a meaningful campaign,” said Hollo.

Technology is your friend

With the continent that has the second largest population in the world, the enormity of the task is immense. One would shudder to think the sheer scale of a programme that needs to target financial education at over one billion people.

While we are sitting trying to come to terms with this, we need to realise that technology is our friend. Statistics show that by 2030, there will be over 500 billion connected devices in the world. If we look at the world today, it is hard to realise that humans produce over 2.5 quintillion bytes of data a day and that 90% of the world’s historical data was created in the past two years.

Technology has been used to great effect across the continent. Jeremy Leach, CEO of Inclusivity Solutions, shows that by using technology, the potential for reaching people is unlike any other.

Reports show that MTN in Nigeria broke one million customers in a single year. Airtel Nigeria reached 200 000 customers within the first three weeks of the company being launched.

“We cannot define our desired future in terms of solving financial education only. We need a compelling vision on how the pieces of the puzzle fit together. However, addressing financial education can go a long way in working towards financial inclusion,” said Leach.

Examples from the north

For those wanting to roll out financial education programmes in South Africa, there are examples of how this can be effectively achieved throughout Africa. One such country is Namibia which has seen some measure of success.

Francois Brand, Manager at FinLit Initiative in Namibia, said that segmenting your population is the best way to achieve results. “You need to know the age demographics of your population and how you target them. The group within Namibia which needs the most education are school kids and pensioners. This means two distinct campaigns that target social media and radio advertisements; two distinct mediums of communication. What we have found is that the average financial literacy score in Namibia is 42 out of 100. We found that when we worked purely on knowledge, the average score went up to 52. So Namibians know what they need to do, but struggle to do it. We therefore need to focus on action,” said Brand.

Editor’s Thoughts:
Like with embracing technology, financial education is not something that insurers can drag their feet with. It needs to be resolved as a matter of urgency. At the end of the day, the risk of losing something is a stronger motivation for action than the possibility of gaining something.  Please comment below, interact with us on Twitter at @fanews_online or email me your thoughts jonathan@fanews.co.za.

Comments

Added by Pieter, 14 Oct 2016
Hi Jonathan

Kindly send me the contact address of Francois Brand of FinLit Initiative, Namibia.

Thanks, Pieter
0824468060
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