Financial Education 2014

Targeting approximately 2 000 SCG members in 100 groups in two provinces, the 2014 pilot is expected to take six months and is aimed at refining the embedded financial education (FE) developed by PlaNet Finance and Microfinance Opportunity in conjunction with SaveAct.FE2

According to SaveAct Executive Director Anton Krone, Microfinance Opportunity were brought in to complement the capacity of PlaNet Finance. The April 2013 Award from Citi Foundation for embedded financial services has enabled these two agencies to work with SaveAct to develop the material and to take it into a pilot phase.

The five modules being tested include:

1. Orientation to managing your money
2. Budgeting
3. Long-term financial planning
4. Managing debt
5. Daily/monthly cash-flow management

During this pilot the material will be refined, based on feedback from the field. The aim is to have FE applied within the savings methodology in a way that it is received as an integral part of the learning process.

"Financial Education has an important role to play in achieving financial capability amongst savings group members," said Krone. "Ultimately that is a key goal for SaveAct. Savings group financial services assist people to realise their plans around household financial management. The education can help them to make more informed and better decisions in the use of these services."

Krone said if the FE is successful it will result in behaviour changes away from costly credit-based services towards savings and investment for long-term security. Social grants play a key role in enabling members to do this, since it is a predictable and reliable source of income. Successful FE should reinforce the trend that has already been documented, where members reduce dependence on loan sharks and shift their focus towards using the services offered by SCGs and other less usurious services.

But to change behaviour, financial education needs to be relevant, said SaveAct's Silvia Storchi, who oversaw the project. "Financial education can be a very powerful tool in improving the ability of the poor to manage their money. However, for this to happen, FE needs to cover topics that are relevant to savings group members and be delivered in an effective way," she said. Thus, selecting the right learning tools and providing adequate training to the FE trainers were among the objectives pursued through the project to embed FE into the savings methodology. "Working with experts from both PlaNet Finance and Microfinance Opportunities has given SaveAct a unique opportunity to better understand the FE needs of rural South Africans and improve its FE programme," she said.