Evaluating the Effectiveness of a Financial Literacy Program in South Africa

An evaluation of was conducted on an Old Mutual financial literacy program to people in both rural and urban areas, which reached nearly 36,000 people in 2011. The objective of the program was to improve people’s financial skills, help them make sound financial decisions, and encourage saving. 


Results and Policy Lessons 

Offering a one-day financial training improved knowledge about budgeting, increased self-reported savings, and reduced loan applications but the evaluation did not detect significant improvements in other types of financial knowledge or practices. Of the 589 individuals offered the training, 71 percent attended the training. The results below describe the average effect of offering a financial education program to a given population, and not the impact of the training on only those who attended. 

Effects on financial awareness and attitudes: The offer of financial training increased knowledge about budgeting, for which initial awareness was low, but it did not improve awareness about savings accounts, loans, insurance, or the importance of separating business and household accounts. Awareness about different aspects of budgeting was 6.1 percentage points higher among individuals offered the program at 53.2 percent compared to the comparison group at 47.1 percent. This increase was driven by individuals with less education. Individuals with low education levels who were invited to the course showed increased awareness of savings accounts and purchasing on credit relative to individuals with low education levels in the comparison group. 

The impact on financial attitudes and perceptions towards financial institutions and products was mixed. For example, within the BSSP sample, people invited to the training were significantly less likely to be nervous about going into a bank, but they displayed a lower recognition of the importance of saving early for children’s education relative to the comparison group. While BSSP members invited to the course displayed improved attitudes toward financial institutions and products, the WDB members showed a slight decline overall. These results were not driven by different education levels.

Effects on savings and borrowing behavior: Offering the financial training had a positive impact on financial behavior related to savings, borrowings, and money management. For people offered the financial training program, savings-related outcomes improved significantly, both in terms of the number of people who reported saving and the average amount of savings. This was true for people belonging to both BSSP and WDB groups, as well as with different education levels. Among the group of people offered the program, there was a 12.9 percentage point increase in saving in any form from a base of 73.3 percent. However, financial education had no impact on ownership of a bank account. 

People offered the training also showed an improvement in their debt management-related practices relative to the comparison group. Fewer of these individuals had applied for loans in the past six months. They were also more likely to save than gamble, and had a higher risk-tolerance level. However, these individuals showed no change in their financial planning behavior, in terms of being financially prepared for an emergency or having a retirement plan in place.

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Source details

Type of content: Report on a website
Source: Poverty Action Lab
Authors: Martin AbelShawn ColeLucas CrowleyChristian Salas PauliacVeronica PostalBilal Zia