Financial Literacy Education in South Africa

Financial literacy is the ability to understand and manage personal finances effectively. This takes into account the skills, knowledge and confidence required to make money decisions. In South Africa, financial literacy is becoming increasingly important as the country’s economic growth continues to be stunted by high levels of poverty, inequality, and unemployment. Poor financial decision-making and a lack of financial security is as a result of lack of basic financial literacy skills, and this is the gap that financial literacy education aims to close within our communities. This article will explore the state of financial literacy in South Africa, its challenges, and some potential solutions to address these challenges.

The level of financial literacy in South Africa is quite low, with only 42% of the adult population being financially literate, according to a 2021 survey conducted by the Organisation for Economic Co-operation and Development (OECD). This means that over half of the adult population in South Africa does not understand basic financial concepts such as interest rates, inflation, and savings. The lack of financial literacy is particularly acute in rural areas and among low-income groups, where access to financial education is limited.

One of the main challenges to improving financial literacy in South Africa is a lack of access to financial education. Many schools do not offer financial education, and when they do, it is often not comprehensive enough to provide our students with the skills they need to manage their finances effectively. There is also no financial literacy education programmes for community members, their families and organisations that they belong to. Financial literacy is not accessable, and also not made a priority, though we all know that every decision each person makes has a financial aspect to it.

Another challenge is a lack of trust in financial institutions. Many South Africans have experienced financial scams, mis-selling, and other forms of financial misconduct, which have eroded trust in financial institutions. This lack of trust makes it difficult to promote financial literacy because people are skeptical of advice from financial institutions, and they always think that one wants to sell them policies, and not put them first. Our Profession has been painted by focusing on getting commission, instead of doing what is right for the client. It is time that we make financial literacy education the centre of everything we do, so as to ensure that our clients and the community at large are better positioned to make informed financial decisions.

Despite these challenges, there are some potential solutions to improve financial literacy in South Africa. One approach is to incorporate financial education into the school curriculum. The experience we got after conducting a Global Money Week programme with 10 schools in Limpopo in March this year is that “children love to save money”. Our children deserve to financial education, regardless of their socioeconomic background. We made it practical by incorporating financial literacy books and money boxes to help kick-start their saving journey. In addition, financial literacy education programs could be offered through community centres, churches, and other organisations to reach those who do not have access to formal education.

Another solution is to promote financial literacy through technology. Mobile phones are widely used in South Africa, and mobile-based financial education programs could be an effective way to reach a large audience. The starting point would be using social media platforms to provide financial literacy education and advice to our communities.

Finally, financial institutions need to play a more active role in promoting financial literacy. They can do this by offering financial education programs and providing transparent and easy-to-understand information about their products and services. By doing so, they can help build trust with customers and promote financial literacy.

In conclusion, financial literacy is an important issue in South Africa, given the country’s high levels of poverty, inequality, and unemployment. The lack of financial literacy is a significant barrier to financial security and can lead to poor financial decision-making. While there are many challenges to improving financial literacy in South Africa, there are also potential solutions, such as incorporating financial education into the school curriculum, using technology to promote financial literacy, and increasing the role of financial institutions in promoting financial education. By addressing these challenges and promoting financial literacy, South Africans can take control of their financial futures and contribute to the country’s economic growth.



Written by Mulalo Nemataheni, CFP®


Post a comment

Your email address will not be published. Required fields are marked *