Rural Finance and Investment Learning Centre

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One billion young people in low-income countries are navigating their transition into adulthood and engaging in various forms of education and employment along the way. Financial services can play an important role on this path, but they alone cannot deliver positive outcomes for youth. Comprehensive approaches that combine a range of financial and nonfinancial services with supportive family and social networks appear to be most effective.

This working paper provides a broad view on the role of financial services in this framework. It highlights key insights that will resonate with policy makers, funders, and financial and nonfinancial services providers who focus on youth education and employment and their enabling factors. It begins with an overview of youth financial inclusion and the surrounding context, focusing on the period of adolescence from 15 to 24 years old. This paper then examines the role that financial services can play in enabling youth education and employment, outlines the existing evidence base, and highlights future directions for both research and interventions.

This resource appears in: Financial literacy

Researchers and practitioners have long suspected that low numeracy skills might affect the willingness of people to participation in formal financial transactions. But exactly what gaps in numeracy skill present create barriers, and what - if anything – can be done about it?

The "financial numeracy indicator" developed by My Oral Village and tested in Côte d’Ivoire and Myanmar in 2017 as part of "Financial Inclusion Insights" identifies an important numeracy gap that can readily be field-tested and is within the ability of private markets and other stakeholders to address.

Disclaimer

This work was funded in whole or in part by CGAP. Unlike CGAP's official publications, it has not been peer reviewed or edited by CGAP, and any conclusions or viewpoints expressed are those of the authors, and they may or may not reflect the views of CGAP staff.

This resource appears in: Financial literacy

In July 2017, Colombia launched its National Economic and Financial Education Strategy, which established an action plan for promoting financial education in the country. The Intersectoral Commission for Economic and Financial Education, in charge of implementing the strategy, partnered with the Latin American Development Bank (CAF) and the Center for Financial Inclusion at Accion (CFI) to develop a training program to impart the latest financial education programming insights and best practices to those who would be implementing the national strategy.

This report describes our efforts to communicate behavioral economics best practices to policymakers and practitioners in Colombia, including case studies from Fundación Capital and Banco de la República. We also evaluate the success of our efforts, and make recommendations for further embedding behavioral insights into financial education programming.

This resource appears in: Financial literacy

In rural Kazakhstan, the credit and insurance services are limited and the state support is weak. Therefore, households’ saving is crucial to provide an insurance against the economic and social shocks. The main goal of this study is to contribute to the literature on financial literacy in emerging economies, namely, the effect of financial literacy on saving rates of rural population. Being well educated not always means to be financial literate and make efficient decisions regarding one’s own finance. People with a lower formal education level but with better experience in consuming financial products could be better prepared for making financial decisions including those related to savings. In this paper other socio-economic determinants of saving rates were taken into account, such as an income level, family size and an employment status. This research was carried out in Pavlodar region of Kazakhstan, and the data collection took place in spring 2014. In total, 405 households were surveyed. Results of the analysis show that if a respondent gives at least one correct answer, it positively affects the saving rates as well as one can observe that the higher the financial literacy level, the higher are the saving rates. Availability of state supported financial education programs for rural people will significantly contribute to the financial literacy improvement. At the same time, providing various and appropriate financial products in rural areas will motivate rural people to search for new knowledge and require authorities to intensify activities in this field. 

This resource appears in: Financial literacy

Financial Literacy (FL) is an important prerequisite for coffee farmers to manage their business efficiently and to access productive credit. Financial literacy is therefore crucial element of farmer training in order to pave the way for increases in productivity, income and profitability and improved livelihoods. Yet, with regards to financial literacy, actors engaged in farmers’ training sometimes lack quality tools and even more often, they do not speak the ‘same language’ to farmers. Hence, training contents and quality levels are often not aligned, neither are they endorsed by the sector at large, including national governments. Pursuing an aligned and sector-wide approach to FL training in order to increase efficiency and to avoid costly duplication of efforts, the purpose of this study was 1) to clarify what is meant by FL, ie which elements FL training should entail, 2) to map actors active in FL training, and 3) to map and screen available tools, focusing on Eastern Africa. Study results show that perceptions on FL vary from being ‘just’ a general life skill on the one hand to advanced business management skills on the other. For a harmonized approach, FL training is recommended to contain the following subjects: • “Making ends meet”: ensuring that spending doesn’t consistently exceed income • “Keeping track”: knowing the details of one’s personal finances • “Planning ahead”: making financial provision for the future • “Choosing & using”: making sound and informed choices about financial products There are a lot of actors directly or indirectly involved in FL training in Eastern Africa. Most if not all of them expressed their interest in supporting the co-development a harmonized approach to FL training, be it on national or regional levels. The mapping and screening of existing tools show that an abundance of training material is available and publicly accessible . However, they vary in terms of comprehensiveness, geographical focus, target groups (farmers vs trainers) and commodity (coffee-specific or rather generic). This indicates that for a harmonized approach there is no need to newly develop training material, however, further screening and adjustment might be required on national levels, based on a joint understanding on focus and content. Hence, as a way forward, national or regional level platforms or working groups will need to agree on an understanding of FL and on the elements FL should include, depending on specific needs and country environments. Based on that and a further, more specific screening exercise of the pre-screened tools, harmonized sets of material may be assembled and endorsed by the public-private sector platforms.

Financial Literacy to Facilitate Access to Finance in Eastern Africa  -  English (en)

This resource appears in: Financial literacy

To be financially literate is to know how to manage your money. This means learning how to pay your bills, how to borrow and save money responsibly, and how and why to invest and plan for retirement.

Take the initiative to self-educate and grow your financial knowledge, by beginning with the basics of money management and maturing into a smart spender. Putting time into your financial development improves saving and investing decisions. By leveraging resources—like age, talent, money and the ability to establish good habits—you can build a long-lasting nest egg.

Financial literacy  -  English (en)

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Women’s World Banking, supported by Citi Foundation, worked with India’s Self Employed Women’s Association (SEWA) Bank to design and implement a financial education program that taught SEWA’s clients how to better use their accounts to save toward their goals. Project Samruddhi (Gujarati for “prosperity”) was a two-year collaboration between Women’s World Banking and SEWA Bank to increase the frequency and amounts SEWA Bank’s women clients save, through financial education and marketing. The program, launched in 2011, hypothesized that a comprehensive financial education strategy tied directly to women’s aspirations could help increase both the regularity of savings and the amount clients save. A key tactic of the project was to use every point at which a client interacted with SEWA Bank as an opportunity for financial education.

Project Objectives

At the outset of the project, the team considered SEWA Bank’s business objective, which was to significantly grow its customer base while ensuring that existing and new clients have the necessary financial knowledge to use their accounts effectively. 

Can Financial Education Be the Engine for Savings Growth? A Case Study  -  English (en)

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Sometimes people find it difficult to make calculations related to agriculture and animal husbandry because knowledge of basic arithmetic is lacking or is no longer ready knowledge. BASIC CALCULATIONS provides training material for situations in which basic calculation skills need to be improved. It offers exercises at upper primary - lower secondary level. It is suitable for use in groups, but can also be used as self-tuition material.

The first chapters refresh basic arithmetic. The following chapters deal with averages, the use of formulae, proportions and scale, graphs and diagrams, the conversion of units and other topics. The second part of BASIC CALCULATIONS is about irrigation, crop growing and animal husbandry. The book ends with the answers to the problems given in the text.

BASIC CALCULATIONS is not meant to be a guide for learning about agriculture and animal husbandry in the usual way. It is an 'exercise book' with basic calculations related to agriculture and animal husbandry, and it does not, for instance, try to explain irrigation or livestock feeding.

This resource appears in: Financial literacy

As a backdrop to its objectives this paper points to the persistence of illiteracy as a major constraint for development in Africa. A rapid scaling up of literacy programmes, particularly for youth and adults, cannot be envisaged without addressing the lack of qualified personnel, well-defined training programmes as well as specialised institutional framework for non-formal education (NFE). It is within this context that the two regional workshops on "Capacity Building of Literacy and NFE Facilitators" were jointly organised in Africa by UNESCO and ISESCO. The first workshop was held from 27 September to 1 October 2004 in Dakar, Senegal, followed by the Bamako Workshop, organised from 25 to 29 July 2005, in Mali. The purpose of these regional consultations was to develop a common training framework to reinforce and accelerate national capacity building efforts for carrying out quality literacy programmes in a sustainable manner.

This handbook aims to be a first step towards developing a holistic regional resource package for capacity building of non-formal education (NFE) personnel in Africa. It is designed for the facilitators to use as a basic guide for responding to the specific needs of the learners and promoting, accordingly, knowledge, skills and attitudes in reading, writing and numeracy. The authors advise that it is important to understand that this Handbook is not meant to be used in isolation, but rather in support of existing national training policies and programmes. It should therefore be complemented by additional materials and tools produced locally and nationally, covering various specific topics that are relevant to the learners’ lives and environment. The Handbook is also intended for governmental entities responsible for literacy and NFE and which are expected to adapt it in accordance with the local contexts and needs and also to integrate it into their national training programmes. They are encouraged to share it with NFE providers and practitioners to help support effective literacy programmes on a large scale.

The main objective of this Handbook is to build the capacities of facilitators and other literacy and non-formal education personnel to promote learning and development at the community level. It aims at developing their skills and knowledge in literacy training, while sensitising them to issues that are at the very heart of adult literacy and education in Africa. In this regard, each of the seven modules of the Handbook addresses an essential theme in the context of literacy and non-formal education in Africa:

• Module 1: Community Sensitisation and Mobilisation for Development
• Module 2: Identifying the Needs of the Learners
• Module 3: Organisation, Running and Management of a Community-based Learning Centre (CBLC)
• Module 4: Facilitating Adult Learning
• Module 5: Assessment of Learning Achievement
• Module 6: Capacity Building for Sustainability
• Module 7: Specific Themes

The first six modules cover themes relating to knowledge and skills. The seventh module addresses the need for facilitators to enhance the life skills of their learners and to help them develop positive attitudes with regard to their environment. Each module is divided into several sections, at the end of which there is an exercise to help check the reader’s understanding. Pages have been provided at the end of this Handbook for writing the answers, and can also be used for taking personal notes. To increase the efficiency of this Handbook, it is strongly advised to adapt it to the local needs and contexts of its beneficiaries. To this effect, some suggestions have been given in the annex to help develop the local version.

This resource appears in: Financial literacy

This paper begins by highlighting that financial literacy or the lack thereof has long been recognised as a major problem in poor households and communities. This is because of the generally lower levels of access to, and inferior standards of, formal education but also because of a lack of access to information.

The authors note that in South Africa – where their study is based – the formal education system has fallen short of achieving acceptable literacy levels (let alone financial literacy) among marginalised communities. They do also highlight, however, that the low levels of financial literacy in South Africa has been recognised by various community-based organisations, the financial industry, the government and other organisations, many of which have launched financial education projects. The financial sector, for example, has made a strong commitment to improving consumer financial literacy in the 2003 Financial Sector Charter by explicitly committing 0.2% of its annual after-tax operating profits to financial literacy projects.

The paper also notes that it is not only low income communities who demonstrate low levels of financial literacy in South Africa. However, lower income households and pensioners remain the most vulnerable to poor planning and exploitative schemes, as it is often more difficult for them to recover from financial shocks.

The specific objectives of this study were:

1. Provision of a comprehensive listing and analysis of current financial literacy programmes in South Africa
2. Development of a discussion document on implementation of relevant Financial Sector Charter Commitments

Although South Africa focussed, the contents of the report do provide an interesting discussion as well as a series of recommendations that may be useful for other geographies. It also includes an overview section on consumer financial literacy, which aims to provide a more in-depth understanding of the concept of financial literacy and the relevance of financial education, as well as a section covering global best practices that provides a summary of the core findings of international activities in the field of financial literacy and education.

The report is divided as follows:

• Section 1: Introduction and Methodology
• Section 2: Overview of Consumer Financial Literacy
• Section 3: Global Best Practices
• Section 4: Financial Education Programmes in South Africa
• Section 5: Key Findings
• Section 6: Recommendations
• Section 7: The Financial Sector Charter

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The purpose of this briefing note is to raise the key issues that have emerged as different parts of DFID have considered the ways in which literacy and poverty interrelate. It highlights principles of good practice (drawing on recent experience), examines potential entry points and identifies challenges for DFID in giving greater priority to literacy in their commitment to poverty reduction. The note provides a very concise appraisal of the importance of literacy in people's lives. The inability to read and write restricts the ability to follow signposts, understand medicine labels and machinery instructions, confirm commercial transactions, avoid being cheated, etc. People need access to information regarding health, education and the market economy, so that they can engage critically with the issues and institutions that affect their everyday lives. Reading, writing and numeracy skills provide the vital link that can widen opportunities to improve their livelihoods.

A study in Nepal led to the following conclusions. Men and women associated being literate with having social status, as well as functional skills. A literate person in their view ‘has knowledge’, can understand issues relevant to their own well-being, and can share this knowledge for the benefit of the community. He, or she, has a ‘voice’ in meetings, can access and analyse information, and has the ability to engage with outsiders and officials more effectively.

The note outlines a number of key principles :

• Literacy tasks should be contextualised within people’s daily lives and aspirations.
• Literacy initiatives should be integrated into other development activities.
• The main starting-point for addressing literacy tasks should be what people already have, know and do –people are not blank slates.
• Determined efforts have to be made to target specific groups of people (categorised according to age, gender or occupation) who otherwise will remain excluded.
• In order to maximise returns, the key lies in responding appropriately to what and how people want to learn.

DFID conclude, therefore, that literacy has to be regarded not solely as an education matter (limited by funding agency agendas to a specific ministry, or treated as part of a second best, non-formal option for adults) – but rather as a cross-sectoral issue, necessitating the integration of new literacy approaches into other development policies and programmes, e.g. relating to small enterprise development, agriculture, health, legal rights, media and distance learning, etc.

This resource appears in: Financial literacy

The Handbook is designed for use mainly by the following two groups:

1. Field workers at community level especially in community learning centres (CLC) - to provide practical knowledge and skills in developing low-cost & learner-centred learning materials with locally available resources.
2. District/provincial level NFE offices - to provide practical knowledge to develop low-cost & learner-centred learning materials on a mass scale and to train field workers who are engaged in literacy and continuing education materials development.

It displays the following characteristics:

1. Simple: Descriptive guides are easy to understand, avoiding technical jargon;
2. Illustrative: Variety of visuals including illustrations, charts, photos help explain technical steps.
3. Practical: Material development skills introduced are easy to practice at the field level

The handbook is arranged in three chapters:

1. Chapter 1: Why, What and for Whom? Basic issues concerning material development are explained in question-and-answer format.
2. Chapter 2: We Can Do It! Open the Material Preparation Process Map in the back of this handbook.The eight steps of material preparation in the map are explained in this chapter in question-and-answer format. Simple processes to make posters, wall magazines, charts, picture cards, leaflets, booklets, songs, drama, and other interesting materials are introduced here. Also, there are TIPS providing complementary information.
3. Chapter 3: Let’s Learn More! If you know the basic steps of material preparation, pass on to this chapter. This is a collection of practical knowledge concerning learning material.

At the end of this handbook, you’ll find a glossary and a list of questions and answers for your reference.

Adult Learning Materials Development at Community Level  -  English (en)

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This paper describes a savings and literacy led alternative to financial institution building that Pact developed in Nepal. The Women’s Empowerment Program created a microfinance model based on building equity in the groups rather than incurring debt to a microfinance institution. The concept was similar in spirit to the growth of early credit unions, with the project’s core objective being the development of well managed, member controlled savings and lending institutions. However, the WEP groups only have 21 members on average; they are all women; literacy training is built in; leadership is from within the group and they operate completely below the radar screens of the regulatory system. The groups do not borrow from a central facility; each group loans its own savings to its members.

The WEP only ran for four years. Within that time they trained and supported 6,500 groups with 130,000 members. This impressive outreach was possible because Pact built heavily on existing groups and worked through 240 local organizations – NGOs, cooperatives and MFIs. They also relied on literacy volunteers to run the classes rather than hire instructors, which kept the costs down. There has been spontaneous replication of the system and over 800 new groups have been created without Pact support.

Despite the region’s extreme poverty, the women participating in WEP mobilized $1,180,000 from savings, retained interest earnings and fund-raising events between June 1999 and June 2001. 82 % of groups keep their own records without outside assistance. In the final year of the project, Pact staff concentrated on training 1,500 of the strongest savings and credit groups to become village banks. This project is interesting because of its opposite approach to most microfinance developments which have focused on developing more centrally controlled and better managed institutions to reach scale and cover costs. WEP is about decentralization and local control and community capacity building.

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This is a book for development workers who have no formal training in adult education or literacy, but find themselves having to respond (as planners, trainers or teachers) to requests for "literacy". Most of the book is essentially practical: it describes the different stages in planning and teaching a small-scale literacy programme and offers suggestions for the assessment of needs, the evaluation of progress, the use of available materials and the design of new ones for specific situations.

The main purpose of the book, however, is to explore some of the central issues in the debate about the role of literacy in development. The authors draw on their own wide range of experience and that of Oxfam and VSO, for case-studies from Africa, Asia, Latin America and the Caribbean to illustrate the consequences of introducing literacy - a far from simple activity - to individuals, groups or communities. (Publisher's abstract)

Adult Literacy: A Handbook for Development Workers  -  English (en)

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This Learners' Primer, together with the "Facilitators' Guide" form a training package called 'Figures for Bookkeeping'. This package teaches arabic figures, calculations and the use of money. It teaches numeracy (= counting) and not literacy (= reading and writing letters, words or sentences). This training has been specially made for illiterate women and men who work in agriculture, fisheries, forestry or who have a small business.

Part I of this guide gives a general introduction on the use of the student's document, how to adapt the training material to other currencies, what other (simple) materials are needed to give the numeracy lessons and what attitude the facilitators should take to stimulate the learning of the participants.

Part II explains the contents of the course and clarifies the details of the document 'Figures for Bookkeeping.

This resource appears in: Financial literacy

This Facilitators' Guide, together with the "Learners' Primer" form a training package called 'Figures for Bookkeeping'. This package teaches arabic figures, calculations and the use of money. It teaches numeracy (= counting) and not literacy (= reading and writing letters, words or sentences). This training has been specially made for illiterate women and men who work in agriculture, fisheries, forestry or who have a small business.

Part I of this guide gives a general introduction on the use of the student's document, how to adapt the training material to other currencies, what other (simple) materials are needed to give the numeracy lessons and what attitude the facilitators should take to stimulate the learning of the participants.

Part II explains the contents of the course and clarifies the details of the document 'Figures for Bookkeeping.