EDUCATION AND FINANCIAL INCLUSION
Financial inclusion is a crucial concept in today’s world, aimed at ensuring that every individual has equitable access to basic financial services.
This concept, which covers the accessibility, use and quality of financial services, encompasses the possibility for individuals to access a whole range of financial products and services (transactions, payments, savings, credit, insurance) that are useful, adapted and affordable.
However, to achieve this goal, effective strategies need to be put in place, and one of the keys to success is financial education.
Financial education encompasses all the knowledge, skills and behaviors related to money management. This includes managing budgets, planning savings, investing, understanding taxes, managing debt, and much more.
II. The objectives of Financial Education
Financial education has a number of objectives :
- Broadening access to financial services : When people have a better understanding of financial products and services, they are more inclined to use them. Financial education promotes access to bank accounts, affordable credit, insurance and other essential financial services.
- Financial empowerment : Financial education gives individuals the confidence to take control of their financial situation. It helps them avoid financial pitfalls and make informed decisions about their financial future.
- Poverty reduction : By giving people the skills they need to manage their money, financial education can help reduce poverty. Individuals are better prepared to save, invest and create financial opportunities.
- Reducing inequalities : Financial education can help reduce economic inequalities by giving everyone an equal chance of financial success. It enables people from disadvantaged backgrounds to acquire the skills they need to improve their financial situation.
- Retirement preparedness : Financial education enables individuals to better plan for retirement, understand social benefits and make informed decisions for their future financial well-being.
- Improved financial stability : When more people are financially literate, it strengthens the financial stability of society as a whole. Individuals are less likely to fall into poverty, reducing pressure on social safety nets.
III. Financial Education initiatives around the world
Many governments, financial institutions and non-profit organizations are setting up initiatives to promote financial education. These initiatives often take the form of teaching programs, online resources, seminars, workshops and free financial advice.
On the Asian continent, India, for example, has set up an extensive financial education program aimed at reaching rural and marginalized populations. Initiatives include local workshops, online courses and media campaigns to raise awareness of sound financial practices.
As a result, the number of bank accounts in India has risen considerably, with the bank account ownership rate increasing from 35% in 2011 to 80% in 2017, mainly due to major financial education efforts.
In Latin America, Brazil, for example, has adopted a comprehensive approach to financial education, integrating courses on personal finance into the school curriculum. The results are promising: according to World Bank data, the number of Brazilians with access to formal financial services has risen significantly in recent years.
On the African continent, the Kenyan government has partnered with local organizations to raise awareness of the benefits of responsible financial management. In Kenya, by 2020, over 50% of the adult population had access to a mobile bank account, which has had a significant impact on facilitating financial transactions and inclusion.
Often cited as a model for financial inclusion thanks to its innovative mobile payment system, “M-Pesa” nearly 80% of Kenya’s adult population now has an M-Pesa account, demonstrating how financial education can facilitate the adoption of financial services.
IV. The Tunisian experience in Financial Education
In Tunisia, initiatives in financial education programs have begun to develop in recent years, particularly with the support of donors and the government.
Local microfinance institutions (MFIs) are also active players in the ecosystem, offering financial education programs mainly to their customers.
These initiatives are set to expand, especially as financial education has become a key focus of the National Strategy for Financial Inclusion (Stratégie Nationale d’Inclusion Financière – SNIF), which is due to be reviewed in 2022.
However, much remains to be done, especially as Altai’s 2018 study on financial inclusion in Tunisia revealed a relatively low level of financial literacy of 3.1/7.
Efforts also need to be made to integrate financial education into schools, which is also a key step in enabling new generations to develop financial skills from an early age.
In this sense, the Observatoire de l’Inclusion Financière (OIF) must play a driving role in developing and coordinating the various players involved in financial inclusion, so as to capitalize on what has been achieved and promote other initiatives for all the categories concerned. This will be done within the framework of the recently defined National Financial Education Program.
The results of an IFC survey carried out in 2022 on Financial Inclusion in Tunisia, show that financial inclusion has progressed in Tunisia.
For example, bank account ownership among adults has risen from 33% to 49%. The rate of adults holding postal accounts has also risen, from 32% to 35% in 2021.
The number of accounts held with microfinance institutions (MFIs) has almost doubled, from 5% in 2018 to 9.7% in 2021.
More generally, the survey reveals a rise in the rate of individual customers of a formal financial institution to 75% in 2021, compared with 61% in 2018.
V. Challenges in implementing Financial Education programs
By investing in financial education, governments and financial institutions can contribute to economic prosperity and the reduction of inequality. However, the implementation of financial education programs can face a number of challenges, including
- Lack of resources : The funding and resources needed to set up a financial education program may be limited. This can include the cost of training teachers, creating teaching materials, and setting up infrastructure to deliver the courses.
- Teacher training : Teachers need to be properly trained to deliver quality financial education. This may also require time and resources.
- Adapting to the target audience : Financial education programs need to be adapted to the target audience, whether school-age students, adults or specific groups. It’s essential to design programs that meet the needs and levels of understanding of these groups.
- Lack of motivation : Some students or adults may lack the motivation to participate in a financial education program, as the subject matter may seem abstract or uninteresting. It is therefore essential to make the content attractive and relevant to learners.
- Complexity of financial topics : Some financial concepts can be complex. It’s important to break these concepts down into simple terms and explain them in an accessible way.
- Resistance to change : People may resist if it means changing their spending or investment habits. It can be difficult to convince learners to apply the lessons learned.
- Evaluating effectiveness : It can be difficult to measure the real impact of a financial education program on participants’ financial behaviors. Evaluating long-term effectiveness can be challenging.
- Integration into the education system : Integrating financial education into formal school curricula can face institutional obstacles, not least because of competing educational priorities.
- Socio-economic inequalities : People from different socio-economic backgrounds may have different financial education needs. It can be difficult to ensure that the program takes these differences into account and is equitable.
- Need for long-term follow-up : Financial education is more than just a course or workshop. To be effective, it needs long-term follow-up to reinforce participants’ financial knowledge and skills.
Financial inclusion and financial education are intimately linked. Despite the difficulties of implementation, financial education remains an essential area for helping individuals in particular to make informed financial decisions.
Governments, schools, non-profit organizations and businesses must therefore work together to overcome these obstacles in order to promote better financial education and thus contribute to improving the financial well-being of target populations.