This essay was submitted to Open Philanthropy's Cause Exploration Prizes contest.
The lack of access to financial literacy programs for adults is a big challenge for the rural populations in Africa. Financial literacy plays a crucial role in eradicating poverty and uplifting rural areas' economic development. However, the lack of reliable financial literacy data makes it difficult to assess financial illiteracy levels in Africa confidently. It has been argued that financial literacy and capability are vital demand-side elements to foster financial inclusion. However, little is currently known about these topics in Africa, and surveys are just beginning to measure financial literacy and capability. The Organisation for Economic Cooperation and Development (OECD) and the Making Finance Work for Africa (MFW4A) partnership initiated projects that are trying to improve diagnostics for understanding financial literacy in Africa.
Financial illiteracy is a huge problem in rural communities in Africa: According to Africa Development Bank’s Financial Inclusion report, less than one adult out of four in Africa has access to an account at a formal financial institution. It’s also neglected as stakeholders often overlook financial literacy as a critical intervention.
Financial literacy is not a new concept and is not highly neglected. Millions of dollars have been invested into financial literacy programs across East Africa. Usually, banks, microfinance institutions, SACCOs, insurance companies, and INGOs offer financial education. However, due to the cost-ineffectiveness of and inability to measure impact in conventional financial education programs, stakeholders often see them as a public good rather than a viable business case. As a result, only a tiny number of organizations are formed solely focused on trying to promote financial literacy.
How can a philanthropic funder help to make progress on this problem?
There are cost-effective interventions for delivering financial topics more effectively at scale through partnerships using modern content styles and delivery channels that could significantly contribute to solving the problem of financial illiteracy in rural communities. Philanthropic funders can help support these innovations (which can be developed, tested, iterated, and piloted cheaply) to scale and measure the impact of financial literacy initiatives on beneficiaries’ lives and well-being in the short- and long-term.
Rural Inclusion’s approach to offering financial literacy to the target market in rural communities addresses the pain points of the vast majority of existing financial literacy programs, which are mainly face-to-face workshops. The first challenge is that in order to scale, expenditure increases proportionately: Typical training costs are salaries of specialist facilitators, facilitation on the ground for learning groups, travel costs, accommodation costs, and materials. The second challenge is the content style needs to be engaging for the rural population, which means going beyond generic materials such as leaflets for complex topics such as insurance into styles such as gamification, roleplays, dramas, and radio which can be entertaining. However, still, the cost to scale these programs are significant and there is a lack of continuous learning and an inability to create linkages over a long period which is needed for any new topic, especially financial education which doesn’t happen overnight. Another challenge is the standardization of delivery of content, which is left in the hands of facilitators in traditional delivery, who typically are not financial specialists due to the complexity of certain topics in finance. Standardization of delivery in training is a key issue for organizations using community-centric approaches that creates trust working through champion farmer models and village extension workers employed locally, as messages from trainer of trainer sessions can be diluted and difficult to track.
Usually, banks, microfinance institutions, SACCOs, insurance companies, and INGOs offer financial education. They educate their customers and members about finance in productbased education workshops, where groups will often learn about the benefits of a specific product without increasing their wider financial knowledge. These organizations are interested in promoting financial literacy among their customers. They may want their customers to increase savings and retirement planning, make realistic assessments of financial products and services, manage debt, make investments or learn consumer rights as per regulation.
Rural Inclusion (RI) is a non-profit social enterprise focusing on financial education in rural communities in Africa. RI supports holistic financial literacy among the poorest groups to ensure no one is left behind. To date, RI is self-funded by the co-founders’ contribution of $115,000 spent on animations, mobile app development, and research projects.
Our processes.
RI’s crucial distribution model is working with partner organizations that support village saving groups (VSLA’s) due to the following reasons:
1) VSLA groups meet regularly (often weekly),
2) When meeting with their group, VSLA members are already thinking about finance (hence a good time to implement training) and
3) There are instant opportunities for group members to practice the training from Ostrii and organizations to evaluate and analyze impact.
Given that a group directly would unlikely be able to subscribe to a paid plan for education on the Ostrii platform, along with the operational difficulty for RI in scaling its solution while working directly with individual groups, RI works with organizations that support and facilitate VSLA groups such as international NGOs, local NGOs, social enterprises, microinsurance institutions, commercial Banks, coffee companies, and tea companies.
Our initial criteria for the partnership include the organization
1) possessing a potent agent infrastructure that has relationships with target VSLA groups,
2) having regular interaction between its agents and VSLA groups, and
3) sharing RI’s social values.
RI partners reap the following benefits of using Ostrii;
1) Quality content in the local language for use with the groups,
2) Offline usage of the app,
3) Standardization of training delivery using the Trainer-of-Trainer model,
4) Improves the confidence of agents who struggle when delivering financial literacy,
5) Access to mobile app usage data to understand and measure the activities of each agent,
6) Enhanced customer experience through personalized certification for groups who complete the course and
7) Access to research data obtained from quizzes and surveys to understand the needs of their customers further.
Next steps.
Our next step is scaling the Ostrii platform in Uganda and pivoting the foundation of RI ambassadors to launch in the target five countries of Kenya, Malawi, Zambia, Rwanda and Tanzania , which primarily involves creating;
1. Additional languages- As RI moves forward from the pilot in Central Uganda, it needs to add other languages to the platform to cater to new partners.
2. Additional content using 3D animated films, 2D lessons, comic books, expert videos and USSD capability. As the Ostrii platform progresses and as we continue to engage with our partners and end groups, there may be scope to increase the number of topics on the platform and expand from financial literacy. We plan to include a course on digital literacy for rural groups initially. In the future, we can consider topics such as business skills & entrepreneurship, VSLA Governance, agronomy, and health education. Building an in-house animation studio will increase our delivery effectively.
Research Project Report - Report
Ostrii Pilot Documentary - Documentary
Africa Development Bank - Financial Inclusion Report
