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Post by sol_drethedon on Sat Apr 20, 2013 12:34 am


A report made by Bank of Uganda (BOU) notes that early work on financial literacy (then called consumer education) was carried out from 2004 through the UK Department for International Development (DFID) Financial Sector Deepening Project. Together with members of the Consumer Affairs Sub-Committee, the project carried out a six months research in Mbale and Masaka districts and later on spread nationally in 2006 to test the usefulness of educating consumers on their rights and responsibilities and about the products and institutions available to them.

According to the report, work was carried out on radio spots, call - in shows and print materials including posters, leaflets and flyers, as well as community presentations by Financial Extension Workers/Officers. Other initiatives that came from this early work included: consumer education, newspaper inserts in the main vernacular languages, short awareness raising messages in vernacular using radio spots, the inclusion of financial issues in radio call-in programs, during which a local expert responded to caller's questions and drama performances put on by Association of Micro-finance institutes of Uganda (AMFIU)

The drama performances illustrated themes from the Global FEP financial negotiations, debt management, budgeting, bank services and savings modules. Other initiatives made by consumer educators that were listed in the report include pinning posters which taught micro-finance clients about their rights and responsibilities and which were displayed prominently in AMFIU members' banking halls.

Further more, the report summarizes some of the finance literacy activities that are currently being undertaken. They include the role played by Capital Markets Authority to run a Secondary Schools' Challenge since 2003. This is an initiative to educate Advanced Level (A-Level) students on financial matters. The schools' challenge also aims at capturing a wider adult audience such as parents, teachers and board members.

Another player in consumer education is the Investors Club which runs an annual Financial Literacy Week and Financial Literacy Clinics. The Investors Club is a private company, which focuses on two aspects - investment, advise and financial literacy. The Financial Literacy Week targets uniformed forces, professionals and students, and the activities are intended to promote savings and best practices in personal finance. In addition, the Investors Club is providing a personal finance curriculum for the Uganda Peoples Defense Forces to incorporate them in their training. Furthermore the Investors Club has also developed a personal finance management tool for savings, investments, budgeting and credit.

The report also notes the role of the media which is to disseminate information. For example the New Vision includes a weekly personal finance column which usually includes one or two items on savings, credit or budgeting on the business page. According to the report, trade associations for banking; insurance and micro-finance institutions; together with the regulators for insurance and capital markets and (as an observer) Bank of Uganda did establish a Financial Literacy Foundation in 2008. The formed foundation according to the report, in conjunction with the Investors Club, runs the Financial Literacy Week, together with Financial Literacy Clinics in various towns of Uganda. These clinics create awareness of financial products, teach people to save and also produce business skills training.

However, due the absence to date of a national strategy on financial literacy, the report notes the lack of genuine strategic direction, uncoordinated and predominantly project-based programs that are taken under financial literacy. Financial Literacy has often been confused with business skills training and with the training that micro-finance institutions carry out to teach their clients how to hold their group meetings, apply for loans and complete he various forms.

The establishment of the Financial Literacy Foundation demonstrates willingness of some of the key financial services stakeholders to work together to seek to improve the population's financial literacy. Furthermore, people who have good financial management skills often find it challenging to manage their finances well. For those with few financial management skills, tackling even relatively straightforward tasks such as opening a bank account - can be overwhelming . People often find money issues confusing, daunting and worrying. Another challenge noted by BoU is that people are likely to say that they do not have an interest in financial matters - but virtually everyone wants to be able to make the most of their money.

However, developing and implementing effective programs to improve people's financial literacy is challenging. Also there are low levels of literacy and numeracy compound with the challenge of seeking to improve current levels of financial literacy. Another difficulty concerns the number of languages spoken in Uganda, which means that any written or oral communication needs to be translated into a range of languages if it is to be accessible y majority of the population. A further issue relates to the high costs which are incurred where it is necessary to pay for the dissemination of financial literacy messages. In addition to they above, national strategy for financial literacy should be developed, implemented and led by BoU, working in partnership with a wide range of stakeholders.

BoU should appoint a high level financial literacy advisory group, comprising senior and influential decision-makers from a range of sectors, to support it; and should also convene an inclusive information sharing group for financial literacy, made up of a wide range of stakeholders and partners. Therefore the implementation of the recommendations in this report would help to bring about that step change and this would be in the interests of individuals, financial service providers and the country as a whole. In particular, the stated implementation would help individuals manage their personal finances, lessen their risks of suffering losses, make them financially stable and enable them choose from more competitively priced financial services and products.

Furthermore financial service providers would have a larger market in which to compete; and their clients would be better informed. According to the report, implementation of the above recommendations would increase financial inclusion for Uganda thus promoting a sound financial system that would take the poor out of poverty.

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