12 August 2014

Tanzania: The Case for Financial Education

OVER the years,financial education has become a topical issue as it relates to economic development; in particular, it is one of the catalysts of financial inclusion. It has been widely documented that financially educated people are able to make better decisions for themselves and their families' financial wellbeing. However, globally and more so in Tanzania, many still lag behind in terms of money management skills and knowledge. Business Standard interviewed Mr Aziz Omar, Managing Director of NUEBRAND Events Company, an events marketing firm that initiated and has been organizing the annual Financial and Investment Services Week, now in its third year.

QN: When exactly is the Financial and Investment Services Week beginning?

ANS: Plans are at an advanced stage for this year's, three-day campaign, running from 4th to 6th September 2014, at the Mnazi Mmoja grounds, Dar es Salaam. Prior to the campaign, we are currently running publicity campaign on radio, TV as well as personal selling to inform and invite as many people as possible to participate in this year's forum.

Qn: What activities are lined up for this year's Financial and Investment Services Week?

Ans: As with the previous years, the framework remains the same, a two-part campaign -featuring, financial education seminar on one part and showcasing financial services and products on the other part. Nuebrand will be training attendees on wealth creation (planning, investing, protection, diversifying) with the goal of attaining financial freedom.

Stakeholder or financial services providers (exhibitors and trainers) on their part will showcase and train attendees on benefits and usage of the various financial products which they (trainees) can utilize to create wealth and attain financial freedom.

The two parts compliment each other in the sense that the seminar attendee (or consumer) gains the relevant products know-how and is better placed to use the various formal financial products in line with his/ her wealth creation strategies. It is evident entrepreneurs (majority of our trainees) already practice and are well-versed in budgeting, savings, debt management etc -therefore our approach of financial education is merging it with product marketing, thereby making it more relevant for trainees and more cost-effective for financial services providers.

Our goal is to fill the knowledge gap on how financial and investment products available in the market functions and ultimately used to attain their aspirations.

This year's campaign theme is "Informed choices for better family financial wellbeing". Choice being a powerful tool and the first step towards any life goal achievement -in a nutshell, the art of wealth creation to attain financial freedom is a choice and also a responsibility.

Training methodology will be accelerated (experiential) technique in that our trainees will be carrying out a physical activity - rather than listening to a lecture or watching a demonstration and activities areas will include planning, investing, protection and investment diversification. Learning material include a pen, notebook and evaluation form offered to each trainee.

Other materials include gifts, prizes and participation certificates used to keep trainees engaged throughout the seminar session.

Qn: Who are the key stakeholders?

Ans: They include the entire financial services providers, banks, mobile money operators, pension funds, MFI's and insurance firms, SACCOS, VICOBAs as well as the support institutions such as business associations, investment facilitators, regulators and development aid agencies with interest in financial inclusion.

Apart from showcasing their financial and investment products, all stakeholders have been allocated time to engage trainees through products presentations and discussions during the seminar sessions.

Stakeholders who are participating include Azania Bank, Akiba Commercial Bank, DCB Commercial Bank, CRDB Bank, Exim Bank, Peoples Bank of Zanzibar, Entrepreneurs Financial Centre (EFC), Amis UTT, Public Sector Pension Funds (PSPF), Government Employees Pension Funds (GEPF), ICEA Lion General Insurance, Resolution Health, PSI Tanzania, Airtel, Vodacom, Zantel, Selcom, Umoja Switch, Deposit Insurance Board (DIB), Tanzania Bureau of Standards (TBS), Social Security Regulatory Authority (SSRA), Tanzania Revenue Authority (TRA), Tanzania Communications Regulatory Authority (TCRA), Tanzania Private Sector Foundation (TPSF) and Business Registration and Licensing Agency (BRELA).

Perhaps one would wonder why PSI Tanzania is also participating. We specifically invited them through their family planning brand "Familia" to engage trainees with presentations and discussions on how the choice of family size and spacing impacts the financial wellbeing of a family.

Accordingly, family planning is one of the cornerstones of attaining financial freedom; in particular, it allows and enhances women's full participation in the labour force and thereby improving their families' income.

Qn: Can you give us a snapshot of the current state of financial education in Tanzania?

Ans: The latest (2013 Fin- Scope) survey the number of adults with access to formal financial services has remarkably increased to almost half the country's population, thanks largely to mobile financial services, 46 per cent of adults in Tanzania now have access to formal financial services.

This trend seem to augur well with the National Financial Inclusion framework goals and the target of enabling 50 per cent of adults in Tanzania to have access to formal financial services by 2016.

Looking at the numbers, it is apparent this target will be reached even before 2016. With the access barriers significantly reduced or in the near future removed altogether, the next big drive will be to persuade consumers to utilize the whole spectrum of formal financial and investment products.

For instance, the use of insurance, social security, stock market and banking services is still very low. In fact, our current strategy of merging financial education with product marketing stems from the above stated opportunity analysis.

Qn: How does this relate to community and economic development?

Ans: A good number of research and case studies have conclusively concluded that there is a close correlation between financial exclusion and poverty. Majority of those living below the poverty line also constitute the bulk of those with low financial literacy, a factor deterring their full participation or inclusion in to the formal economy and adversely affecting their financial wellbeing.

Qn: Do you think that financial literacy campaign will make a difference in communities?

Ans: Yes indeed, we expect this and other financial education campaigns we have initiated to have a positive impact and achieve their goals. As stated earlier, although the 2013 FinScope survey paints a picture of progress towards inclusion, nonetheless,it is largely quantitative rather than qualitative, in the sense that many have access to formal financial services but are yet to start using key financial and investment products, specifically, insurance, social security, banking and stock market investment opportunities.

Now, as indicated in our advertisements published in this paper, our work is succeeding because the uptake of the products mentioned above will not be achieved through the conventional product advertising, but rather through financial education - mass market acceptance is rare.

It is imperative to find early adaptors, engage them relentlessly in conversation (education), embrace and support them.And then be patient yet persistent; help them internalize money management concepts, supplemented with information about available products and services and how they work.

Better informed people will make better decisions on which products to use, to the mutual benefit of the institution and themselves. Secondly, viral connections based on experience are the only reliable way to spread new ideas in communities, that is, members within a community will learn from early adaptors or a peer-led introduction to new products.

Qn: What exactly are your objectives?

Ans: Our key objective is to offer both financial and investment products consumers and service providers a platform where they meet, learn each other's needs and pin point relevant solutions.

Again, it is imperative to link financial education to real products, not just because of the need to provide consumers opportunities to use and experience products, but also because this provides an opportunity to deliver financial education on a massive scale as part of product marketing efforts.Ultimately, we believe our efforts will help to move financial inclusion a notch higher.

Qn: Lastly, what does NUEBRAND have in store?

Ans: Well, we have initiated various financial education channels, of course, the annual Financial and Investment Services Week being one of them and which is now a permanent annual campaign.

Other financial education initiatives in store and which are also running includes a radio programme called "Je Unaijua Fedha", airing once a week on Radio Free Africa. We are also running a specially designed financial education for the youth called FLY iClub or Financial Literacy for Youth Investment Clubs.

All these programmes feature financial education merged with financial products. We are currently developing a TV programme, M-learning and Internet platform, which we hope to role next year.

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