Breaking the cycle of poverty by actively engaging young peopleAuthor: email@example.com
Financial education in South Africa isn’t working very well. This is despite the best efforts of financial service providers which are required to invest 0,5% of their net profit after tax to educate consumers about money.
It is estimated that about R1bn is spent annually on financial education programmes.
Four-and-a-half years of data from 15 500 surveys shows that South Africans struggle with their relationship with money. They are not able to convert knowledge and skills into income-earning opportunities, do not understand how to budget and where their money is going, which leads to an inability to save. Then, faced with an unexpected expense or emergency, they incur debt. So, the cycle begins.
The fact that some 85% of South Africans are over-indebted suggests a different approach is required – one that assesses outcomes and efficiency, not just how much was spent and how many people were exposed to the messaging.
It’s why, after two years of running a typical financial education programme that ticked all the regulatory boxes, DirectAxis decided to try a different approach.
It may seem contradictory for a financial services company that is primarily in the loans business to be looking for better ways to educate people about how to avoid the debt trap, but actually, it’s entirely consistent with our approach.
Many people need loans for all sorts of reasons, from opening a business to furthering their education. We’ve been a successful business for over 25 years because we’re very careful about who we lend to. It is very much in our interest to have more financially educated consumers who borrow responsibly and pay back loans on time.
So, we teamed up with an innovative youth peer-education programme that has a proven model.
Called gold Youth Development Agency, over the past 16 years it has developed and implemented a system-change model to unlock the social and economic potential of South Africa’s youth.
To do this it pioneered a peer-based education system which it calls an ‘each-one-reach-one’ model. The peer educators are not necessarily the top academic achievers or traditional role models, but rather the cool kids, who others naturally follow and want to emulate. This ensures the messenger is credible and resonates with his or her audience, which is then more likely to trust and act on the information.
At weekly meetings, skilled young adult facilitators equip and mentor the peer educators. In addition, they are given academic support, work-readiness skills and workplace experience.
Each student and facilitator are paired for four years, during which peer leaders are taught how to model positive decision making, educate their peers and younger children to make positive choices and maximise their impact in the community.
School principals, teachers, parents, community leaders and local businesses are mobilised to create an enabling environment. Alumni are connected to future opportunities in further education, internships, access to entry level jobs and micro-entrepreneurship support.
Using this model gold-youth has reached over 71 000 young people in 123 communities with concrete results in youth social-behaviour change, education and job creation.
Now we’re employing the same proven peer-education approach to try and make financial education more effective and break the cycle of poverty.
Importantly gold is also deploying part of its monitoring and evaluation system called the Poverty Stoplight Tool. This allows households to generate a snapshot of their quality of life and re-evaluates it again in 12- and 24-months’ time. The dual benefits are that it encourages people to want to change their red and yellow lights to green and also provides a way of measuring the effectiveness of the peer-to-peer education programme.
The financial education couples personal development and financial freedom training. It prioritises spending across 50 indicators to achieve independence and dignity. Participants self-diagnose across these metrics using the Stoplight: red (I’m stuck), yellow (I’m struggling but trying) and green (I’m doing OK).
It’s being rolled out across some of South Africa’s most impoverished communities as part of the gold programmes in the Western Cape, Kwa-Zulu Natal, Mpumalanga and Limpopo. In addition, multiple Peer2Peer sites in the Northern and Eastern Cape will provide training for selected adults.
To best evaluate efficacy, there are three target groups:
·Parents of gold adolescent peer educators. This takes the form of two day-long workshops and two one-on-one poverty stoplight mentorship- and behaviour-change evaluation sessions.
·gold graduates entering the job market. This includes 10-day work readiness and Me and My Money training and two mentorship sessions.
·Me and My Money training for parents and young adults on how to implement a Me and My Money peer education programme.
We don’t know which iteration will work best or even whether any of them will deliver the results we want. We do know that the peer education model works and that we’ve got to find a better approach than just spending money to tick the regulatory boxes.
Whatever the outcome we’ve decided that this is open-source social investment and we’ll share the learnings with anyone in the financial services sector who’s interested. Like Volvo’s three-point seatbelt or penicillin, the societal benefit outweighs any proprietary considerations.
Shafeeqah Isaacs is the head of social investment at DirectAxis