Business Day 29th April 2019
South African public schools are taking a scattershot approach to teaching financial education to high school students, leaving young people sadly unprepared for life.
Part of the variance stems from the difficulty in defining financial literacy. Over the past decade, financial literacy has been increasingly recognised globally as an essential life skill, particularly among the youth. As many face financial decisions and are consumers of financial services, developed and emerging countries have become increasingly concerned about the level of financial literacy among their citizens.
In 2005, the Organisation for Economic Co-operation and Development (OECD) recommended that financial education start as early as possible in schools. As a result, an increasing number of countries have integrated financial education topics into existing subjects during curriculum revisions.
In SA, the model includes financial education in broader subjects. The Financial Sector Conduct Authority (FSCA), which is responsible for monitoring the conduct of financial institutions, is of the view that financial education in South African schools is happening too infrequently to make an impact.
“Currently our department of education believes that they’ve got enough. It’s very subject specific, and we maintain that it is more of a life skill that learners need to have,” said Lyndwill Clarke, head of financial education at the FSCA.
According to Cheryl Weston, director of curriculum implementation and quality improvement at the department of basic education, financial education is integrated into the curriculum. She said a subject such as Economic Management Sciences is provided as a compulsory subject to all pupils in the system from grade 7 to 9 to equip them with the necessary financial skills.
“Other subjects that also have components of financial literacy as part of the curriculum include mathematics, mathematical literacy, tourism, consumer studies, hospitality studies and agricultural management practices,” said Weston.
Although the subjects have basic financial literacy material, they fall along a broad spectrum in terms of rigour.
For instance, in mathematics, pupils focus on finance and exponential growth and decay. Mathematical literacy has finance as one of its application topics which covers budgeting, tax, interest rates, income and expenditure, and running a business.
“This approach only scratches the surface of what learners need to know about money,” said Kristia Van Heerden, CEO at Just One Lap.
Just One Lap, a platform that offers trading and investment education through free-to-attend webcasts and live events, recommends that everyone understand five basic concepts: assets, compound interest, inflation and index-tracking products.
“Just by understanding these five terms, you can make good financial choices whenever you want. The thing is that you can only affect change one pay cheque at a time, so even if you get your strategy 100%, it takes longer to implement,” said Van Heerden.
A financial literacy study conducted by the Human Sciences Research Council found that a considerable portion of South African adults may not be adequately equipped to make critical financial decisions. About 58% of respondents indicated that they had a household budget, while 81% said they had a considered approach to spending. Yet only 37% always paid their bills on time, suggesting that there may be a difference between respondents’ attitudes toward financial control and their actions.
While financial institutions and regulators have increased their focus on the issue of financial literacy for consumers over the past few years, these efforts are not translating into real legislative change.
“We tried to lobby and get financial education into the subject life orientation which I think is a very suitable area. Currently, the life orientation curriculum is more focused on health and writing a CV. However, if we’re teaching learners how to write a CV then we have to take it further and teach them about what happens with your money after you get a job”, said Clark.
Most countries have adopted guidelines supported by the OECD, where financial education in schools is part of a coordinated national strategy. In 2012, the National Consumer Financial Education Committee (NCFEC) was formed and mandated to design a strategy for SA and coordinate the implementation of the strategy by the various stakeholders.
While that strategy was developed, coordination and the creation of a database of financial education initiatives in the country is still pending.
“We’ve got a challenge in the sense that the NCFEC is a voluntary body and the national strategy was not adopted by parliament. We’ve adopted it, but it has not been taken through the process,” said Clark.
The FSCA is finalising a policy through the Treasury that will lead to a revised new national strategy.
“Financial institutions, the National Credit Regulator, NGOs and the FSCA will be on the same page. The NCFEC will be able to write conduct standards for financial education so that financial institutions don’t use financial education for marketing purposes,” Clark said.
Until a new national strategy is finalised, the FSCA has applied a creative way to get young people exposed to financial education. Through a joint effort with the department of basic education, the FSCA is running an inter-provincial literacy speech competition aimed at improving financial literacy levels among grade 11 pupils by requiring them to do in-depth research on one of the approved financial topics and present this to an audience in the form of a five-minute prepared speech.
“Learners gain knowledge by researching the different finance topics and then, in turn, can impart the knowledge gained. It’s a start, but ideally, we’d like to see at least one module focused solely on financial education from grade 10 onwards throughout the education system. I believe kids need to know the value of money,” said Clark.