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SAIA’s financial literacy project a world first for South Africa
Compulsory fund contribution by the South African short-term insurance industry towards improving the financial literacy education of the nation is a world first and is being used internationally as a best-practice model.“This is something that our industry can be justifiably proud of,” says Michael McCann, chairman of the South African Insurance Association (SAIA) Consumer Education Committee. “We are putting considerable effort into educating hundreds of thousands of people about the importance of financial instruments such as insurance, banking and funeral cover.
“If we can help to maintain the assets of the poorer communities of South Africa, this will not only protect the people themselves, but will also relieve the burden on the state.”
“From an insurance perspective it’s encouraging to see a portion of our profits being put to such good use. The SAIA is actively involved in the industry and prides itself on being able to give back in such a meaningful way,” adds Josie Holley, Etana marketing manager.
According to a comprehensive study by the Financial Services Board, South Africa currently has a financial literacy rate of 51%, on par with a number of developed countries and higher than many contemporary developing nations.
The funding, which amounted to R12-million last year, is generated via a compulsory contribution of 0.2 percent of the profit generated by every SAIA insurer. The association expects to have a further R13-million to put to work in the same way in 2013.
The SAIA Consumer Education Committee’s Lelo Ntshalintshali manages the diversion of funds from insurers into educating high school learners and countless other South Africans living in impoverished regions about financial literacy.
Funding is used to upskill maths literacy and accounting teachers to assist them in developing curriculum-linked programmes. These programmes are used to educate learners in grades 9, 10 and 11 in subjects such as maths literacy, accounting and financial literacy.
Lelo says the consumer education initiative was implemented in 2004 as a voluntary initiative. In 2009 it became a SAIA membership requirement.
“The initiative came about as a result of the industry identifying an increasing need to plug consumer knowledge deficiencies and to improve policyholders’ understanding of the financial sector and its products.
“In order to address these gaps, the industry decided to embark on an initiative to enlighten South Africans,” she explains.
“For the SAIA, consumer education is a social and moral imperative. It also assists in increasing access to the products offered by our industry in the short, medium and long term,” says Lelo.
Part of the initiative involves reaching dispersed communities countrywide. To achieve this, educational dramas are broadcast on five community radio stations in five official languages. Next year Zulu, Afrikaans and English will be added to the broadcasts, which use characters and soap opera storylines to educate listeners of all ages in the fundamentals of financial literacy.
“Based on pre- and post-feedback from listeners following the vernacular community radio broadcasts, we are well on our way towards achieving our financial literacy goal. This is a source of encouragement since we are ultimately aiming to reach every South African community using all 11 official languages,” adds Michael.
