Over on the All About Finance blog, Bilal Zia provides a comprehensive roundup of what we know about the impact of financial literacy programs. As Zia points out, there are a lot of reasons to believe that financial literacy is important, but evaluations of financial literacy programs have so far produced lackluster results. An evaluation of a financial literacy seminar in Indonesia targeted at the unbanked found no impact on the overall population (although some impact among the least well off); a program for farmers in India also had little impact.
Although Zia suggests that in both these cases perhaps what is needed is simply more -- longer trainings, more often -- maybe the problem is rather in the delivery mode. Rather than delivering in the format most familiar to those who are responsible for the training, i.e. some kind of formal training module, perhaps the solution is to use a now widely available form of communication: mobile phones.
A new research brief from a young organization funded by the Bill & Melinda Gates Foundation called AudienceScapes posits this possibility. The brief discusses results of surveys in Kenya and Ghana of financial literacy among youth and young adults (YYAs). Kenya in particular stands out as a good candidate. It finds that some 87% of YYAs use mobile phones on a weekly basis. Delivering information on the smart management of finances via SMS could reach a large audience.
The authors of the brief point out at least one obstacle:
Similarly, only 10 percent of YYAs listed SMS messages as being “very trustworthy” and 26 percent felt SMS was “somewhat trustworthy,” while 48 percent indicated that they did not have enough information to make a judgment. This suggests that the jury is still out on the use of SMS as an information dissemination tool.
Of course, the same problem of establishing trust faced M-Pesa at its founding, but it is now trusted but much of Kenya's population to regular handle money transfer transactions.
(Thanks to Giulio Quaggiotto for the pointer.)