Enhancing financial education in Africa’s financial sector


Financial education is key to improving individual financial behaviour, preventing over-indebtedness, protecting clients, contributing to market development and ensuring financial stability.


By providing citizens with the knowledge, skills and confidence to manage their personal finances well, financial education ensures that citizens are less likely to suffer fraud and losses

By providing citizens with the knowledge, skills and confidence to manage their personal finances well, financial education ensures that citizens are less likely to suffer fraud and losses

It makes a crucial contribution to the development of inclusive financial systems and to broader economic and social development goals.

Financial education is, therefore, increasingly high on the agenda of many countries, including countries in Sub-Saharan Africa (SSA).

To increase consumer awareness and financial literacy, financial education is in the interest of a range of stakeholders, including central banks, banking supervisors, insurance supervisors as well as other policymakers and market participants.

Considering the need for coordination among these players, a number of countries have developed or are in the process of developing national financial education strategies.

Too often, national financial education strategies are developed and implemented with insurance not included or only added as a bit of an afterthought.

To encourage better cross-sectorial coordination and facilitate the sharing of experiences on key factors involved in a successful financial consumer education campaign.

Financial education is a key instrument in supporting responsible financial inclusion and driving uptake.

It is defined by the Africa Development Bank as a capacity-building process by which individuals, through information, instruction and/or objective advice, develop the skills and confidence to:

  • Become more aware of financial risks and opportunities;
  • Improve their understanding of financial products and concepts;
  • Make informed choices, know where to go for help, and take other effective actions;
  •  Improve financial well-being.

Financial education contributes to financial inclusion by empowering citizens to make the best choices for their financial well-being.

The resulting financial literacy and capability is seen by many as a life skill and is essential from a consumer protection perspective.

Moreover, financial education can contribute to the growth of the financial sector and economic growth in general by increasing savings and demand for financial services

Significant knowledge gaps continue to exist in SSA regarding the development, implementation and impact of effective financial education programmes and strategies.

Financial education programmes are often developed in isolation and knowledge sharing across and within countries is limited.

Importance of financial education

Financial education fulfils an important consumer protection function. By providing citizens with the knowledge, skills and confidence to manage their personal finances well, financial education ensures that citizens are less likely to suffer fraud and losses.

Through financial education, consumers are better able to judge the actual level of risk associated with financial products and are thus empowered to choose financial products that add value to their lives.

Knowledgeable consumers are also more likely to understand their rights, report misconduct or inappropriate practices and influence product design by being able to better articulate their needs.

In addition to educating consumers about the benefits and risks of financial products, the private sector also has a role to play in developing appropriate and simple products that meet the needs of the consumer and which enhance the quality of people’s lives.

To avoid increasing mistrust in the sector, financial service providers should discontinue the practice of selling products which they know consumers can afford, even if they do not entirely meet consumers’ needs.

Regulators must take consumers’ needs into account when developing consumer protection policies and systems.

For instance, the disclosures of terms and conditions of financial products may comply with regulation but are frequently so complex that the vast majority of consumers do not understand them fully.

Moreover, regulators can establish financial education requirements for the industry to ensure that information is provided in an objective way and is not just a form of marketing.

Promoting financial education in insurance

Insurance products play a pivotal role in curbing risks and in social and financial protection. In many countries, consumers have a low level of awareness of their risk exposure, do not sufficiently understand the concept of insurance and strongly distrust insurance service providers and products, largely due to the intangible nature of insurance products.

Yet, insurance is often left out of national strategies and financial education programmes.

Insurance education serves a dual purpose. It helps raise awareness of risks and to set correct expectations of how insurance can help cover those risks.

In addition, it helps develop the knowledge, skills, and confidence that individuals need to adopt proactive and responsible behaviour regarding their risk exposure. Governments, regulators and supervisors, insurance associations, and providers all have a role to play in promoting the education of consumers on risk management strategies, including insurance.

Kudzai is a strategic and innovative business consultant. He offers consultancy services to local and international investors. Contact: kgoremusandu@gmail.com. He currently works with Coover Bottlers, a new beverage company based in Harare.