Without financial literacy ‘rewards of financial access can’t be realised’‚ study finds

30 August 2016 - 12:51 By Tmg Digital
rands, money
rands, money
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As they lack in financial literacy‚ a large part of the SA “populace might have to depend on hearsay or friends and family for such skills”.

That’s according to a PhD thesis from the University of Cape Town’s Faculty of Commerce‚ which said that “without proper financial skills‚ the rewards of financial access cannot be realised”.

The work‚ by Dr Lwanga Elizabeth Nanziri‚ probed the “whether the use of formal financial services can improve one’s welfare compared to using semi-formal or informal mechanisms in South Africa”.

Nanziri said that while “post-apartheid South Africa identified broad-based access to finance as one of the mechanisms for reducing inequality…without the knowledge to engage with the formal financial sector‚ that objective would not be realised”.


Nanziri’s research found that certain groups – “women‚ youths‚ individuals with less-than-matric level of education and those with low incomes” - are less likely to be financially literate‚ and that “financial literacy is significant in the use of financial services”.

She described it as being “like driving without understanding traffic rules and regulations”.

“The difference here is that there is no official licence to prove one’s proficiency to operate‚ say a bank account‚ yet one’s management style of such an account can have either positive or negative effects on his/her welfare‚” said Nanziri.

She hopes her findings would help advise “policy-makers on how to make ‘finance-for-poverty-reduction’ initiatives work for the beneficiaries”.

“Those with sufficient earning often make use of financial advisers and planners when they are in doubt‚” Nanziri said.

“The rest of the populace might have to depend on hearsay or friends and family for such skills. This impacts negatively on the financial decisions of those who can least afford it‚ justifying the implementation of consumer financial education programmes.”

Nanziri’s thesis was supported by scholarships from the Carnegie Foundation and the National Research Foundation Chair in Poverty and Inequality Research.

– TMG Digital