Financial Literacy Revolution – Africa – Guest Editorial

Brian Myers, CEO at Equiti Capital

Alan Greenspan, the ex- U.S Federal Reserve Chair, once remarked “The number one problem in today’s generation and economy is the lack of financial literacy.” Whilst he was predominantly centering this towards the United States, the statement is certainly true for those in Africa. Financial Literacy rates must be improved across the African continent- and fortunately there has never been a better time to take up the challenge.

africa

Financial literacy has many definitions, but a widely used one is from Standard & Poor (S&P), who in their Global Financial Literacy Survey define it as the ability to ‘understand essential financial concepts in making informed decisions about saving, investing and borrowing’. This survey went across the world and found rates of financial understanding amongst Africans to be alarmingly low. Simple questions were asked around topics such as diversification of risk, calculating interest repayments and knowledge of transaction costs and a percentage of correct answers/ literacy rates were captured for each country. The finding showed that where many European countries, for example, had literacy rates of circa 65-75%, many African countries fell well below, such as South Africa (42%), Tanzania (40%), Kenya (38%) and Nigeria (26%). This is a profound issue, as it shows most of these populations are not able to navigate their financial lives effectively and are certainly not planning their retirements to any real extent. Indeed, in Kenya it is noted that 70% of the population enter retirement with less than $10k.

Growing Mobile Phone Penetration Opportunity

These low financial literacy rates are bad news, but the good news is we can massively improve the situation very quickly and key to this is mobile phone usage. The number of people that will have access to mobile phones over the coming years will increase at a phenomenal rate across Sub-Saharan Africa particularly. Unique mobile subscribers will increase from 477 million in 2019, to 614 million by 2025. Of these users, a huge 475 million will have internet access through their smart phone by 2025. This is so important, as it allows people of all backgrounds and genders to seek information, education and fintech organisations there to help people understand how to save and invest.

Much more can be done to improve financial literacy

Brian Myers
Brian Myers

But there is so much more we can do whilst this mobile internet adoption continues to take place. Financial institutions like our brokerage, Equiti Group (EGM Securities/ FXPesa) must certainly play it’s part. We will persist in increasing the education we are supplying; We spend a huge amount of time, energy and money shipping out educational content to our African clients through seminars, webinars, podcast, radio and tv interviews and social media channels. This education needs to be balanced and open eyes to exciting short-term returns + investing for the long-term. For example, there is a current hysteria around Cryptocurrency trading across Africa, with those investing solely in assets like Bitcoin expecting huge returns each week. Improved literacy will mean understanding the need to diversify across asset classes.

Social Networks- the good and the bad

The recent rise of forums such as r/Wallstreetbets on Reddit and stock memes on platforms such as Instagram and Twitter have brought trading to a younger generation across the world – and Africa is no different. This is a huge positive, as we are seeing more people decide to learn how to invest. However, these social networks can have a raw side-effect also. Poor financial literacy increases a person’s susceptibility to scams. Young Africans are being bombarded with ‘influencers’ and targeted ‘get rich’ schemes, that unfortunately steal hard-earned and much needed income far too often.

Financial Literacy Revolution

So it’s crystal clear that improving financial literacy is critical for all generations, but particularly the young. This is one of the reasons that myself and my Equiti/ FxPesa team decided to start the ‘Financial Literacy Revolution’ webinar tour at the beginning of 2021. For several months now, we have held a virtual tour of universities across Kenya, determined to give basic financial knowledge and equip students with more information to counter bad agents within finance. In parallel to the tour of universities, we are always holding financial literacy talks with our army of clients. Over the past year we have spoken to over 100k bright eyed Kenyans through this series and our other webinars and seminars. It has been an incredibly rewarding experience for us all. This is only the start of the revolution….. but started it has!

By Brian Myers, Chief Executive Officer at Equiti Capital. Follow Brian on Twitter @bjmyersuk.

The subject matter and the content of this article are solely the views of the author. FinanceFeeds does not bear any legal responsibility for the content of this article and they do not reflect the viewpoint of FinanceFeeds or its editorial staff.

Read this next

Institutional FX

Fiserv secures major payment institution licence in Singapore

Brookfield-based financial services technology provider Fiserv Inc has obtained nod for a Major Payment Institution license in Singapore.

Institutional FX

Finalto expands NDFs line-up with Taiwanese dollar

Finalto announced today that it has expanded its non-deliverable forwards (NDFs) offering with the addition of Taiwan’s dollar to its trading platform.

Opinion

It’s time for FX to Harness Crypto’s Potential

Jonathan Cumberlidge, FX Sales Director for BVNK, makes the case for cryptocurrencies in improving the efficiency and flexibility of foreign exchange trading.

Digital Assets

Owner of OptionMint, OptionKing, and OptionQueen gets 30 months in prison

A US federal judge has sentenced Ohio resident Jared Davis, who was found guilty for his participation in a multi-million fraud scheme carried out by Israeli-run binary options websites.

Executive Moves

iS Prime co-founders Raj Sitlani and Jonathan Brewer leave, but “business as usual”

“For our clients and teams at iS Prime, iS Risk and iS Prime Hong Kong, it is business as usual. We will be increasing our investment in our technology and staff, putting our clients first as we drive the business forwards to maintain our market leadership position.”

Digital Assets

Germany-focused DekaBank taps METACO for digital asset custody offering

“Digital assets are a critical part of the future, a radical new way for how assets will be represented, from currencies to real estate.”

Technology

Eventus launches AML solution for TradFi and digital asset space

“Firms operating in traditional financial markets and digital assets alike are facing greater challenges than ever to protect themselves from those presenting a risk to their businesses and reputations, along with their standing with government regulators.”

Industry News

Qomply launches direct-to-FCA trade report solution that bypasses ARM

“Certainly, for back-reporting large volumes of data, QomplyDirect removes extra ARM fees by offering the flexibility of sending reports directly to the FCA via a firm’s own infrastructure.”

Executive Moves

BNP Paribas AM appoints Geoff Dailey as Deputy Head of US Equities

“Geoff has more than 20 years’ experience in the industry and as a key, senior member of the team with a strong investment pedigree and leadership profile, he is the natural successor for Pam.”

<