Impact Evaluation Concept Note for Uganda Financial Education for the Highly Educated
Intervention Summary • From 2003-2008, more than 4000 Ugandans lost their savings in get rich quick schemes that included pyramid schemes, gift circles etc… • What was surprising is that among these, more than 45% of those affected were highly educated people who included doctors, engineers, architects, government ministers etc…
Evidence Cont’d… Pyramid Schemes: • It is estimated that more than 4,114 people fell victim to pyramid schemes of money lending companies such as Dutch International, COWE, TEEM limited – Jinja and many others. • The amount of cash lost was estimated to be more than UGX.11 billion. (Uganda Crime Report 2008) (0.04% of GDP)
Cause of the Problem • The Ugandan Education system is designed in such a way that a person can go through primary, secondary and tertiary school levels without having come across financial education concepts such as banking, loan management, insurance , investment, financial planning and budgeting unless one specifically chose commerce or economics as subject options. • For example, a doctor can graduate from medical school and open a highly successful practice without any skills in personal financial management
Why the Intervention? • The various Financial Education programmes in the country currently being undertaken target the poor to the exclusion of the highly educated professionals. • Highly educated professionals earn high incomes and, therefore, have very high potential to save and invest into the economy. • The economy is deprived of the trickle down effect that would have occurred through their savings and investments.
Proposed Interventions • Financial literacy clinics, which involve talks on: Value of saving – Current savings and Savings for retirement Investment options – Short and long term investments DVD and interactive sessions Website of resources for financial planning • Post Bank Bond – Fully Government guaranteed product offering with attractive returns, similar to Kiva, investments will be used to finance MFI loans through the Post Bank (and advertised as such)
Selection Criteria • Stratify the highly educated population by profession, gender and income level and institution/location e.g. hospital or university • Randomize within strata at the individual level. • Introduce 2X2 intervention independent of each other.
Evaluation Questions • What is the impact of financial literacy training on saving behaviour among professionals (e.g. long term savings like pensions) • Does financial literacy training lead to prudent investment behaviour? • Does financial literacy training lead to adoption of the new investment product? (Post Bank Bond) • Does financial literacy training increase the range of investment products undertaken by professionals?
Team and Staffing • Partnership between the World Bank, Finlit Foundation and the Bank of Uganda.
Budget • We shall apply for funding from the various sources including the World Bank Russia Trust Fund on Financial Literacy. • World Bank Second Private Sector Competitiveness Project (PSCP II) for financial markets development in Uganda.