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Financial Education for the Highly Educated

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  1. Impact Evaluation Concept Note for Uganda Financial Education for the Highly Educated

  2. 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…

  3. Evidence of the Problem

  4. 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)

  5. 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

  6. 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.

  7. 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)

  8. Methodology

  9. 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.

  10. 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?

  11. Timeline

  12. Team and Staffing • Partnership between the World Bank, Finlit Foundation and the Bank of Uganda.

  13. 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.