Financial Literacy in Africa: Are you financially literate?

To gain financial freedom, one must embrace financial literacy –this is the ability to understand and effectively apply financial skills including personal budgeting, investments, managing financial challenges etc.

Most people drown in debt because they are not financially literate. Some lucky fellows who win money at a lottery eventually lose all the money because they lack financial literacy.

Standard & Poor’s Global Financial Literacy Survey show that African countries score the worst in terms of financial literacy world-wide. The most financially literate country is Botswana at 51% and the least is Somalia at 15%.

Photo Credit: Future Africa Forum

The Global Financial Literacy survey measures 4 important foundations for financial decision-making— risk diversification, inflation, basic numeracy, and interest compounding.

Now, test your level of financial literacy with the following questions, just as randomly selected people in Africa were tested in the survey (Take note of your own answers, then scroll down to see correct answers)

Suppose you have some money to invest: How would you invest it?
A. In one business or investment 
B. In multiple businesses or investments
C. Don’t know
D. Refuse to answer

Suppose over the next 10 years the prices of the things you buy double. If your income also doubles, will you be able to buy less than you can buy today, the same as you can buy today, or more than you can buy today? 
A. Less than
B. Same 
C. More than
D. Don’t know / Refuse to answer

Suppose you need to borrow 100 US dollars, what is the lower amount to pay back: 105 US dollars or 100 US dollars plus 3%?
A. $105 
B. $100 US dollars plus 3%
C. Don’t know
D. Refuse to answer

i) Suppose you put money in the bank for 2 years and the bank agrees to add 15% per year to your account: Will the bank add more money to your account in the 2nd year than it did the 1st year, or will it add the same amount of money both years?
A. More 
B. The same
C. Don’t know
D. Refuse to answer

ii) Suppose you had $100 in a savings account and the bank adds 10% per year to the account. How much money would you have in the account after 5 years if you did not remove any money from the account? 
A. More than $150 
B. Exactly $150 
C. Less than $150 
D. Don’t know / Refuse to answer
1. B - Multiple businesses or investments
2. B - The same
3. B - $100 plus 3%
4i. A - More
4ii A - More than $150 

A Call to Action

A low level of financial literacy explains why some families are in debt, others barely have retirement savings, and a majority continue to live below the poverty line. To solve some of these problems, government agencies (such as the Ministry of Education, Ministry of Finance, Securities & Exchange Commission), financial Institutions, and the media must play their roles in ensuring that Africans gain financial literacy.

Government Agencies:

Ministries of Education, Finance and other agencies should work with media houses to publish simple but practical articles on financial literacy for the public. More importantly, financial literacy should be included in student’s curriculum from nursery to university level.

Fintechs and Mobile Money Operators:

A majority of internet usage in Africa is done via smartphones. It provides an opportunity for fintechs to teach the public financial literacy through their mobile money apps. Also, they can incorporate tutorial messages on popular social media apps which most African youths frequently use, such as Facebook, Twitter and Instagram.

Financial Institutions:

Financial institutions can organize school programs and boot camps for youths where they teach financial lessons. Banks have the capacity to create financial literacy programs for their customers and the general public to better understand loans, savings, investments and other financial vehicles. They must also train their employees to better understand customers’ risk tolerance, horizon and investment objectives so that they can recommend the right financial products and services to them.


The media is an important tool in spreading financial literacy education. Television shows, radio programmes and newspaper content can be tailored to teach financial literacy.

Photo credit: ResearchGate


Still Craving? Explore on Future Africa Forum and S&P’s Global Financial Literacy Survey.

Recommended books onfinancial literacy: The Richest Man in Babylon by George S. Clason and Rich Dad, Poor Dad by Robert Kiyosaki. Top 10 Personal Finance Books of All Time.

Article Credit: Hephzber Ifunanya Nwoka

#FinancialLiteracy #FinancialFreedom #Africa #Finance #RiskDiversification #Inflation #Numeracy #CompoundInterest

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