Impact of Financial Literacy on Budgeting, Savings, Credit, in South Africa


  • PROJECT NAME: Measuring the Impact of Financial Literacy on Savings, Credit, and Budgeting in South Africa
  • TARGET SEGMENT: Members of burial societies and women’s development groups in the Eastern Cape area
  • DELIVERY CHANNEL: Group-based, interactive financial literacy seminar
  • EVALUATION TEAM: Bilal Zia (World Bank), Shawn Cole (Harvard Business School)
  • PARTNERS: Old Mutual South Africa, J-PAL South Africa
  • TIMELINE: November 2011 - February 2012.


Governments, NGOs, and aid organizations are increasingly focusing on financial literacy education as a tool for improving welfare. Yet to date, there is little rigorous evidence that financial education is effective. This project evaluates Old Mutual’s ‘On the Money’, a one-day financial education program that provides training on saving, financial planning, budgeting, and debt management. The training program is very similar in content and delivery to a financial literacy evaluation being conducted by the same authors in India.

To rigorously measure the impact of the intervention, this project use a randomized control trial involving approximately 1,300 individuals: 610 organized in 43 Burial Societies and 690 organized in 36 Women’s Development groups in the Eastern Cape and KwaZulu Natal. A randomly-selected half of these groups receive financial education. The other half forms the control group for the duration of the study.

To estimate the true causal impact of financial education, it is critical to establish the correct counterfactual. Studies that simply compare individuals who receive financial education to those who do not are susceptible to selection bias, meaning that people who choose to take financial literacy courses may differ from those who choose not to take such courses. The RCT evaluation methodology eliminates that bias. By randomizing assignment to treatment or control, researchers ensure the offer to attend training is not correlated with any potentially confounding factors like level of education, income, or motivation.

Examining the scope and pathways by which financial education affects financial behaviors requires that researchers obtain a rich dataset on trained participants and the control group. To that end, we will obtain outcome measures from a variety of sources, including individual surveys and administrative data collected by Old Mutual and WDB, which will allow for an understanding of how financial literacy evolves, the ways individuals change their financial behavior in response to training.

Read more