TANZANIA FINANCIAL EDUCATION FRAMEWORK, ITS WEAKNESSES AND A WAY FORWARD.

Financial education and consumer protection have been identified as important pillars to achieve financial inclusion. Many countries around the world have taken some measures on these two pillars albeit at different context and magnitude. With the increase of financial providers in the country, financial product sophistication and low financial literacy level, the need for financial education and consumer protection cannot be overemphasized.

Tanzania has recognized the vital role of financial education and it has taken bold measures in the right direction. For example; in 2016 the government launched its five years “National Financial Education Framework/Strategy-Public Private Stakeholder’s Initiative” which aims to be a guide for the implementation and coordination of financial education initiatives in Tanzania. It comprises three components namely: a consumer strategy; a national coordinating and implementation structure; and a results-based monitoring and evaluation framework.

However, the framework has several fundamental weaknesses just to mention a few. First, the framework puts a great emphasis to the private sector to take the lead in the implementation of financial education initiatives and the adoption of responsible finance practices in the country where as the government and its agencies plays leadership role including but not limited to implement financial education initiatives targeted at own employees. Giving the private sector implementation role, ignore private sector especially financial institutions weaknesses such as financial constraints as well as a tendency to promote its interests. It may not be a surprise to find the bank or MFI runs marketing initiative for her products and services disguised as financial education initiative.

Second, despite baseline survey having shown that financial literacy is at low level to the largest segment of the population, a voluntary approach is advocated, rather than legislating for the implementation of financial education. This is to say even the National Financial Education Secretariat (N-FES) or Bank of Tanzania despite being apex body on financial matters of the country and key stakeholder in the framework will act voluntarily and not legally bound to do so.

Third, framework has no funds for implementation apart from government meeting operational costs of N-FES. All that it suggests is to set up Financial Education Fund to provide support for the implementation of financial education programmes by stakeholders. How will it be funded? The framework appears to rely on voluntary contributions and fund raising strategy. It appears that the framework positioned to end up on papers.

Fourth, it is not clear if financial education content to targeted segments is the role of N-FES or of interest groups. While interest groups are critical implementation component, financial education content is a specialty area that requires expert knowledge to address target segments financial education gaps and any relevant future educational need.

What needs to be done to address these weaknesses? It is my humble suggestion that the government should legally institutionalize National Financial Education Secretariat (N-FES) with a law or within existing law, giving N-FES a legal mandate and responsibility to ensure Tanzanians in all segments are financial literate. N-FES should have its own budget from the national budget rather than relying on fund raising campaigns or voluntary contributions. In addition to its current roles and responsibilities, it must assume the leading role in the implementation of financial education initiatives in the country by designing financial education curriculum and training modules targeting all segments of the population and work closely with other stakeholders on the delivery of those modules to the target segments.