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Rural Inclusion on the role of insurance in supporting financial literacy

Rural Inclusion on the role of insurance in supporting financial literacy | Insurance Business UK

Rural Inclusion on the role of insurance in supporting financial literacy

Earlier this year, the case for increased digital education around insurance and other financial services received a significant boost with the news that the University of Nottingham would lead an interdisciplinary project entitled “Financial Education for Rural Communities in Africa: A Digital Approach” in collaboration with the UNCDF (United Nations Capital Development Fund), Rural Inclusion, and Agri Evolve.

Professor Meryem Duygun (pictured left), Aviva chair in risk and insurance, and co-director at the INFINITY Research Centre at the University of Nottingham, and Jack Farren (pictured right), co-founder and MD of Rural Inclusion, recently joined Insurance Business to discuss the programme and its implications for the future.

‘Inclusive economic infrastructure and financial services’

Revealing how the opportunity first came about, Duygun noted it was in October 2022 that she was invited by the Royal Academy of Engineering to join the Frontiers symposium in Addis Ababa, Ethiopia as co-chair for the theme on ‘Inclusive economic infrastructure and financial services’.

“It was a terrific event attended by entrepreneurs, academics, and policymakers with a common interest in promoting inclusive economies in developing countries,” she said. “It was at this event that I met with our project partners Jack Farren, as well as Stephen Waiswa from the United Nations Capital Development Fund (UNCDF).”

As the co-director of INFINITY, the University of Nottingham Inclusive Financial Technology Hub, dedication to promoting financial inclusion is critical to Duygun, and so, she registered the opportunity to utilise the combined strengths of the organisations to develop a product potentially capable of yielding a significant positive impact.

“Fortunately,” she said, “the Royal Academy of Engineering offers seed funding opportunities in support of developing such projects under the Frontiers programme. We feel privileged to have been awarded funding for our research project from such a prestigious funder.”

What is this research project looking to achieve?

Outlining the key ambitions of the project, Farren – one of Insurance Business’s Rising Stars of 2022 - noted that its main objective is to research the effectiveness of both manual and digital delivery methods of financial and insurance education to coffee farmers in the Rwenzori region of Uganda. Rural Inclusion has developed an offline mobile app called Ostrii, he said, which is used by community agents of partner organisations to deliver training to farming communities through the use of animation in local languages.

He added: “Our local partner in the project, Agri Evolve, a coffee company based in the Rwenzori mountains of Uganda, will educate target groups through three methods which will be tested for their effectiveness: Traditional workshops delivered by a community facilitator; Ostrii delivered by a community facilitator; and Ostrii directly accessed by groups.”

The project contains two stages, Duygun said, and as it is currently at the initial stage, the priority is to build a solid foundation for the large-scale analysis implemented at the later stage of the project. This includes partnership-building, routine establishment and familiarisation, and a pilot research project to validate a scalable solution to educate farmers in vulnerable communities in Uganda.

What are the next steps for the teams?

“Moving forward,” he said, “we would like to expand the research project to other countries in Africa. Countries across Africa present different characteristics and face unique challenges. The pilot project in Uganda will provide a firm knowledge base of the best financial inclusion practices that we can serve to formulate comprehensive solutions to promote financial inclusion, we still need to conduct a larger-scale analysis that will take into account a greater range of factors affecting financial inclusion in Africa.”

Meanwhile, for the Ostrii platform itself, Farren said, this project is a significant milestone in its journey, and he believes the results from this project will provide key learnings for Rural Inclusion to improve the development of its solution. Ostrii is currently being used in four countries in Africa and Latin America, and projects such as this, which are researching the effectiveness of the solution, are crucial.

Interest in digital education around financial literacy is certainly increasing, Duygun said, and she believes this is being driven by two major factors. Firstly, policymakers around the world are increasingly seeing the importance of financial education in promoting productivity, addressing financial inequality, and improving the resilience of individuals’ financial health and henceforth the overall economy.

Financial education as a UN SDG

“As such,” she said, “financial education is not only one of the major focuses of the UN Sustainable Development Goals (SDGs) but also among the top issues on governments’ agendas. The second reason is digitalisation. In today’s digitalised society, financial services are becoming much more accessible to many people while also becoming too complex to use for some. The proliferation of mobile services, for instance, enables millions to easily use financial services (e.g., saving, investing and borrowing) with their phones anytime anywhere.”

This trend is being further accelerated by the COVID-19 pandemic, Duygun noted, as many studies suggest that the number of digital service users surged over the past three years. Although digitalisation is a major trend explaining the proliferation and democratization of financial services, online services also increase the risk exposure of individuals who have yet to be equipped with sufficient knowledge to use such tools.

“This opens room for fraud and scams, not addressing but further exacerbating the economic challenges faced by many families,” she said. “Hence, the tension between digitalisation and financial security is another main factor driving the surge of interest in financial education.”

Adding to this, Farren highlighted that while the majority of financial education programmes in Africa are delivered through traditional means, the team at Rural Inclusion understands the importance of developing curriculums that are scalable across countries, while ensuring content that they are relevant and enjoyable to those with a low understanding of financial products and services. This is why the organisation focuses on developing content through animation in local languages, she said, and it’s why it’s seeing a rising demand for such solutions.

Why academics, practitioners, and policymakers are key financial education stakeholders

Having the right partnership in place to facilitate greater awareness of what can be done to improve financial literacy is extremely important. Academics, practitioners, and policymakers are key stakeholders in increasing financial literacy, Duygun said, and each group of stakeholders has unique knowledge and resources that can be deployed to promote financial education.

“Practitioners have first-hand experience of dealing with end users of financial products and services,” she highlighted. “Academics have in-depth knowledge and skills in creating and utilising suitable analytical tools that can help generate impactful scientific insights. Policymakers have access to a wealth of data at the macro-level and have the means to disseminate insights and convert them into practical actions that can benefit society. Combining the respective strengths of these various stakeholders creates significant synergies with tremendous potential in improving financial literacy.”

Such projects represent an enormous opportunity to move the dial on critical social initiatives. For Duygun, the potential to come up with comprehensive solutions to effectively promote financial education in Africa, and equip farmers with essential financial skills to mitigate the risks induced by climate change is ground-breaking.

“Beyond that,” she said, “I believe that our project is a solid foundation upon which to conduct future research on this issue, encouraging new creative research collaborations between a wide range of partners interested in tackling socially and economically significant challenges in Africa, including but not limited to financial education.”

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