A comparative legal analysis of the promotion of financial education for low-income earners in South Africa

Abstract

Financial education entails the process of enhancing financial consumers’ understanding of financial products, services and concepts. It is vital for improving financial consumers’ knowledge on better saving, budgeting, investment, financial planning, financial risks and responsible borrowing. Moreover, financial education is also essential to assist financial consumers to make well-informed decisions, judgments and choices regarding the management of their finances for both short and long-term financial goals. Educated and well-informed financial consumers improve their financial resilience against financial fragility, taking into consideration any change that can occur in economic events and/or related aspects. The advent of the coronavirus (COVID-19) pandemic resulted in unprecedented socio-economic effects that have affected the livelihood of most households. This status quo necessitates the adoption of adequate and appropriate financial education programmes and initiatives to strengthen the financial resilience of financial consumers, especially low-income earners in South Africa. This study is premised on the argument that a robust financial education regulatory framework for promoting financial education is essential for curbing financial illiteracy and related problems among low-income earners in South Africa. The proposed framework could enhance the promotion and regulation of financial education for low-income earners in South Africa. The researcher examines the relevant provisions of the National Credit Act 34 of 2005 as amended, the Consumer Protection Act 68 of 2008 as amended and the Financial Sector Regulation Act 9 of 2017, among others, that deal with the provision and promotion of financial education in South Africa. This study seeks to establish whether the current financial education regulatory framework is robust enough to adequately promote financial education for low-income earners in South Africa. To this end, this study provides a comparative legal analysis on the promotion of financial education to draw lessons from Botswana, Australia and the United Kingdom regarding the robust promotion of financial education.