FINANCIAL INCLUSION | RESULTS BRIEF The Impact of Financial Education through Savings and Credit Cooperatives in Rwanda PHOTO: JESSICA MASSIE Limited financial knowledge, skills, and confidence are associated with suboptimal financial behavior such as low rates of saving, limited usage of deposit and transactional accounts, and overindebtedness. The Government of Rwanda, the World Bank Group, and Innovations for Poverty Action (IPA) partnered to conduct a large-scale randomized evaluation that measured the impact of Phase One of the Financial Education through SACCOs program. The evaluation measured and compared the impacts of two program delivery models—autonomous vs. fixed trainer selection—on SACCO members’ financial knowledge, skills, attitudes, and behaviors. Key Findings »» SACCO members attended more sessions of the Financial Education through SACCOs when SACCOs had autonomy to choose trainers from the local community (“autonomous selection”). »» SACCO members in this autonomous selection group showed improvements in financial knowledge, attitudes, and behaviors, including with respect to knowledge of key rules of thumb, attitudes that emphasize saving and responsible borrowing, and having—and strictly adhering to—a written budget and financial plan. »» They were also more likely to report saving regularly towards financial goals, and to deposit savings in the SACCO. »» However, when trainer profiles were predetermined and limited to individuals with formal roles at the SACCO (“fixed trainer selection”) these improvements were not observed. No improvements in either group were found on account usage, borrowing behavior, or financial security. RESEARCHERS FUNDERS Bilal Zia (World Bank Group) World Bank Group Douglas Randall (World Bank Group) Government of the Netherlands Emmanuel Hakizimfura (Innovations for Poverty Action) COUNTRY PARTNERS Rwanda Ministry of Finance and Economic Planning, Rwanda TIMELINE World Bank Group 2015-2017 Rwanda Cooperatives Agency Rwanda Institute of Cooperatives, Entrepreneurship, and Microfinance SAMPLE National Bank of Rwanda 200 Savings and Credit Cooperatives (4,000 individuals) The Challenge Limited financial knowledge, skills, and confidence are percent of adults were participating in the formal financial associated with poor financial behavior such as low sector, the Government of Rwanda set a policy goal of rates of formal savings, limited usage of deposit and establishing a SACCO (locally known as Umurenge SACCOs) transactional accounts, and overindebtedness. But in each of the country’s 416 sectors.1 By 2012, FinScope data research has shown that financial education programs often showed a significant increase in financial inclusion indica- have little or no impact. tors, with more than 20 percent of adults using a SACCO to save or borrow. The initiative was particularly successful Increasing the reach and quality of financial education was in expanding financial inclusion outside of urban centers. established as a priority in Rwanda’s Financial Sector Devel- According to the FinScope data, more than 80 percent of opment Plan (FSDP) II, as a key means to reach the country’s SACCO members are from rural areas and over 90 percent ambitious financial inclusion goals. In December 2013, of Rwandans live within 5 kilometers of a SACCO. the government launched its National Financial Education Strategy (NFES) following the FSDP II’s recommendations. Given their wide reach in Rwanda and their disproportion- ately rural and newly-banked member base, the govern- SACCOs—member based cooperatives—have played a ment identified Umurenge SACCOs as critical implementing significant role in Rwanda’s financial inclusion progress. In partners for the delivery of financial education. response to the 2008 FinScope survey that found only 21 The Program With support from the World Bank Group,2 the Ministry In May 2016, MINECOFIN began implementation of of Finance and Economic Planning (MINECOFIN) the Financial Education through SACCOs program. The developed and piloted the Financial Education through implementation followed a training-of-trainers model, SACCOs program in 2015. The program was designed to where three representatives from each SACCO attended reflect curriculum and delivery elements that had proven a three-day training by master trainers at the Rwanda to be successful in other financial education interventions, Institute of Microfinance, Entrepreneurship, and notably ‘edutainment’ and ‘rules of thumb’ approaches. Cooperatives (RICEM) in Kigali. SACCO representatives The six curriculum content areas were (a) setting financial received training on the program curriculum itself, goals; (b) making a savings plan; (c) making a budget; as well as adult learning techniques, key facilitation (d) deciding where to save; (e) what to know before you skills, peer teaching guidance, and action planning. borrow; and (f) borrowing honestly and responsibly. Following the training-of-trainers, the SACCO representatives The central theme of the curriculum was the phrase “Nawe assumed responsibility for training additional trainers Birakureba” or “it’s up to you!” which encourages members and members at their respective SACCOs. Participating to take charge of their own finances and financial futures. SACCOs were given a goal of training 500 SACCO The curriculum centered on a typical, rural Rwandan family members within a six-month period. Each participating and neighborhood, who face every day financial issues. This SACCO was given curriculum materials (trainer manuals, cast of characters was repeated in all delivery mechanisms. participant workbooks, audio files, speakers, pencils, pens, attendance sheets) and an early implementation The program curriculum material included ‘edutainment’ grant to help cover administrative costs. Following the radio dramas, classroom training manuals, take-home training-of-trainers, RICEM master trainers provided workbooks, and posters spanning the six content areas. regular follow-up support and supervision via onsite The ‘edutainment’ radio dramas were 5-8 minute audio visits and telephone calls to ensure the timeliness, episodes following the lives of the main characters as consistency, and quality of program delivery. they confront and resolve common financial issues. The radio dramas were recorded using voice actors from the As of the end of 2016, more than 68,000 SACCO popular Rwandan radio drama Urunana. Each episode members across 135 SACCOs had received training concluded with simple and actionable ‘rule of thumb’ under the Financial Education through SACCOs program. messages, for example “Save even one coin every day” or Fifty-four percent of participants were women and “Before you spend, ask yourself: is this a need or a want?” participants attended an average of 3.5 sessions. 1 Umurenge means “sector” in the local Kinyarwanda language. An Umurenge SACCO was established in each of Rwanda’s 400+ sectors in the late 2000s. 2 Support for the program and evaluation were undertaken through the World Bank Group’s Financial Inclusion Support Framework (FISF) Rwanda Country Support Program. The Impact of Financial Education through Savings and Credit Cooperatives in Rwanda Innovations for Poverty Action | 2 W Izigamire make – n’ubwo yaba igiceri kimwe! NA E Buri munsi mu gihe cy’iminsi ijana BIR ! BA AK URE A poster used in the Financial Education Through SACCOs curriculum. The Evaluation The Government of Rwanda, the World Bank Group, Group 1 (autonomous trainer selection): These SACCOs and IPA partnered to conduct a large-scale randomized participated in Phase One of the Financial Education evaluation that measured the impact of the Financial through SACCOs program. SACCOs were asked to select the Education through SACCOs program on members’ three most suitable trainers from the community to lead financial knowledge, skills, attitudes, and behaviors. delivery of financial education at the SACCO level; these The evaluation also compared the efficacy of competing individuals received training and were tasked with program models of financial education delivery. implementation. (65 SACCOs) The study was comprised of two treatment groups, which Group 2 (fixed trainer selection): These SACCOs differed in the degree to which SACCOs could select the participated in Phase One of the Financial Education through profiles of the three trainers who would attend the training- SACCOs program. SACCOs were asked to select the SACCO of-trainers and lead financial education delivery at the manager, a loan officer, and a board member to lead SACCO level, and one comparison group. delivery of financial education at the SACCO level; these Rwanda has one Umurenge SACCO in each of its 416 individuals received training and were tasked with program sectors, across thirty districts and five provinces.4 Of these implementation. (65 SACCOs) 416 SACCOs, 179 had recently participated in a financial education program prior to the study and another five were Group 3 (comparison group): These SACCOs served as a included in the piloting of the Financial Education through comparison group and did not participate in Phase One of SACCOs program. Hence, these SACCOs were excluded the Financial Education through SACCOs program. (70 SACCOs) from the study sample. Of the remaining 232 SACCOs, the researchers randomly selected 200 to be part of the study To measure impacts, researchers used household survey sample. data, collected approximately six and 12 months after the intervention, as well as administrative data on savings These 200 SACCOs were then randomly assigned to one balances from the SACCOs, for up to 18 months after the of three groups: intervention. 4 Rwanda has both Umurenge SACCOS (those established by the GoR beginning in 2009) and non-Umurenge SACCOs. The program and evaluation studied in this paper cover only the Umurenge SACCOs (which far outnumber non-Umurenge SACCOs). Note that we use the terms “SACCO” and “Umurenge SACCO” interchangeably. The Impact of Financial Education through Savings and Credit Cooperatives in Rwanda Innovations for Poverty Action | 3 Results Analysis from follow-up surveys found statistically Overall, these findings show clear beneficial effects significant differences across the groups. First, of the Financial Education through SACCOs program participation was higher among members of among members of Group 1 SACCOs (autonomous Group 1 SACCOs (autonomous trainer selection): trainer selection) and fairly muted effects among 63 percent of members of Group 1 SACCOs attended members of Group 2 SACCOs (fixed trainer selection). more than two sessions of the financial education No statistically significant impacts were found in either program, while this figure is only 54 percent in group on account usage, borrowing behavior, or Group 2 SACCOs (fixed trainer selection). financial security. However, the results among those who attended the trainings (as opposed to all those offered Members of Group 1 SACCOs also showed significant them) suggest that higher levels of participation in the improvements in financial attitudes, financial planning, trainings in the future may reveal broader impacts, knowledge of rules of thumb, as well as budgeting provided more community members are trained. and savings behaviors. In contrast, members of Group 2 SACCOs who attended the trainings show no improvements What explains these results? The analysis shows on any of the outcome measures. Specifically, relative to the significant differences in trainer profiles across the comparison group, members of Group 1 SACCOs were:5 two treatment groups. Trainers in Group 1 SACCOs were significantly more likely to be community members »» More likely to report financial attitudes that and significantly less likely to be loan officers. emphasize saving and responsible borrowing (8.8 percentage points for those who attended These differences in the trainer selection process are the training vs. the comparison group); consequential. Qualitative interviews with SACCO »» More knowledgeable of key rules of thumb, including members and administrative staff reveal that most loan the advantages of borrowing for business/investment officers faced significant time constraints in delivering over consumption (4.6 percentage points for those financial education. Loan officers typically have a full set who attended the training vs. the comparison group); of work requirements and goals; assigning them the further task of teaching financial education in Group »» More likely to report having written a financial 2 was likely quite burdensome. Qualitative interviews plan and strictly adhering to their financial plan also suggest that the larger pool of SACCO members (14.2 percentage points for those who attended which were drawn from in Group 1 included skilled and the training vs. the comparison group); motivated trainers who were eager to deliver financial »» More likely to report having a written budget education and had the time availability to do so. and strictly adhering to their budget (15.4 percentage points for those who attended These findings suggest that small differences in the the training vs. the comparison group); structure of decentralized delivery have important implications for the success of financial education »» More likely to report saving regularly towards programs. The qualitative analysis further points to the financial goals (17.7 percentage points for those who importance of ensuring that those tasked with the delivery attended the training vs. the comparison group); of financial education have the capacity and willingness to »» More likely to deposit savings in the SACCO do so and are properly incentivized. Identifying the types (5 percentage points over the comparison of incentives and levers that can relax such constraints group, according to administrative data). for financial education delivery at the community level is an important and open question for future research. 5 Both intent-to-treat (ITT) and treatment-on-treated (TOT) regression analyses were conducted. Numeric values are shown for TOT regression analysis, which are higher than those derived from the ITT regression analysis. Several of the numeric values represent composite scores. For more detail, see: Hakizimfura, Emmanuel; Randall, Douglas; and Bilal Zia. 2018. “Decentralized Delivery of Financial Education : Evidence from a Country-Wide Field Experiment.” Policy Research Working Paper No. 8521. Washington, D.C. : World Bank Group. Writers: Max Mauerman, Douglas Randall | Editor: Laura Burke | Designer: John Branch www.worldbank.org/financialinclusion | www.minecofin.gov.rw | www.rca.gov.rw | www.bnr.rw | www.ricem.rw NOVEMBER 2018 Project Development: pd@poverty-action.org | General Inquiries: contact@poverty-action.org | www.poverty-action.org Innovations for Poverty Action (IPA) is a research and policy non-profit that discovers and promotes effective solutions to global poverty problems. IPA designs, rigorously evaluates, and refines these solutions and their applications together with researchers and local decision-makers, ensuring that evidence is used to improve the lives of the world’s poor. 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