Language matters

Nosihle Maqhagi, customer success manager at Paymenow, says language is an important aspect of financial literacy.

Terms such as “budget”, “debt”, “savings”, and “credit score” are ones we should all be familiar with, but often aren’t, due to a lack of financial education.

On top of this financial barrier, there is another language aspect that needs to be taken into account – home language. Based on our customer engagements, people are more likely to open up and discuss finances when these issues are addressed in the vernacular than when they are discussed in a second or third language.

This is especially true when you consider that many people who need more cash to make it to the end of the month, and often turn to loan sharks or “mashonisa”, are those in blue collar jobs who have limited formal education. A lot of them didn’t finish high school, and many dropped out in primary school. As a result, they aren’t familiar with financial terms, especially not when these terms are used in English.

When we discuss financial aspects with consumers in the language in which they are most comfortable, however, they open up and ask meaningful questions that are relevant to their life and lifestyle.

A 2018 research project into financial literacy in South Africa measuring and profiling financial literacy in South Africa, found that knowledge of budgeting and interest rates was low, with respondents admitting to not trusting banks. About 24 percent claimed knowledge of how to use savings, insurance, and investment products.

The survey specifically probed:

  • Knowledge and understanding of bad debt;
  • Knowledge and understanding of the National Credit Act (NCA);
  • Knowledge and understanding of credit bureaus; and
  • Knowledge of compounding interest (saving small amounts and investing overtime).

The authors determined that there is no visible difference in the distribution of financial literacy scores by gender, age group and geo-area. However – and unsurprisingly, as this matches what we have found in our own experience – there are substantial differences in the distribution by education, marital status, personal income and race.

Higher income and education levels reflect above-average financial literacy, while white and Asian people also score better for understanding monetary terms. Distribution for black and mixed-race people, however, shows a different situation, one in which a lack of education is impacting their ability to understand financial aspects.

When we remove the language barrier, we can help people understand why saving is important, why debt is not ideal, and how to get to the end of the month without resorting to loan sharks.

In my experience, many of the consumers I interact with do not immediately understand the difference between a loan and responsible early access to wages. They also do not know what credit scores are, or how they can be affected.

When we explain what these are, and take them through the financial literacy module on our app, we are helping educate people and increasing the level of savings in South Africa, which is good for them and good for our economy.

People also take these lessons home to their families, and share their education, creating a ripple effect in the communities they live in.

This is why we have now made it company policy to approach its customers in the language with which they are most comfortable. We feel it is critical to provide financial education to as many people as possible. And the best way to do that is to speak the language they are comfortable with.