Teaching About Money in Sub-Saharan Africa

Can you teach about investing if there’s no bank or stock market?

Hello friends! I’m back from Paper Robots summer vacation and looking forward to a new semester of writing. I’ve got some fun new topics in mind, and – of course – updates about the book, which is dropping in January. I’ll send newsletters on Wednesdays instead of Tuesdays this semester, since I teach Tuesday mornings and need to prep.

In June, I had the privilege of traveling to Arusha, Tanzania with Mrs. Paper Robots and an Economic Education colleague, Chandler Jordan, and her husband, Keach. We went under the auspices of local partners Jifundishe (“teach yourself” in Swahili) and the Global Economic Education Alliance, which seeks to build economic education connections internationally. Our mission: to teach Tanzanian teachers and development workers how to teach about money. You can see our Day 1 video here.

Tanzania is much better off than it was 25 years ago. The standard of living has doubled since then, to $3,700 per person. That’s poor compared to the United States, but it’s not the grinding, “less than a dollar a day” poverty that Westerners have long associated with Sub-Saharan Africa. Extreme poverty has declined a lot globally over recent decades. This is one of the great blessings of modern times, and we should all appreciate it more. Tanzania is the most populous country entirely south of the Equator, with 67 million inhabitants.

When Chandler and I were putting together the curriculum to teach, we had to investigate what Tanzanians wanted from economic and financial education. We quickly bumped into one interesting fact: instead of using banks, many Africans save money with their cell phone company. Tanzania, like many countries with little capital development, doesn’t have many large institutions that people trust. But the cell phone company has it all: trust, a large pool of money, a system of credits and debits, and regular communication with millions of people. In Tanzania we had pretty good cell phone coverage wherever we went, including (and especially) the Serengeti. Phone companies there now allow flexible buying and selling of phone credits, to the point where they basically act as banks.

So we had to edit all our lesson plans so they simply mentioned “saving money,” rather than “put money in the bank.” We also removed exact prices from lessons and replaced them with, for example, “one week’s pay,” or “the price of one meal.”

How do Tanzanians invest in this economy? According to the Brookings Institution, “Africa boasts the world’s highest rates of entrepreneurship, with more than 1 in 5 working-age Africans starting a new business and more than three-quarters of the youth planning to start one within five years.” Small businesses are the main way that Africans invest. For them, investment and entrepreneurship are largely the same thing.

That’s good, right?

Not so fast. According to The Economist, “Africa has too many businesses and not enough business… Many Africans continue to see land and property as more reliable places to store wealth. Though the rise in fintech firms should make it easier to save, the shallowness of capital markets means there can also be a lack of investment options.” Sub-Saharan Africans have side-hustles, but that’s about it. But because of a scarcity of infrastructure, loanable funds, and capital, it’s hard to make a business grow.

So what do you teach in this situation? Chandler and I had to remove most of the references in our materials to stock markets. Our audience just didn’t have much access to those. In place of our usual teaching about stock index funds, we had to combine our lessons about saving, investment, entrepreneurship, and human capital development (education).

We also made lessons that were low-tech. We didn’t know if everyone would have an LCD projector or wifi access or the next EdTech product that American school districts are excited about (the ZiggleZabble app or whatever). We shared active-learning lessons that a teacher could do in 45 minutes with little tech. We used classic lessons like the CFPB’s “Bouncing Ball Budgets” and the Federal Reserve’s “One Hen.” I love these lessons and I’m excited to use the entire collection here in the States (email me if you want them).

Tanzanians have mostly the same desires for financial education that Americans do: they want their kids to learn to plan (budget), save, delay gratification, and be hard-working, public-spirited, and creative. They wanted young people to avoid scams and gambling and to embrace education, employment, and entrepreneurship, which, as we learned, doubles as investment in Africa.

The big difference in teaching about money in Africa was the financial system. I learned not to take our rich-world financial infrastructure for granted. Here, financial educators urge people to invest in low-fee mutual funds (e.g. index funds). That way savers become owners of many companies, not just one. With a stock index fund, you can easily open an account, link it to your bank account, and automatically debit savings to it. Markets have had a 10% average return for the last 100 years. This allows people to get high returns over time by spending less than they earn, and making sure the savings are automatically invested. That’s a recipe for long-term financial stability. We should appreciate it by using it.

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Thank you for reading. Are you still here? You are? The article is over, but in case you’re interested, here are a few more highlights from Tanzania.

• Do you have thoughts or experiences to compare and contrast with my trip? Let me know in the comments.

• Our next-door neighbor in Arusha was Pete O’Neal, an expatriate Black Panther who hasn’t been back to the United States since he skipped bail on a gun crimes charge in 1970. We met his wife, Charlotte, who introduced herself by saying, “I’m Tanzanian, but I’m from Kansas City.” She welcomed us to the neighborhood.

• I took a walk by the University of Arusha, which was in our neighborhood near Jifundishe. There happened to be a college soccer tournament going on, and when I stopped to watch the game, a student tapped me on the shoulder and ushered me up to the trophy table to sit with the Vice Chancellor, the chaplain, and an Education professor. The Vice Chancellor was wearing a three-piece suit; I was wearing shorts and a t-shirt. They chose me as the honorary guest to hand out the trophies to the winning teams. As they brought me forward, the student section chanted “Mlete Muzungu!“ which roughly translates to “Bring the Gringo.” The rest of the time they spoke English.

• Tanzanians speak tribal languages at home and Swahili in primary school. High school is taught in English, though many don’t learn to speak it well. In college, instruction in English and all students are fluent.

• After the week of teaching we went on a Safari with Chandler and Keach. (I think “Couples Safari” sounds more fun than “couples economic education institute,” but you be the judge.) You can see our trip in this four-minute video:

• The Maasai tribe has decided not to modernize. They remain pastoral herders. Fascinatingly, you see their villages and herds scattered in between modern Tanzanian towns.

• The Maasai village we toured put on quite a show. They threw traditional cloaks on us and made us join in their bouncy dance (Keach was mortified). The kids sang songs and expected extra donations. They had a little shop full of what they described as “handicrafts made by the women here in the village,” but which were the exact same as the factory-made ones at the souvenir shops. It was kind of a hustle (see “entrepreneurship” above) but a good tourist experience, so we stayed in the spirit of things.

• The weather was wonderful, even though it’s near the Equator. It was 15 degrees (F) cooler than our hometown of Richmond, Virginia.

• Thank you to the wonderful family and friends who watched our kids while we were away. It was our 15-year anniversary, and it was a spectacular once-in-a-lifetime experience.