Plan your future, Poland
Case study -Schemes for underachieving groups: Plan Your Future, Poland
The „Plan Your Future “ education package was set up by the Microfinance Centre for Central and Eastern Europe and the New Independent States (MFC) in Poland. It’s pilot phase was carried out under the auspices of the Global Financial Education Project (FEP)19 led by Microfinance Opportunities and Freedom from Hunger, with funding from the Citigroup Foundation.20 By providing information and tools on household money management, the education package aims to strengthen the abilities of the poor to manage their money more effectively and, as a result, improve their families’ well-being.21 Based on a preceeding study22 the key gaps of Polish poor households in financial education were identified. These findings were incorporated in the education package, which provides financial education providers with material to run financial education workshops (FEWs). After a pilot test in Poland in 2005, the education package is now available in Polish, English, Russian and Serbo-Croat.
The programme allows for the particular life situations of the poor as they often have precarious livelihood strategies, scarce resources and limited access to financial services. Given an increasing number of complex microfinance products and services available to the poor, including credit for housing and education, money transfers, insurance and saving-accounts, poor clients encounter difficulties to assess their options and use them to their advantage.
For more information on Microfinance Opportunities, please see www.microfinanceopportunities.org/, for more information on Freedom for Hunger, please refer to http://www.freedomfromhunger.org/
The following case study is based on free accessible resources of the programme providers and telephone interviews conducted with Michal Matul, project leader of the MFC, and Sebastian Kopanski, national financial education expert for Poland. Both interviews were conducted on the 27th of June 2007.
Matul, M.; Pawlak, K.; Falkowski, J. (2004): Priorities in Enhancing the Financial Education Among Poor Household in Poland
MFC is a membership-based microfinance resource centre with 107 member microfinance institutions in 27 countries in Central and Eastern Europe and the New Independent States. It has been operating since 1997 as a grassroot institution. MFC mission is to contribute to poverty reduction and human potential development by promoting a socially oriented and sustainable microfinance sector that provides adequate financial services to an increasing number of poor families and micro-entrepreneurs. MFC fulfils its mission by addressing four critical areas of relevance:
- Know-how (MFC Training and Consulting)
- Innovation (MFC Research)
- Policy change (MFC Policy)
- Transnational information exchange (MFC Networking)
The MFC has been involved in financial education projects in Poland and in other countries of Eastern Europe since 2004.
The target group of the project is low-income persons, living in poverty or vulnerable to poverty. These were to be active individuals in settled family circumstances. In Poland around half of the 38 million people live in poverty or are vulnerable to poverty. This means that their living standard would fall dramatically, if a series of unexpected expenses occurred. Of these the MFC expects that 13,5 million are low-income adults who actively seek to improve their lives. This translates into 5 million households with a) a high probability of insufficient financial education and b) a high awareness of their problem.23 It can therefore be assumed that the target group is significant. MFC research has found that low-income families manage their scarce assets in a very reactive manner. The share of the households that admit to have outstanding borrowing is 50% whilst only 20% of the respondents admit to save (see figure below).24
Matul, M.; Pawlak, K; Guzowski, K. : Financial Education for Low-Income People in Practice – An Evaluation Report on a Pilot Test on Financial Education, p. 6
Matul, M.; Pawlak, K. (2005): Towards Sustainable Future , MFC Spotlight Note #15, p. 2
Figure 7: Financial Strategies of Households in Poland
Michal Matul, project manager at the MFC, reports that to date the workshop is addressed to special subgroups of the actual target group. Workshops are running for instance for groups such as unemployed women or disadvantaged adolescents. National and Transnational Context MFC has projects also in Russia, Bosnia and Herzegovina, Ukraine, Georgia and is about to launch activities in Belarus and Azerbaijan. These activities aim to raise awareness of various stakeholders and build capacities of local organizations with a potential to reach large numbers of low-income households. It has also proved to be difficult to raise local funds for a further local development of the programme. In Poland four NGOs and one Banking association are currently working with the education material developed in the course of the programme. Educational Content and Methodology The “Plan your Future” education package was especially developed for the cultural setting in Poland and draws heavily from the international project “Financial Education for the Poor” managed by Microfinance Opportunities and the curriculum that was set up in this context in the first place.
The educational package is intended for financial education providers and provides materials to run Financial Education Workshops (FEWs).
- Learning activity scenarios and guides on how to prepare FEWs,
- A financial education compendium,
- Basic theory and practice on adult learning,
- Guidelines on how to adapt the basic module to the needs of different client groups,
- Materials for workshop evaluation.
The educational package is available in the password protected area of the website www.edufin.org.pl (see figure below).
Figure 2: The project website edufin.org.pl
The educational package is part of an overall concept involving a proceeding study on the actual needs of the target group. According to the national financial education expert Sebastian Kopanski this contributes very much to the high impact of the programme on the target group. The overall goals of the FEW’s can be depicted as follows:
- Teaching the knowledge, skills and attitudes required to adopt good money management skills while keeping the future economic goals in mind
- Combining economic education contents with the promotion of entrepreneurial attitudes, which involves also the raising awareness of the benefits derived from financial planning
- Enable the participants to assess information on financial products and banking services.
Based on these considerations, the content of the FEW’s comprises the below-mentioned topics:
Figure 3: The process and outcomes of FEW’s
Instruction is provided in a workshop format using adult learning principles. Each workshop group comprises a maximum of 20 participants. In order to test their newly acquired knowledge and skills in “real life”, they complete homework assignments using auxiliary materials. An additional visit to a bank provides the participants with hands-on experience in choosing formal financial services. At the end of the workshop, each participant has set up his proper family budget. Depending on the special needs of the audience reached within the workshop, the workshop comprises a scale of 14 to 20 hours.
Results & Innovations
In 2006 approximately 100 people were trained with the “Plan Your Future” educational package. In the pilot phase of the project, 262 participants were reached. The result of the pilot evaluation can be summed up as follows:
- Financial education at a basic level achieves considerable changes in how low-income people perceive their own finances and the opportunities they provide. Therefore the participants have the potential to stabilize their financial situation.
- FEW’s stimulate people to develop a hands-on-mentality and makes people aware of how far they are responsible for their sustainable future. The participants began to believe that long-term financial planning was a viable option (see figure 4).
- Basic financial education stimulated the interest of low-income people in financial services as well as strengthening consumer awareness.
Figure 4: Attitude towards systematic saving before and after the FEW’s
The FEW pilot project has demonstrated that an audience as young as 14 and 15 years old are receptive to the financial education programme. It is also remarkable that the programme produced better results in matters of improvement of knowledge, financial skills and attitude towards money with adolescents than with adults.
The overall retention rate of 82% is also worth mentioning because FEWs were organised for a target group, which generally displays a very negative attitude towards learning. On an individual basis the programme seems to have a strong impact on the attitude of the participants. One of the former workshop participants stated: “There was something going on, there was a chance to go out, stop thinking dark thoughts and meet other people coping with similar problems”, another one said:“I was amazed: I realized I could save money on trivial things. I always thought that this was not worth it”.
In the context of innovation, the project was the first attempt to involve microfinance institutions in financial education matters. As the individual effects of misallocation of private finance are substantially growing with decrease of income it was a consequent step to reach low-income groups through this channel.
Sebastian Kopanski states that the confidence that the workshops give to the participants is the really innovative thing about “Plan Your Future” whereas Michal Matul would say that “Plan Your Future” is so overarching and complete that it easily enables organisations to run FEWs by themselves.
Outreach Approach and Sources of Funding
Sebastian Kopanski, a national expert on financial education states: “It takes a lot of time to not only built up the knowledge, but to also strengthen the necessary attitude and skills.” Michal Matul, project manager at the MFC, agrees: “Financial literacy shouldn’t be considered to be a one-time need.”
The organisation therefore plans to include more distribution channels (e.g. social campaigns or individual counselling) in its attempts to promote financial education.
In order to deliver ongoing support and guidance on a wider scale, the MFC strives to design self-sufficient education models that will motivate organisations, that haven’t been involved in the of financial education debate so far, to get active. The choice of potential financial education providers includes:
- Non-governmental organisations for local development,
- Local governmental bodies (local authorities, employment offices, welfare centres)
- Financial institutions (banks, microfinance organisations, credit unions, insurance companies),
- Primary and secondary schools,
- Consumer organisations,
- Church and religious groups,
- Consumer advocates,
- The media,
- Local volunteer organisations (fire service, farmers’ club, village homemakers’ clubs) and
- Local authority figures (teachers, village heads, priests.
According to the MFC all above-mentioned institutions appear to have an interest to promote financial education as part of their mission, marketing strategy or corporate social responsibility agenda.
Bringing together all these different institution, the MFC hopes that every actor involved in this project will play the part that suits them best, allowing the project to take profit out of the diversity.
Matul, M.; Pawlak, K. (2005): Towards Sustainable Future , MFC Spotlight Note #15, p. 6
According to the MFC, the content of the “Plan Your Future” education package is thanks to its holistic approach adaptable to various settings. For instance workshops could as well take place in classrooms as in adult education or advice centres. It has to be seen though that the findings on the special education needs of low income people are based on the Polish population and therefore not necessarily applicable for other national contexts.
On the contrary the international microfinance context of the MFC with special emphasis on the Eastern European countries, allows the organisation to know about the relevant issues in the respective countries and has a sound understanding of the low-income market as a whole. This would allow the MFC to easily adapt the curriculum to different local needs with low effort. The fact, that the “Plan Your Future” education package is already available in Polish, English, Russian and Serbo-Croatian gives prove to these assumptions.