A Literature Review of the Level of Financial Literacy in South Africa

The importance of financial literacy, which includes facilitating a comprehensive understanding of how money works and guiding how an individual makes economic decisions, has received considerable attention from scholars. Several studies have disclosed that the less educated and low-income earners display low levels of financial literacy in South Africa. However, despite the numerous studies, none has been able to capture financial literacy through an applicable theoretical lens that situated the issue in a manner that provides a direction on dealing with the findings. To this effect, the paper aimed to: undertake a literature review and analysis that suggest a theoretical framework (vulnerable group theory and the public service theory) that the key findings may be situated to foster better understanding of the problem. The methodology hinges on a critical educational research paradigm. The critical theory assumes that existing reality is shaped by “cultural, political, ethnic, gender and religious factors that interact to create the social system”. The paradigm does not just try to disclose or comprehend societal phenomena but to change the status quo. Thus, this research is not focused on merely highlighting the level of financial literacy in South Africa, but to suggest actions that minimise the ills to transform the situation. The study started with a systematic review of empirical studies on financial literacy with an emphasis on those relating to South Africa. Existing literature on the problem are miniature but very consistent. The literature review presents three classes of cohorts of South African society that still record low levels of financial literacy: the less educated, the low-income earners and the black people who form the bulk of low-income earners. Financial literacy comes with a cost which these classes of citizens may not afford. The lack of exposure to financial literacy may not be properly understood outside the context of some socio-economic profiling of the people, and there may be a need for it to be treated as a public service that ought to be readily available in all equality and equity. This approach may contribute to lifting the vulnerable group of society from perennial financial illiteracy and as a result informs them to make favourable economic decisions. To this effect, there is a need to capture results and findings from existing literature in a theoretical framework to lend itself to easy comprehension of the problem and the implementation of possible feasible interventions.