Assessing the capabilities and incentives of illiterate villagers to engage in formal finance
Orality in this study refers to the modes of thinking, speaking and managing information in social contexts in which most people cannot read or write, or prefer not to. Orality encompasses not just speech but a wide range of activities from pictures and numerals to memory, music and dance. Oral institutions, behaviors, capabilities and practices are most visible in rural communities, but can also be found in urban areas.
The goal of this study is to assess the capabilities and incentives of illiterate villagers to safely and confidently engage in formal savings or payment transactions in a digital or conventional interface. The study provides support for the proposition that illiteracy is a major cognitive transaction cost with the potential to disable the development of formal financial markets among millions of oral users.
This exploratory field study involves a test of selected financial numeracy skills of 80 oral adults in Tanzania and Cambodia, combined with supplementary qualitative evidence from markets and focus groups. The evidence suggests that cash is used as a medium of exchange, but not as a store of value. The paper also presents the results of tests of a simple human-centered design solution that presents financial information to illiterate users in a format that is more closely aligned with the needs of oral users. In field testing in Cambodia and Tanzania the research found evidence of:
Gaps in numeric cognition that are critical to financial inclusion: including decoding multi-digit number strings, saving and planning for the future in cash, and using calendars to manage household resources;
Oral strengths that offer cognitive scaffolding for learning key skills, especially ability to count large numbers with the support of physical cash notes.