2019 ─ National SchoolBank Project: The Country Case of Georgia

National SchoolBank Project:

The Country Case of Georgia From idea to implementation

summary The importance of financial literacy and the need to promote financial education has been long recognized as an important contributor to individuals’ well-being and broader financial stability. The special attention is being devoted to financial education of children and youth, taking into account a growing complexity of financial markets, the effects of digitalization, and earlier access to financial products that young people have compared to previous generations in many countries around the world. However, the financial skills of children and youth do not seem to match these growing challenges – as the OECD surveys have shown, younger people have lower levels of financial literacy compared to their parents, leading to potential vulnerabilities in the future (OECD, 2014).

There is also a growing amount of evidence that financial education for youth is not sufficient for behavioral change and acquired knowledge retention. Several studies conducted in different countries suggest that a combination of financial education and access to basic financial services is a more effective approach, as behaviors that are developed at a young age are likely to influence one’s actions later in life. The combination of financial education and the access to a basic transaction account that would allow the youth to practice the acquired knowledge and skills formed the basis for the SchoolBank model, developed by Child & Youth Finance International (CYFI). The CYFI’s SchoolBank model, in turn, provided the conceptual framework for a variety of initiatives that were piloted in 10 countries. One of these notable initiatives is the ongoing SchoolBank project in Georgia, which is being implemented in the country since 2015 under the leadership of the National Bank of Georgia (NBG). The SchoolBank project was one of the first large-scale financial education initiatives in Georgia that accompanied the process of the national financial literacy strategy formulation.

The project provided a platform for a multi-stakeholder cooperation, including between NBG and the Ministry of Education of Georgia, which later led to a wider integration of financial education into the mandatory school curriculum in the country.

outlines the major milestones of the project implementation, project timeline, materials developed, teacher trainings, details of cooperation with public, private and civil society sector stakeholders, as well as the first results of the project assessment, conducted in 2017-2018 by the ISET Policy Institute. The results reveal that the SchoolBank pilot succeeded at improving financial knowledge and attitudes of participating schoolchildren; however, the effect on financial behaviors is limited and requires further research.

The SchoolBank pilot in Georgia helped identify key challenges and potential solutions related to project implementation, among them challenges related to effective teacher trainings, educational materials and tools, regional differences between the capital city Tbilisi and other areas, project structure, and project evaluation.

Going forward, NBG will continue to cooperate with the Ministry of Education, commercial banks, educational establishments and NGOs for scaling up the SchoolBank project in Georgia, especially in the rural areas. The SchoolBank pilot in Georgia has set a strong test case for cooperation between the central bank and national educational authorities on a financial education program. As the Ministry of Education and schools in Georgia prepare to start delivering financial education as part of the national school curriculum, the local stakeholders can rely on valuable lessons learned from the pilot SchoolBank project in the process of developing curriculum content, conducting teacher trainings, and designing monitoring and evaluation tools.

NBG remains committed to youth financial literacy and inclusion, and hope that this case study is useful for other countries’ financial supervisors, educational authorities, commercial banks, nonprofits and other stakeholders planning to develop financial education projects and products for the youth. NBG is prepared to engage in further experience-sharing with interested parties, including, by providing the Georgian SchoolBank module, teacher training manual and other practical materials, as well as by offering study visits.

The current publication aims to be a practical case study of the SchoolBank project in Georgia. The document

Authors: Mariam Guniava, Head of Financial Education Division, National Bank of Georgia Karina Avakyan, Consultant, Dimes Consultancy Irakli Barbakadze, Researcher at Private Sector Development Research Center, ISET Policy Institute (Chapter 8 of the Case Study)

Editor: Abram van Eijk, Child & Youth Finance International Design: quint studio │ www.quintstudio.com Visuals: National Bank of Georgia, Child & Youth Finance International Disclaimer: The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of the National Bank of Georgia.

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TABLE OF CONTENTS

 Product Development Workshop for commercial banks, NBG, 2017

1. SchoolBank Concept: From Idea to Implementation

4

Background

4

5

What is SchoolBank

Implementation of CYFI SchoolBank project

6

2. Financial Education and Financial Inclusion in Georgia

7

Financial Education

7

Financial Inclusion

9

Financial sector consumer protection framework in Georgia

Youth and Investments in Georgia

10 11

3. SchoolBank Project Model in Georgia

12

4. Project implementation & timeline

14

5. Educational Component of SchoolBank project

15

6. Teacher Training

16

7. Product Component of the SchoolBank project

17

8. Project Evaluation

20

Data

20

Evaluation of the SchoolBank pilot

21

9. Lessons learned and ways forward

24

Next Steps

10. References

26

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1. SchoolBank Concept: From Idea to Implementation BACKGROUND In the modern world, in the environment of continuous innovation, growing abundance and complexity of financial services, and persistent marketing from financial institutions, a growing number of people experience challenges in managing personal finances, and consequently, making sound decisions can be difficult, especially in the absence of knowledge of certain baseline financial concepts. Empirical evidence shows that financially educated people can make informed choices on savings, investments, loans and other financial issues, while lack of financial literacy may lead to undesirable outcomes, such as over-indebtedness, bearing excess fees, endangering safety of savings, and more. The children and youth of today need to be prepared to make decisions, manage risks, and engage in financial transactions from an increasingly early age. This makes the issue of financial education of the younger generation even more prominent. At the same time, national surveys in many countries show that young people have amongst the lowest levels of financial literacy – the issue that policymakers around the globe are trying to address. Starting back in 2005, the OECD recommended that financial education should be taught in schools as early as possible. Integrating financial education into the school curriculum from an early age allows children to acquire the

 Global Money Week Celebrations, NBG Money Museum, 2019

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knowledge and skills to build responsible financial behavior throughout each stage of their education.

Many studies that emerged in recent years have also shown that financial education is often not enough.

Studies conducted in different countries1 suggest that a combination of financial education and access to basic financial services would be the most beneficial in terms of behavioral change and acquired knowledge retention, as behaviors that are developed at a young age are likely to influence one’s actions later in life. The combination of Economic Citizenship Education (Financial, Social and Livelihoods education) and Financial Inclusion (access to a child and youth friendly bank account) for young people formed the basis of CYFI’s Theory of Change. Research shows that children and youth are more likely to continue using financial products when financial education is complemented by the opportunities to apply what has been taught. Moreover, such a combination is in line with experiential learning theory that emphasizes that the possibility to practice what one learns will have a positive effect on knowledge retention2. Thus, these theories have formed the basis of the SchoolBank concept.

What is SchoolBank The SchoolBank initiative of Child & Youth Finance International aims to provide a new innovative model of financial inclusion that combines quality Economic Citizenship Education and access to basic banking services, such as saving and/or payment facility. However, the concept of ‘schoolbanking’ was not invented by CYFI – it goes back to the 19th century and is connected to the first savings banks in Europe. It is believed that the first school bank was started in France in 1834, and the momentum then spread across many other European countries including Belgium, England, Austria, Germany, the Scandinavian countries, Switzerland, Brazil, Chile and to the United States during the rest of the 19th and beginning of the 20th centuries.3 Throughout the years, different methods of collecting and banking children’s savings were used – with a passbook, stamp cards, automatic receiving letters that were similar to school savings boxes, and other methods.

CYFI’s Schoolbank approach initially focused on children and youth between 6 and 18 years of age, although according to the country-specific context, a subset of this age group can be targeted instead (e.g. only primary or secondary school, university students, etc.). The objective of SchoolBank is to provide access to basic financial services and education through schools. The basic model of SchoolBank follows two ways: •

First, by imparting elements of financial, social and livelihoods education through schools. The schoolteachers are trained to deliver the necessary curriculum in each school.

•

Secondly, by partnering with the financial service providers, developing the appropriate and safe financial products and services for young people, training on its use, and delivering them through the program.

 Global Money Week Celebrations, NBG Money Museum, 2019

In terms of services, the SchoolBank model delivers three basic services to children and youth: 1.

One-time banking initiation: Banking partners provide child-friendly saving and payment accounts and supply account collaterals, such as passbooks, ATM cards, and checkbooks.

2.

Ongoing transaction support: Banking partners and schools provide withdrawal and deposit facilities, transfer of cash between accounts, balance inquiry, and interest accrual. Additionally, technology and telecom companies can provide technological solutions to improve transaction support.

3.

Continuous educational inputs: NGO partners, financial regulatory authorities, and Ministries of Education provide educational component through innovative delivery methods.

Thus, the SchoolBank model requires a multi-stakeholder approach, including involvement of at least the national coordinator (ideally the national authority, responsible for the financial education agenda in the country), Ministry of Education and educational authorities, financial institutions, as well as implementing schools and other educational institutions implementing the model. All products and services offered as part of SchoolBank project have to be tested against Child & Youth Friendly Banking Principles (see section 7) and follow the Economic Citizenship Education (ECE) principles, which introduce financial, social and livelihood education at all stages of childhood, aiming for meaningful behavioral change.

1See examples: CFED (2014) Financial Education and Account Access Among Elementary Students, Child & Youth Finance International (2016) Financial Inclusion for Children and Youth.

2This theory and its background and practical application to youth financial inclusion is discussed in more detail in CYFI & WSBI publication on Schoolbanking (2016) 3CYFI & WSBI (2016)

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Implementation of CYFI SchoolBank project Over the course of 2014-2018, CYFI and its network partners piloted more than 10 SchoolBank pilots in different regions throughout the world, to assess their efficacy in terms of impact on children’s knowledge and behavior, as well as the potential for a scale-up of SchoolBank model in the respective country. The implementation of each SchoolBank project was set up on a country level and used a pilot approach to launch. In order for the CYFI team to be able to best support the partners in the countries when implementing the SchoolBank pilots the development of an extensive series of material was needed. Such materials (which were available to partners upon request) included: an implementation guide, an implementation framework, a standard PowerPoint presentation in various languages, a guide on funding SchoolBank projects, a rapid product assessment in cooperation with the national authorities, a rapid curriculum assessment, an evaluation methodology and evaluation guide, child friendly communication guidelines to be used by the banks, a homework booklet for parental engagement, and a specialized curriculum

 Teacher training for the SchoolBank project, NBG, 2018

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(composed in collaboration with Aflatoun), composed of 14 lessons, which are easily adaptable to local contexts. While it was not compulsory to use the CYFI materials, and partners were free to use their own curriculum (given it is in line with ECE framework). The use of CYFI materials, those were provided to partners free of charge.

The current case study document is dedicated to the details of the implementation of one of the first CYFI SchoolBank pilots in Georgia. The following chapters are devoted to the overview of the national financial education and financial inclusion policies and regulations in the country that provided a broad background for the project’s implementation, then go in depth analyzing the stakeholder process, presenting the material developed and used, as well as first project evaluation results, followed by the discussion of lessons learned and recommendations for the way forward.

 Global Money Week Celebrations, NBG Money Museum, 2019

2. Financial Education and Financial Inclusion in Georgia Financial Education Georgia is a lower-middle income country in South Caucasus region, with a population of 3.7 million people, and with a sizeable and a well capitalized banking sector. Liberalization and modernization of the Georgian economy over the last 15 years, and the significant structural transformation and the growth of the financial system, led to the expansion of the consumer market, development of the variety of products and services offered by financial institutions, and increased access to different types of credit. Innovations led to complex products, while increased competition led to aggressive marketing campaigns pursued by financial institutions. On the one hand, such developments can bring benefits to the consumers: competitive environment can help improve the quality and the variety of financial services offered on the market, as well as lower costs, allowing the users to make better choices. However, these developments can also create challenges for people who do not know how to analyze financial products’ terms and conditions, weigh risks and opportunities associated with different products, and compare prices, thus increasing the likelihood of making financial mistakes in the absence of relevant knowledge and guidance.

population; people facing special life events, such as going to college, buying a home, getting married, etc.

These risks are particularly high for vulnerable groups of population, including young persons. Owing to the ever-growing financial market, as well as technological advances, younger generations across the globe start using financial products and making independent financial decisions at an earlier age than their previous generations. In Georgia too, the youth will have to bear more responsibility for their financial wellbeing and associated risks in the earlier adulthood than the generation of their parents. Therefore, over the last years the issue of financial literacy, and notably, financial literacy of the youth, has gained a prominent position in the policy agenda of many countries, including Georgia.

Over the recent years, several studies have been conducted measuring general education levels, as well as financial literacy in Georgia.� In 2016, as an initiative of NBG and with the support from the Development Facility of the European Fund for Southeast Europe (EFSE DF), a comprehensive, country-wide study of adult financial literacy and financial inclusion levels was carried out, which served as a baseline for developing the National Strategy of Financial Education�. Unfortunately, no largescale studies of financial literacy of the youth under the age of 18 have been conducted in Georgia at the moment.� The objectives of the 2016 adult financial literacy and financial inclusion study were to analyze the levels of financial literacy and inclusion in the county by evaluating financial knowledge, behaviors and attitudes of the population and deriving financial literacy scores.

The study also aimed to measure product awareness and use, and research respondents’ money management styles. The survey results were analyzed based on age, gender, region, settlement type, employment, income levels, and other demographic parameters. Key findings of the 2016 study can be found in Box 1. A follow-up adult financial literacy and inclusion study was conducted in Georgia in 2019, as part of the Technical Assistance project on financial education, offered by OECD/INFE and the Ministry of Finance of the Netherlands. Results will be published in late 2019.

In 2016, the central bank of the country, the National Bank of Georgia (NBG), with the involvement of different stakeholders from public entities, private financial sector and civil society, and with the support from the Savings Banks Foundation for International Cooperation (SBFIC), approved the National Strategy for Financial Education. The mission of the Strategy is to develop the guiding principles and strategic directions for enhancing financial literacy levels of population in Georgia.

The Strategy identifies following target groups: the young generation - pupils and students; unemployed population; people employed in large companies/organizations; rural

The strategy maintains that financial education should start from an early age, so that personal finance management becomes an integral part of individuals’ daily life, as most psychology research shows that it is much harder to influence human attitudes and behaviors in adulthood. As children and youth are the future generation of the country, in the long run, by investing in youth financial education, the country invests in future financial wellbeing of its population. In this endeavor, NBG closely cooperates with the Ministry of Education, Science, Culture and Sport of Georgia (hereinafter, Ministry of Education). Already in 2018, with the involvement of the National Bank of Georgia, Ministry of Education approved the updated national curriculum for grades VII-IX, where financial education was introduced as part of civics education. Ministry of Education and NBG also cooperate on providing financial education through informal channels (SchoolBank being one example of an informal financial educational project), as well as through vocational and higher education channels.

�For example, Standard and Poor’s Global Finlit Survey (2014) �A follow on financial literacy study was conducted by OECD in 2019, as part of the Technical Assistance project on Financial Education. Results are expected to be published 2019.

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National Financial Literacy and Financial Inclusion study in Georgia, NBG, 2016

While the study revealed that financial literacy levels of the Georgian population is below the OECD country average, both positive and negative trends can be observed in the directions of financial knowledge, behaviors and attitudes, namely: •

Most of the population has a satisfactory knowledge of basic financial terms, but struggles with complex questions – e.g. compound interest, time value of money, inflation;

•

The population displays mixed financial behaviors – e.g. 89% pay bills on time, but 41% do not set long-term financial goals. Less than 40% managed to save money last year, out of which, only 17% save at banks; 75% are unprepared for unexpected financial challenges; 45% has borrowed when their income did not cover their expenses.

•

Most of the population approaches borrowing with caution, yet considers that “money is there to be spent”; about 66% focus on satisfying short-term financial wants instead of long-term financial goals, indicating that many do not see money in terms of its future potential and it is likely that these people will not make adequate savings.

Other findings: •

Highest levels of financial literacy were displayed by respondents aged 36-45, closely followed by the respondents between the ages of 46-55, 26-35, and 18-25. This could be explained by the wider experience that the group of 36-45 year olds have had with modern financial products throughout their adult life.

•

In contrast, compared to the rest of the population, elderly persons have displayed the lowest levels of financial literacy.

This is likely related, among other factors, to the lack of experience with and resistance towards using modern financial products by this group. This, in turn, might be due to the negative memories of currency depreciation and loss of savings in 1990s after the collapse of the Soviet Union, resulting in the loss of trust towards financial institutions.

•

Only 14% of the “Financially Responsible” segment of the population are young people (18-25 years). This segment unites people characterized by practical financial behavior, cautious approach to spending, close control of finances, timely bill payment, and financial planning. Further, only 15% of the “Business-minded” segment – i.e. people who set and achieve long-term financial goals, carefully distribute income to make savings, and are ready to take some risks when investing money - are 18-25-year-olds.

•

About 13% of the “Financially Fearful” segment are 18-25 year-olds - in fact, the youth are the least financially fearful age group of the entire population. Further, it seems that many young people tend to live for today, finding it more satisfying to spend money than to save it for the long term (e.g. spontaneous buying, borrowing for unexpected purchases is somewhat common in that age group).

Cooperation between NBG and Ministry of Education on Curricular financial education In 2016, NBG and the Ministry of Education started working on developing the financial literacy curriculum for the primary educational level (grades VII-IX), and in 2018, the Minister of Education approved the New National Curriculum, in which financial literacy topics are integrated as part of the civics education subject “Citizenship”. Teaching of the new curriculum in Grade VII will start in Fall 2019, and in Grades VIII and IX – in the upcoming years. The core topics of financial literacy curriculum include saving, budgeting, financial decisionmaking, borrowing, investing, frauds and financial security, consumer rights and responsibilities. The curriculum also includes a number of basic economics topics, such as markets and prices, supply and demand, and resources and scarcity.

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 Global Money Week Celebrations, NBG Money Museum, 2019

Financial Inclusion Broadly defined, financial inclusion entails access to safe, affordable and appropriate financial products and services (payments/transactions, credit, savings, insurance) for individuals and enterprises, delivered in a responsible and sustainable manner. Access to finance helps households and companies meet financial needs arising in everyday life, as well as make appropriate plans for achieving long-term goals (e.g. saving for retirement, for purchasing a house, for sending children to university, expanding own business, etc.), and handle unexpected expenses (arising from illness, loss of income, business downturn or other unforeseeable events).

Having a basic transaction/current account allows people to learn about and use other financial services – including saving instruments, various types of credit and insurance – that will ultimately help them improve their financial wellbeing. Thus, it is no wonder that financial inclusion has emerged to the forefront of policymakers’ and regulators’ agenda globally, including in Georgia.

Georgia’s financial sector has seen significant growth and transformation since the country regained its independence from the Soviet Union in 1991. The sector is dominated by commercial banks, with banks holding over 92% of the sector’s assets. As of June 2019, 15 commercial banks, 57 microfinance organizations (MFOs), 2 credit unions, 174 non-bank, non-MFO loan issuing entities, 17 insurance companies and 2 stock exchanges are registered on the Georgian market.� The National Bank of Georgia (NBG) supervises the financial sector for the purpose of facilitating the stability and transparency of the financial system, as well as protecting consumers’ and investors’ rights. According to the assessment by the joint IMF and World Bank mission under

the Financial Sector Assessment Program (FSAP) of 2014, NBG’s advanced supervisory approach is comprehensive, forward looking, and risk-based, proportionate to the systemic relevance of supervised banks.� Due to the variety of and competition between financial intermediaries, as well as significant expansion and accessibility of financial services across the country, the level of access to finance for individuals in Georgia is not low. Quite on the contrary, Georgia often outperforms comparable economies from Eastern Europe and Central Asia in terms of access to finance. To illustrate, according to IMF’s Financial Access Survey of 2018, there were 2,248 deposit and 1,173 loan accounts with commercial banks per 1,000 households in 2017.� Further, as of the end of 2018, there were about 3,382,825 unique deposit account holders at banks (this includes both current/transaction and savings accounts), and in total, there are 6,533,006 active accounts at banks. Further, about 1,917,930 adults have loan accounts at commercial banks and in total, 3,499,740 loans have been disbursed by commercial banks to individuals.�� However, access to finance alone is not sufficient for sustainable financial inclusion. In the absence of a robust and effective regulatory framework, including, in the direction of consumer protection, ready access to credit can lead to increased financial vulnerability, excessive borrowing, and, ultimately, financial exclusion. Therefore, when facilitating financial inclusion, policymakers should also strengthen supervisory and consumer protection approaches. The next section discusses consumer protection framework in Georgia.

�Source: National Bank of Georgia �IMF (2015) Georgia : Financial Sector Assessment Program-Detailed Assessment of Observance of the Basel Core Principles for Effective Banking SupervisionTechnical Note. Available at: https://www.imf.org/en/Publications/CR/Issues/2016/12/31/Georgia-Financial-Sector-Assessment-Program-Detailed-Assessment-ofObservance-of-the-Basel-42589 �IMF Financial Access Survey (2018): http://data.imf.org/?sk=E5DCAB7E-A5CA-4892-A6EA-598B5463A34C ��Source: National Bank of Georgia

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Young adults and financial inclusion in Georgia According to the World Bank’s 2017 Global Financial Inclusion Survey (Global Findex), only 30.7% of Georgian young adults aged 17-25 stated that they have a current or savings account. This number is lower than NBG estimates and is likely driven by the fact that many young people may not realize that when they get a payment card or a loan, they also get a current account. It is also possible that many young people do not actively use their current/savings accounts, and therefore, do not recall owning them.

Although youth account ownership has been improving over the recent years (likely driven by the developments in financial technology and the emergence of youth-friendly financial products), it still falls below the analogous figures from many comparable economies. As the authors of ADB Institute’s “Financial Inclusion, Financial Literacy, and Financial Education in Georgia” suggest, this is likely driven by the low rate of economic activity and high rate of unemployment among the youth in Georgia.�� To illustrate, according to the official figures from the National Statistics Office of Georgia, 61,2% of the youth between the ages of 20–24 were economically active, and over 30% of them were unemployed in 2018. Low rates of economic activity and resulting low economic independence, in turn, can lead to the lack of financial inclusion among the youth. Therefore, supporting youth employment, encouraging banks to develop more products for the youth and promoting advancements in financial technology can help foster financial inclusion of the youth. Interestingly, account ownership can, in turn, help promote youth employment – According to ILO’s "Exploring the linkages between youth financial inclusion and job creation: Evidence from the ILO schoolto-work transition surveys," access to appropriately designed youth-friendly financial services can help young adults save and invest in their education to improve their future employability on the one hand, and transition into employment, on the other, by starting and growing their own income-generating businesses.��

Financial sector consumer protection framework in Georgia To protect the rights of financial sector’s consumers and investors, and to support financial stability in the country, NBG supervises the financial sector - commercial banks, nonbanking institutions (MFOs, credit unions, non-bank, nonMFO loan issuing entities, currency exchange units) and the securities market.

In 2011, NBG established its first Consumer Protection Division and introduced the Rule on Providing Essential Information to Commercial Bank Consumers when Rendering Banking Services, which established disclosure requirements for commercial banks, covered retail consumers only, and applied to loans and deposits up to GEL 50,000 with an additional lower cap for loans at GEL 300. In 2017, in response to the expansion of the consumer market and emergence of new types of financial products and intermediaries, as well as in line with the provisions of relevant EU Directives,�� NBG obtained the authority to supervise previously unregulated members of the financial sector. Accordingly, the Rule on Providing Essential Information to Commercial Bank Consumers when Rendering Banking Services was replaced by the Rule on Consumer Protection for Financial Organizations. The new Rule applies not only to commercial banks, but also to MFOs, credit unions and non-bank, nonMFO loan issuing lending entities, such as pawnshops and payday lenders, and covers both retail consumers and legal entities. The new Rule further covers loans and deposits w/upper cap at 200,000 GEL with a lower cap for loans at 300 GEL. The Rule establishes requirements regarding the information to be disclosed when offering, selling and in the lifespan of financial products; format of agreements and key facts statements; rules on early repayment, inactive products, distance products and advertisements, and other important aspects of consumer experience.

of 18. However, existing Georgian legislation establishes the age at which minors independently, or with parents’ / legal guardians’ consent, can open and manage bank accounts.

More specifically, the Civil Code of Georgia establishes that any person under the age of 18 is a minor. Children under the age of 7 have no legal capacity, which means they cannot enter into agreements – including, financial agreements – independently, while minors between 7 and 18 have limited legal capacity, which means they can enter into agreements, but the consent of their legal representative is required.

Upon receiving parent’s/legal guardian’s initial consent to enter into an agreement with a bank and open an account, children between 7 and 18 can independently carry out the following operations on their bank account: depositing or withdrawing money at bank branches, using debit cards at ATMs, POS terminals, and internet, and accessing and utilizing internet banking services. The Georgian legislation allows for consent from the parent/legal guardian to be obtained once, and there is no need for obtaining consent anew for every operation carried out within the frames of the same agreement, which allows minors a significant level of independence in managing their accounts. However, to minimize risks, commercial banks can decide, in line with their internal procedures, to request parental consent before every operation on a child’s account.

Even though the existing Georgian consumer protection Rule does not include specific provisions regarding minors, since 2017, NBG and CYFI provide joint guidelines on youthfriendly banking products to commercial banks interested in developing financial products for children and youth (more details are provided in Box 5 in Section “Product component of SchoolBank project”).

No particular provisions in the Rule on Consumer Protection for Financial Organizations focuses on minors below the age ��ADB Institute, “Financial Inclusion, Financial Literacy, and Financial Education in Georgia”. ��International Labor Organization (ILO), “Exploring the linkages between youth financial inclusion and job creation: Evidence from the ILO school-to-work transition surveys”. ���NBG is working on harmonizing its regulations with relevant EU directives and regulations, in line with the EU/Georgia Association Agreement, which was signed in 2014, and which entered into force in 2016.

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 Global Money Week Celebrations, NBG Money Museum, 2019

Youth and Investments in Georgia There is a growing body of literature suggesting that financial literacy programs in schools should include lessons about investing so that students understand the importance of longterm financial planning (including, for the retirement) and learn to analyze risks and rewards related to investments from an early age.�� Investor education, too, works best when students get an opportunity to apply theoretical knowledge in practice through simulations or real investments in the stock market.�� As we mentioned above, according to the Georgian legislation, minors with limited legal capacity can enter into agreements with the consent of their parent/legal guardian, which applies to investment agreements as well. Upon receiving the consent from their parent/legal guardian and providing required documentation, minors could potentially invest by buying securities, such as bonds and shares.

However, due to the underdevelopment of the Georgian securities market and the low level of investor literacy, retail investment activity in Georgia is rather low. NBG and other local stakeholders are working actively to support the development of the capital market in Georgia, among others, by improving the legal and regulatory framework, updating market infrastructure, and educating market participants and potential investors. As part of the youth investor education initiative, investing is included in the new national school curriculum for primary level (grades VII-IX), approved by the Ministry of Education in 2018, and is covered by the Georgian SchoolBank program as well.

In addition, NBG hosts periodic competition programs for university students to help them gain essential knowledge and skills for financial valuation and for assessing companies’ investment attractiveness.

��For example, see OECD/INFE Core Competencies Framework on Financial Literacy for the Youth (2015), and Young Money’s Financial Education Planning Framework for 11-19 years (2018) ��For example, see Shares4Schools Competition in the UK, which allows high school children to build upon their financial knowledge and invest in the real stock market: https://www.shares4schools.co.uk/

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3. SchoolBank Project Model in Georgia

Discussions about the SchoolBank project between Child & Youth Finance International (CYFI) and the National Bank of Georgia began in late 2015, following the launch of several small-scale CYFI SchoolBank pilots in other countries of Central & Eastern Europe��. From the beginning NBG has taken on the role of the national initiator and coordinator of the project in Georgia, making the SchoolBank project one of its first relatively large-scale financial education initiatives. The CYFI Secretariat served as a high-level advisor and content provider throughout the process.

Establishing and maintaining close partnerships with key local stakeholders was essential for ensuring the effectiveness and sustainability of the SchoolBank project.

In addition to NBG and CYFI, the main partners involved in the implementation of the SchoolBank project in Georgia include the Ministry of Education, National Youth and Children’s Palace (NYCP), and Bank of Georgia (BoG), a commercial bank that received child and youth friendly product endorsement from CYFI in 2016. Figure 1 shows the project model of SchoolBank in Georgia.

Figure 1.

SchoolBank project model in Georgia

COORDINATOR: NATIONAL BANK

Educational authority: Ministry of Education

Schools

Banking sector

National Youth and Children Palace

Individual commercial banks

��Pilot CYFI SchoolBank projects, supported by European Fund for South Eastern Europe took place in Macedonia, Moldova and Romania.

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KEY PARTNERS

the Ministry of Education NBG initiated cooperation with the Ministry of Education in 2016 to facilitate the introduction of financial literacy in schools through curricular (formal) and extracurricular (informal) channels.

the National Youth and Children’s Palace NBG has been cooperating with the National Youth and Children’s Palace (NYCP) - a multidisciplinary educational and training establishment affiliated to the Tbilisi City Hall, offering informal education to the youth between the ages of 6 and 18 - as part of the Global Money Week and World Savings Day celebrations since 2014. In 2017, the partnership between the two organizations was formalized: NBG and NYCP signed a Memorandum of Understanding (MoU) to cooperate on the topic of financial education, NYCP teachers were trained for the SchoolBank program, and NYCP started offering SchoolBank classes to its students.

 Teacher training for the SchoolBank Project, NBG, 2019

the Banking sector in Georgia Since 2015, NBG has been working with the retail commercial banks in Georgia to encourage them to join the SchoolBank project by developing and/ or scaling up the offer of financial products for the youth market.

Bank of Georgia

Bank of Georgia (BoG), one of the largest commercial banks in Georgia, has been cooperating with NBG as part of Global Money Week, World Savings Day and other financial literacy initiatives since 2012. In addition, BoG is one of the members of the Steering Committee for the National Strategy for Financial Education��, established in 2017. BoG was the first bank to develop the youth product in the country, as well as their own educational component, that became part of the SchoolBank project.

��National Strategy for Financial Education of Georgia (2016)

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4. Project implementation & timeline • June: NBG and Ministry of Education specialists participated in CYFI Summit and Child and Youth Friendly Product Development Workshop held at the National Bank of Romania, Bucharest.

2015

• August: NBG, Ministry of Education and NYCP specialists took part in CYFI’s Training on Implementing Effective Financial Education and Inclusion Programs held in Chisinau, Moldova, with the support from the Visegrad Fund and the Development Facility of the European Fund for Southeast Europe (EFSE DF).

The training focused on empowering trainers and teachers on delivering financial education using active learning methods.

• NBG and CYFI began talks with the Ministry of Education to facilitate introduction of financial education in schools as part of informal, extracurricular education.

• NBG held a presentation and distributed information regarding the SchoolBank project to commercial banks. The first private bank - Bank of Georgia (BoG) - expressed interest to participate.

• September 2016: Bank of Georgia (BoG) launched a sCool Card, accompanied by an educational component called Business School, developed with the involvement of child psychologists and approved by the Ministry of Education.

• BoG received a Product Endorsement from CYFI, meaning that sCool Card complies with CYFI’s Child and Youth-friendly Banking Principles.

• Between October and December 2016, 175 students across 10 schools of Tbilisi took part in the pilot sCool Card Business School classes, led by the trainers from BoG, and sCool Cards were distributed among the program participants.

2016

• March: NBG translated and adapted the SchoolBank’s standard educational module to the Georgian context. The Ministry of Education approved the SchoolBank educational module, highlighting its usefulness in facilitating social, civil and financial education and skills-creation among the schoolchildren.

• NBG adapted the quantitative evaluation tools, developed by CYFI, to use for assessment of the SchoolBank project.

• April 2017: NBG conducted the first 3-day training of teachers for 13 teachers of NYCP.

• September 2018: Ministry of Education offered public schools a new program supporting informal education – “School Activities Support Program” - that replaced “Free Lessons” and similarly provided grants for teaching SchoolBank. However, the new program was offered to schools with maximum 70 students in grades VII-IX, and thus essentially targeted schools in small towns and rural areas only. Due to the challenges related to the communication with the regional schools, and the novelty of financial literacy – especially in rural areas - a smaller number of schools expressed interest to participate in the project.

2017

• July 2017: CYFI conducted a 2-day Product Development Workshop for Georgian commercial banks in Tbilisi with the support of NBG. 20 participants from 7 commercial banks that serve retail clients participated in the workshop.

• Ministry of Education distributed information about the SchoolBank project across all schools of Georgia and offered interested public schools grant opportunities to teach SchoolBank lessons as part of the “Free Lessons” program.��

• In order to establish new and sustainable partnerships with other local stakeholders, in September 2018 NBG and Tbilisi Youth House - another public multidisciplinary educational organization under Tbilisi City Hall, which offers informal educational classes to children in 9 districts of Tbilisi, started discussing the possibilities of cooperation on SchoolBank project.

• At the same time, NBG also held meetings with private school representatives to raise the awareness of the project among private schools and involve them in the project as well.

2018

• NBG continued its communication with commercial banks on the importance of developing child and youth-friendly products, and invited more banks to participate in the training.

• October 2018: NBG conducted another 3-day training, in which teachers from 3 public schools from Kvemo Kartli and Samegrelo Regions, and 9 private schools from Tbilisi, as well as 2 representatives from Tbilisi Youth House and 4 representatives from 2 commercial banks – BoG and TBC Bank participated. BoG plans to continue providing financial literacy classes in schools throughout 2019-2020 and to integrate elements from the CYFI/NBG SchoolBank guidebook with its sCool Card Business School educational module. TBC Bank developed a debit card for schoolchildren – “No. 1 Card” – in 2017 and is planning to join the SchoolBank project in 20192020.

• Throughout 2018, NYCP continued offering SchoolBank lessons to students – this time, as part of its Social and Financial Literacy Club, meaning that students outside of the Mathematics Club can also attend SchoolBank lessons.

• ISET Policy Institute, with the support from the Administration of the President of Georgia, completed the evaluation of the SchoolBank pilot in Georgia. On October 18, 2018, ISET Policy Institute researches presented the results of the study at a roundtable discussion, attended by the Governor of NBG, representatives from the Ministry of Education, financial institutions and other public and private stakeholders. Teachers who taught the pilot SchoolBank classes also participated and shared their practical experience. The attendees singled out key successes and challenges of the project and discussed future steps. Key findings of the study are discussed in chapter 8 of this Case Study.

• July 2017: NBG and NYCP signed a memorandum of understanding (MoU), committing to further the cooperation between the two parties on financial education. In October 2017 NYCP started offering SchoolBank lessons as part of its Mathematics Club.

• September 2017: NBG conducted a 3-day training for teachers recruited from 11 interested public schools from Tbilisi, Rustavi and Mtskheta regions. Students from Ilia State University, another member of the Steering Committee for the National Strategy for Financial Education, also participated in the training to assist the schoolteachers during the SchoolBank pilot lessons and act as multipliers during the next stages of the project.

• October 2017: SchoolBank classes were piloted in Grades VII and VIII of the abovementioned 11 public schools. In total, 232 students participated between October and December of 2017.

NBG specialists monitored the implementation process and provided guidance to the teachers on a continuous basis. NBG received feedback from the teachers, which was used to update the SchoolBank guidebook and the training module.

• Students participating in the SchoolBank pilot completed surveys before and after the program. Survey responses were analyzed by the Policy Institute of the International School of Economics in Tbilisi (ISET Policy Institute) to evaluate the effectiveness of the project.

2019 and onwards

CYFI, NBG and the Ministry of Education established the following priorities for 2019-2020: • Work closely with regional schools and resource centers to facilitate the implementation of the SchoolBank project in rural areas; • Form strategic partnerships country-wide with educational NGOs that can serve as multipliers of the project and support the scale up; • Encourage more commercial banks to get involved in the SchoolBank project; • Work on resolving the challenges identified through the evaluation of the SchoolBank pilot, conducted by the ISET Policy Institute, as well as through teacher evaluations.

��The program “Free Lessons” was launched by the Ministry of Education, Science, Culture and Sport of Georgia in 2017, to facilitate the improvement of the quality of education, increase motivation to learn, expand opportunities for informal education and contribute to creating an interesting and creative school life. “Free Lessons” were funded under the grant provided by the Ministry. The maximum amount of the grant per school was GEL 3,000 (GEL 450 specifically for each class, including the SchoolBank class) to fund the salaries of teachers and administrative staff and purchase any necessary resources.

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5. Educational Component of SchoolBank project In 2017, NBG translated and adapted CYFI’s standard, 14hour educational module to the Georgian context to create a Georgian-language guidebook for the program. The guidebook was later endorsed by the Ministry of Education.

The objective was to have a standard program for all involved stakeholders to use, which would cover the most fundamental financial issues that young people should learn in school.

The Georgian-language SchoolBank guidebook consists of 15 hours (lessons) and is targeted to the 12 – 15-year-old-age-

group. However, considering the relevance of the financial topics taught and active learning methods used, the program is often delivered to both younger and older audiences.

The SchoolBank guidebook covers the following topics: saving, financial products and services, financial system and intermediaries, financial decision-making, consumer rights and responsibilities, frauds and security, and money and currency. NBG added one additional lesson on budgeting to CYFI’s standard module. Box 4 shows the main modules of the SchoolBank curriculum in Georgia.

SchoolBank Curriculum content 1.

Under saving, students learn about the importance of saving, saving goals and strategies, and consequences of a lack of saving. Students also brainstorm on how to improve savings behavior.

2.

Under financial products and services, students learn about saving and current accounts, balance and interest, cards and payments. Over the course of the program, students also learn about different types of credit and how to use them.

3.

Under financial system and intermediaries, students learn about the functions of the financial system as a whole, as well as its intermediaries – banks, MFIs, insurance companies, stock exchange (for the older students).

Students also learn about the role of the central bank.

4.

Under financial decision-making, students learn about the process of choosing financial and non-financial products, including the questions to ask prior to purchasing and criteria for comparing products across providers.

5.

Under consumer rights and responsibilities, students learn about rights and responsibilities that adults and children have. Afterwards, they learn about specific rights and responsibilities that financial consumers enjoy. Students also are acquainted with consumer protection regulations, and practice reading contracts and filing complaints.

6.

Under fraud and security, students learn about the most common types of fraud, ways of protecting personal and financial data (including, when shopping online or using payment cards), and the steps to take in case one becomes a victim of fraud.

7.

Under money and currency, students learn about the history and functions of money, ways of recognizing real from counterfeit banknotes, different countries’ currencies and conversion exercises.

8.

Under budgeting, students learn about different types of income and expenses, strategies of increasing savings, and creating a simple budget and sticking to it.

The Georgian SchoolBank guidebook provides complete lesson plans for the teachers, so that they do not have to come up with additional resources for the class. Each lesson plan consists of a short overview, lesson objectives, instructions for the facilitator, materials to be used, and a timetable, outlining how much time should each activity take.

Sections addressing financial institutions and products offer two alternative texts that teachers can choose from, based on the age of the audience.

All lessons in SchoolBank’s educational module are delivered by using active learning methods of teaching that strive to involve students in the learning process more directly than more traditional classroom methods: jigsaw exercises, roleplaying, learning by teaching, games, etc. Teachers also are encouraged to do energizers to ensure active involvement of the students.

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6. Teacher Training

Teacher training is essential for the successful implementation of the SchoolBank project. In Georgia teachers from all disciplines can take part in the training and teach the SchoolBank classes. It is, however, critical that they are committed to expanding and updating their understanding of money management and consumer issues, using innovative teaching techniques, and inspiring the young generation to learn about personal finances for achieving financial goals and financial security. In Georgia, SchoolBank teachers most commonly have experience of teaching civics, mathematics and IT classes.

After the training, the SchoolBank Guidebooks, as well as additional online and print resources are distributed to teachers as a complement to SchoolBank lessons. In addition, NBG monitors the SchoolBank implementation at schools (including through school visits), and hosts workshops for participating teachers to discuss any contentrelated and administrative challenges that they encounter.

NBG also conducts teacher surveys to identify weaknesses and opportunities arising during project implementation.

Key challenges identified through teacher workshops and surveys are the following:

• Length and complexity of some chapters in the SchoolBank guidebook.

• NBG responded to this challenge by amending these chapters, providing additional guidance and resources to teachers, and offering two alternative texts – an easier and a more complex versions - for teachers to choose from based on the age of schoolchildren.

• Lack of opportunities for students to apply theoretical knowledge in practice.

• NBG is working to resolve this challenge by continuous consultations with commercial banks to get involved in the SchoolBank project, and offer child and youth-friendly financial products more actively outside of the capital city.

• Technical difficulties related to administering some activities (e.g. games) from the SchoolBank guidebook.

• NBG responded to this challenge by providing additional instructions to teachers, as well as including several alternative activities in each chapter of the SchoolBank guidebook for teachers to choose from.

 Teacher training for the SchoolBank project, NBG, 2019

Key Takeaways from Teacher Trainings Teacher trainings revealed that trainers should focus not only on teaching key financial concepts and practical skills while conducting SchoolBank lessons, but also cultivating the appreciation for the benefits of financial literacy and healthy financial attitudes among teachers. This is crucial to ensure that the teachers will in turn encourage schoolchildren to form healthy financial perspectives and behaviors.

Teacher trainings also underscored the significance of teachers having a solid knowledge of and confidence in the financial topics covered by the SchoolBank guidebook, so that they can effectively teach students and answer

16

most questions that may arise. To that end, NBG devotes a special section during each training to discuss financial topics in depth, and offers supplementary resources and consultations to teachers after the start of the SchoolBank course as well.

Finally, teacher trainings have shown that the trainings where teachers are invited alongside trainers from commercial banks are quite effective, as schoolteachers have an opportunity to discuss financial topics directly with bank representatives and cultivate personal relations with financial institutions.

7. Product Component of the SchoolBank project For the full implementation of a SchoolBank concept, the educational program alone is not enough – the ‘learning by doing’ element can be provided in the form of a ‘real’ financial product for youth. For children and youth this product is most commonly a basic bank account that allows for savings, and possibly, payment options. As part of the SchoolBank project, CYFI promotes the use of Child & Youth Friendly Banking Principles, that became the first ever guiding principles that could be applied for child and youth products developed by banks. The Principles are based on the UN Convention on the Rights of the Child and facilitate

an international benchmark for safe and reliable banking products for children and youth. CYFI has also developed an assessment and endorsement tool, allowing for thorough evaluation of a particular product on compliance with the principles. Box 4 presents the eight main principles, and rational behind each one of them can be found in Banking the New Generation Guide��, published by Mastercard and CYFI in 2014. It is important to emphasize that these principles are developed exclusively for bank accounts without any possibility of overdraft, and are not applicable for credit, insurance and any other financial product for young people.

Figure 2.

Child and Youth Friendly Banking Principles, CYFI 1 2 3 4 5 6 7 8

Availibility and accessibility for children and youth

They are widely available and accessible to children and youth despite their economic, social, cultural, or religious situation, gender, age, or ability

Maximum control to children and youth

They provide the maximum possible control to children and youth within the boundaries of local jurisdiction and ensure financial ownership

Positive financial incentive for children and youth

To build confidence as children and youth enter the financial system, postivie financial incentives (e.g. no overdraft and relatively higher interest rates) are important

Reaching unbanked children and youth

The financial institution proactively reaches out to unbanked children and youth as part of a larger financial inclusion agenda, within the boundaries of local jurisdiction

Employing child & youth friendly communication strategies

The communication and marketing materials around the product are child and youth centered, connecting to their needs, interests and level of comprehension, complemented by the ability of all staff within a financial institution to interact in a child friendly manner

A component of Economic Citizenship Education

In combination with the product, children and youth are offered a component of Economic Citizenship Education, with elements of financial, life skills, and livelihoods education

Monitoring of child & youth satisfaction

The financial institution monitors the extent to which the product and relating services satisfy the needs and interests of children and youth

Internal control

The financial institution has internal controls in place on all these Principles

��CYFI & Mastercard “Banking a New Generation” (2014)

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From the start of the SchoolBank project in Georgia, NBG has provided these principles as working guidelines to the commercial banking sector in Georgia, encouraging them to develop responsible products for children and youth to offer as a product component of the SchoolBank. After several presentations and meetings NBG held with private banks, in July 2017, CYFI, in collaboration with NBG, held a two-day Product Development Workshop for banks, aimed at deepening the banks’ understanding of the youth market, and training the banks’ personnel on practical tools and instruments that could be used when developing and marketing youth products.

More than 20 participants from major consumer commercial banks in Georgia took part in the workshop, alongside representatives of

NBG, Ministry of Education and Science of Georgia, and Savings Banks Foundation for International Cooperation (SBFIC). The topics included discussion on the role of the financial institutions in advancing financial literacy and financial inclusion for youth, responsible market conduct, regulation and consumer protection, the business case of investing in youth products, incorporating needs and wants of youth, and engaging them in the product design, communication and marketing, as well as group work that encouraged banks to develop their own child and youth friendly banking products to participate in the SchoolBank project.

NBG and CYFI’s directions for commercial banks with regards to development of youth banking products: •

Children under age of 18 should not be sold credit products;

•

Overdrafts should not be allowed on children’s accounts. In case of an unsanctioned overdraft, the data on children’s accounts should not be shared with credit information bureau;

•

While it is encouraged to allow children to use internet bank, based on their age, children should have different levels of access to the internet bank, and some features (e.g. money transfers) should be limited for younger children. Parental involvement can be sought when deciding which internet banking features to block/allow for children’s use;

•

Banks should consider blocking children’s access to potentially harmful websites, such as gambling websites;

•

Children and their parents should be given all necessary information in a clear and comprehensive manner when offering, selling and during the lifespan of the product;

•

Banks should apply no or minimal costs for using the account, including, no/minimal withdrawal fees and no minimum deposits on an account;

•

If the product is a deposit - there should be no or minimal penalties for early withdrawal from deposit;

•

Banks should systemically monitor claims about children’s accounts and inform NBG about any recurring issues.

After the Product Development Workshop held in July 2017, NBG continued close communication with local commercial banks regarding the development of youth-friendly financial products and banks’ involvement in the SchoolBank project.

As the result, one more local commercial bank - TBC Bank – decided to join the SchoolBank project in 2019-2020. TBC Bank launched a debit card for schoolchildren titled “No. 1 Card” in

2017, took part in teacher trainings organized by NBG in 2018, and conducted pilot SchoolBank lessons in Tbilisi in 2019. TBC Bank is planning to scale up its involvement in the project by offering the full SchoolBank module and its "No. 1 Card" to Tbilisi schools starting in 2019-2020.

“In today’s world, the young generations have to make important financial decisions at increasingly earlier stages of their lives. For this purpose, children and youth not only need theoretical financial knowledge, but also the ability to apply financial literacy to practical situations. Thus, it is crucial for the young generation to have access to appropriate financial products and services, in order to develop healthy financial attitudes, save money, set financial goals, and expand their opportunities. In this process, it is imperative to protect children’s rights and interests. In a long-term perspective, these initiatives will help the youth become economically active and financially responsible citizens, reinforcing their financial well-being” – Koba Gvenetadze, Governor of the National Bank of Georgia At CYFI & NBG Product Development Workshop, 13 July 2017

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Parallel model - Bank of Georgia JSC Bank of Georgia (BoG) is one of the leading Georgian banks with a market share of 35.6% (based on total assets), 34.6% (based on total loans) and 35.6% (based on client deposits) as of May 31, 2019. The Bank offers a broad range of retail banking, corporate banking and investment management services. As of May 2019, BoG serves approximately 2.2 million client accounts through one of the largest distribution networks in Georgia, with 276 branches, 889 ATMs, 3,163 Express pay (self-service) terminals, a fullservice remote banking platform, and a call center.�� BoG became the first commercial bank in the country to respond to the ‘call’ of NBG to join the SchoolBank project.

Initially it was envisaged that commercial banks will join the project by providing the 2nd component – access to basic savings/payment account, but BoG went further by also launching the educational program for youth – Business sCool. On the product side, BoG has developed a unique product for the country – the sCool card for 6 to 18 year old students of Georgian schools, which also has a transportation feature. The sCool card has multiple properties: •

Allows children to get accustomed to a financial culture

•

Enables them to make payment throughout the country and abroad

•

Enhances financial education by participation in business-school trainings

•

In some schools helps control the level of school attendance

•

Enables them to pay for lunch in school café

•

Allows schoolchildren to use public transportation

Every year more than 50,000 students in Georgian schools become eligible for the sCool Card. The majority of students use it as a transportation card, but the bank encourages them to use the banking features more. In 2016, the sCool Card product of Bank of Georgia went through the process of Product Assessment conducted by CYFI as compulsory part of the SchoolBank project. BoG passed the assessment on compliance with CYFI’s 8 Child and Youth Friendly Banking Principles,�� and thus received a Product Endorsement from CYFI as a Child and Youth Friendly Product. BoG was also nominated in the category “Child and Youth Friendly Banking Award” at the Global Inclusion Awards 2017, held in Berlin, Germany, in partnership with G20/ GPFI. As the educational component, BoG has launched their own Business sCool program, which was developed in consultation with child psychologists and which allowed schoolchildren to learn the basics of financial literacy, as well as employment and entrepreneurship skills (see the Box below for more detailed on the content of the Business sCool program). The program was aimed at two different age groups: children between the ages of 11-13, and children between the ages of 14-17. In 2016, Business sCool program was delivered to 175 schoolchildren in 10 schools of Tbilisi. In 2017, 85 more schoolchildren from Tbilisi were involved in the program. BoG did not deliver Business sCool classes in 2018, but plans to continue the program in 2019-2020 in Tbilisi, Batumi and other regions of Georgia.

BoG’s Business sCool program BoG’s Business sCool program focuses on financial, employment and entrepreneurship education and is aimed at two different age groups: 11-13-year-olds and 14-17-year-olds. The program for 11-13 year-olds (“Step 1”) consists of 5 lessons of 90 minutes offered to an audience of 15-20 schoolchildren, while the program for 14-17 year-olds (“Step 2”) consists of 6 lessons of 90-120 minutes offered to an audience of 15-20 schoolchildren.

Many of the lesson activities centers on group work. Further, Business sCool program participants receive sCool cards, allowing them to apply financial knowledge in practice. At the end of the program, all participants evaluate themselves and their groups, highlighting the most important lessons learnt and the new skills acquired. Participants are also invited to a field trip to BoG service centers, where they have a chance to observe how banks work.

The topics covered by “Step 1” include: money and income, forms of payment, budgeting, needs and wants, saving and spending, charity, commercial banks and their functions, accounts and cards, School Card and its uses, and financial security.

The topics covered by “Step 2” include: teamwork and motivation, short-term and long-term goal-setting, academic skills for success, money management, saving, needs and wants, School Card and its uses, writing, presentation and communication skills, and project management and its cycles (idea-generation, budgeting and monitoring, risk management, etc).

��Source: National Bank of Georgia ��These Principles were developed by CYFI and Mastercard in collaboration with CYFI Financial Inclusion Working Group, and they serve as the first global standard for safe and reliable Banking Products (both savings and current accounts) for children and youth (0-24 years). In order to use the Principles for the Product Assessment, they have been broken down into 20 testable Controls. More detailed information about the methodology of CYFI Product Assessment can be requested from CYFI Secretariat.

19

8. Project Evaluation

ISET Policy Institute, in collaboration with the National Bank of Georgia, evaluated the effectiveness of the educational component of the piloted the SchoolBank project in the first months of project implementation.

The research was done based on pre- and post-program questionnaires filled out by participating schoolchildren.

The data was collected over the period of four months, from September 2017 through December 2017.��

data To study the outcomes of the pilot SchoolBank project, ISET Policy Institute used the data from pre- and postprogram questionnaires. In total, the data contains information about 232 pre- and 161 post-test results.�� The regional distribution of the sample shows that the largest share comes from Tbilisi (47% pre-test), followed

by Rustavi, Ksani and Ereda (villages in Mtskheta municipality). The share of girls is 52% in pre-program tests, while the share of boys is 48%. It should be noticed that the share of girls in the post-test is even higher - 62%. This means that proportionally more girls completed the course, possibly because they were more interested in the course.

The SchoolBank project was piloted primarily in 7th and 8th grades (with only three 9th grade students) in Georgian schools, among the children between the ages of 12 and 14. Course completion rate for 7th grade equals 61%, while the same indicator for 8th grade is even higher – 76%. It is noteworthy that the enrollment in this course was not mandatory and that the students were not graded, which may have contributed to dropouts.

The pre- and post-program questionnaires used in the research were developed by CYFI and adapted to the local context by NBG. The questions covered students’ financial knowledge, behaviors and attitudes. The teachers distributed questionnaires to the students and administered the test-taking process. Based on the participating schools’ and teachers’ preferences, schools had an option of administering tests digitally (through special online forms developed by NBG and CYFI), or on paper.

 Teacher training for the SchoolBank project, NBG, 2017

Q1. Attitude: I think that saving is useful; Q2. Behavior: I regularly save money in a safe place; Q3. Behavior: I always plan how to spend money; Q4. Knowledge: I know what the main financial terms, deposits and payment cards mean.�� Q5. Knowledge: Suppose, 10 children are given 250 Gel and 50 cents. If this money should be distributed equally, how much money each of the child will get.

Q6. Knowledge: Suppose, you make a 100 GEL deposit and the annual interest rate on deposit is 2%. How much money will you accumulate after 5th year?

Q1-Q6 cover all three components of the financial literacy: financial attitudes, financial behavior and financial knowledge.

To measure the level of financial literacy in this case, financial literacy was calculated as the number of correct answers to six of the financial literacy questions.�� ��For the full report, please see: Barbakadze, Irakli, (2018) Effectiveness of financial literacy program at schools. The case study of SchoolBank in Georgia at: https:// papers.ssrn.com/sol3/papers.cfm?abstract_id=3206094 ��As of June 2019, approximately 450 students in total (both in schools and other educational institutions, such as NYCP and the National Youth House) have participated in the SchoolBank project. ��Based on traditional methodologies, such as in Hung et al. (2009), Kalwij et al. (2017). ��Q1-Q4 are Likert scale (a scale used to represent people's attitudes to a topic) questions, with answers ranging from “Strongly disagree” to “Strongly agree”.

Answers like “Agree” and “Strongly agree” are treated as correct, while “Strongly disagree”, “Disagree” and “Neutral” are treated as incorrect.

20

Figure 3.

The distribution of correct answers for the pre-survey (number of respondents - 232) 0.0043 0.0129

0.0991

0.0733

0.2328 0.319

0.2586

0

Correct Answers

1

Correct Answers

2

Correct Answers

3

Correct Answers

4

Correct Answers

5

Correct Answers

6

Correct Answers

Source: Authors' own calculation

The distribution of financial literacy scores based on the pre-test results shows that most of the students answered the majority of questions correctly. There is only one student with all incorrect answers. On average, students correctly answered 68% of the questions – which is 4 questions out of 6.

Evaluation of the SchoolBank pilot As the data did not provide an opportunity to use parametric or semi-parametric models, the researchers of ISET instead opted to focus on mean comparisons�� to evaluate the effectiveness of the SchoolBank project. On average, the level of financial literacy among students increased, meaning that after the SchoolBank lessons the students answered 77% of financial literacy questions correctly, while the same indicator was 68% before the SchoolBank lessons. The study shows that such improvement of financial literacy is mostly driven by

a significant increase of financial knowledge and attitudes, while the effect on financial behavior (answers to the following questions: I regularly save money in a safe place and I always plan how to spend money) is limited (see Table 1). These results are consistent with existing studies (Batty et al. (2015), Kalwij et al. (2017)) which conclude that in the short term, financial education programs contribute to improvement in financial knowledge and attitudes, but time is needed to transmit financial skills into financial behavior.

��It should be noted that the number of responses to pre- and post- program questionnaires are not the same: 232 students filled out pre-questionnaires, but only 161 filled out post-questionnaires. This is likely due to dropouts, and partially, due to technical challenges related to administering post-tests at schools. The exact reasons for the dropouts are not known, but it might affect the interpretation of the results if the dropout from the course was not random.

21

TABLE 1.

Financial literacy by three main components ATTITUDE

BEHAVIOR

KNOWLEDGE

PRE

83.6%

66.1%

64.1%

POST

90.1%

63.7%

81.1%

DIFFERENCE

6.5%*

-2.4%

17%***

Source: Authors' own calculation

why the project was less effective outside Tbilisi - was it due to students, teachers, or possible administrative or technical issues?

Boys and girls showed very similar financial literacy levels before and after the SchoolBank project. Since SchoolBank is not a mandatory course, only children who are interested in the topic are enrolled. This could mean that children with more or less similar interests and similar initial financial literacy levels are selected. A statistically significant improvement of financial literacy was observed in both gender groups.

Due to the fact that SchoolBank was one of the first official financial literacy courses taught at schools, we observe that the initial financial literacy level of 7th and 8th grade students is very similar, in the 67-69% range. After the SchoolBank course the improvement in financial skills is observed to occur at a higher rate (by 11 percentage points) for 7th grade students than for 8th grade students (by 7 percentage points).

It is worth noting that before the SchoolBank classes, the difference in financial literacy levels between Tbilisi’s schools and schools from other cities, such as Rustavi and Mtskheta, was six percentage points. After the course, a significant improvement was observed in financial literacy in both sub-groups. Interestingly, on average, students from Tbilisi schools improved their financial literacy level (by 13 percentage points) more than the students outside Tbilisi (by 6 percentage points).

Thus, the gap in financial literacy between Tbilisi schools and the schools outside Tbilisi increased even further. The exact reasons behind this disparity cannot be observed from the data, but further investigation is needed as to

It is noteworthy that students who have a bank account, on average, showed higher levels of financial literacy before starting the course – they answered 76% of questions correctly in the pre-test, while the same indicator is only 67% for students who do not have a bank account. After completing the SchoolBank course, we observe almost no change in financial literacy level for account-holder students, but the improvement in financial literacy for students without a bank account is significant.

TABLE 2.

Pre and Post Financial Literacy level by different sub-group

Average

Boys

GIRLS

Capital City

Other cities

7th grade

8th grade

Has deposits

Does not have deposits

Number Of observations

PRE

68%

68%

68%

71%

65%

69%

67%

76%

67%

232

POST

77%

77%

76%

84%

71%

80%

74%

77%

77%

161

9%***

9%***

8%***

13%***

6%**

11%***

7%**

1%***

10%***

DIFFERENCE

Source: Authors' own calculation

*statistically significant at 10% level, ** at 5% level, *** at 1% level

22

Overall, the evaluation has revealed positive results of the first round of the SchoolBank program on financial knowledge and attitudes of students; however, further and more in-depth research is needed to identify the long-term impact of the course.

pilot succeeded at improving financial knowledge and attitudes of participating schoolchildren, the effects of the program on financial behaviors is limited and requires further research. The research also found a positive interdependence between having a bank deposit and financial literacy, pointing to the significance of youth financial inclusion in furthering their financial literacy, and a higher effectiveness of the program in the capital city, raising the need to study and mitigate the challenges that regional schools have in effectively implementing the program.

ISET Policy Institute also conducted the analysis of the first results of pilot SchoolBank classes conducted at the NYCP during October 2017 – May 2018, with the main results outlined in Box 8 below.

To sum up, while the evaluation performed by ISET Policy Institute and NBG revealed that the SchoolBank

The SchoolBank pilot at the National Youth and Children’s Palace (NYCP) In April 2017, NBG conducted a training for the teachers from the National Youth and Children’s Palace (NYCP) – a multidisciplinary educational and training establishment affiliated to the Tbilisi City Hall – and in October 2017, NYCP started offering the SchoolBank lessons to its students as part of the Mathematics Club. Students join the Mathematics Club voluntarily, resulting in a self-select bias. The pilot lasted for 8 months and ended in May 2018.

NBG and ISET Policy Institute researched the impact of the SchoolBank pilot classes on financial knowledge, skills and behaviors of NYCP students as well. Because only 30 students participated in the pilot at NYCP, it was impossible to conduct a regression analysis, and the method of descriptive statistics was used instead.

The evaluation revealed that the overall financial literacy scores of the participating students improved after the SchoolBank project. Similar to the SchoolBank pilot in public schools, the program’s effects were the most pronounced on the financial knowledge of NYCP students: the average financial knowledge score of the students improved by 32 percentage points. In contrast, the students’ behaviors improved by 3 percentage points, while their attitudes improved by 7 percentage points.

It is worth mentioning that the financial attitudes score of participating students was already quite high during the pre-test, which is likely stemming from the self-select bias of the sample.

FIGURE 4.

Financial literacy by three main components ATTITUDES

BEHAVIORs

KNOWLEDGE

Overall Financial literacy

PRE

94%

63%

58%

66%

POST

95%

65%

90%

83%

DIFFERENCE

1%

3%

32%

17%

Source: Authors' own calculation

After the pilot, NYCP started offering the SchoolBank lessons to students outside of the Mathematics Club as well, as part of NYCP’s Social and Financial Literacy Club. While the self-select bias remains, this approach ensures that the students from different academic backgrounds and with varying interests can and do participate in the program. NBG continues to work closely with NYCP to ensure the sustainability and the continuity of the program, as well as to closely monitor and research the effects of the program on students.

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 Teacher training for the SchoolBank project, NBG, 2019

9. Lessons learned and ways forward

It is widely acknowledged that financial literacy is an essential life skill of the 21st century, and that financial education should start at an early age, preferably in schools. To that end, NBG is working closely with the Ministry of Education to make financial education part of the national school curriculum on all levels of education.

However, as the curriculum reform is a complex and lengthy process, it is important that informal programs fill the temporary gap created in the absence of formal financial education (and supplement the formal financial education after the latter is implemented as part of the national curriculum). Informal educational programs not only improve students’ financial literacy, but also prepare policymakers, schools and teachers for eventually implementing financial education as part of the national curriculum.

The SchoolBank project is the first financial literacy program for Georgian schools that combines economic citizenship education with access to appropriate banking

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products for the youth. Through SchoolBank lessons, schoolchildren learn about money management and planning, saving and borrowing, consumer rights and responsibilities, investments, and fraud and financial security. In addition, by means of active learning methods, students learn to apply information received to practical cases and analyze and challenge their own financial attitudes. With the involvement of commercial banks, children further gain practical skills of making payments, monitoring income and expenses, and saving, which can help them form responsible financial behaviors.

While the overall financial literacy levels of students improved as the result of the pilot SchoolBank project in Georgia, implemented between 2016-2018, a number of notable challenges, which require further study, remain.

The key lessons learned from the SchoolBank pilot, as well as the main challenges and recommended solutions are outlined below:

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Challenge to influence financial behavior: Even though financial knowledge and attitudes of participating students improved as the result of the pilot SchoolBank lessons, the effect on financial behaviors has been limited. Thus, stakeholders should focus on fostering behavioral changes and helping students apply theoretical information in their daily, practical lives. In this regard, facilitating children’s access to appropriate financial products, and involving parents through homework or other projects is essential. Parents can act as positive role models, providing practical advice and nudges to induce positive change in children. Stakeholders should also consider using behavioral insights to facilitate positive behavioral changes among the youth and raising the awareness of the psychological factors that affect financial decision-making among them.�� The latter can be achieved, for example, by combining financial information and recommendations with psychological guidance at schools.

•

The role of having a bank account: There is a significant positive correlation between having a bank deposit and initial financial literacy levels. Even though there is no causal relationship, there are arguments suggesting that access to formal financial products can enhance children’s financial literacy by helping them gain practical financial skills through using cards for payments, adding and withdrawing money from accounts, calculating interest accrued on saving, etc. Therefore, involving additional banks in the project and ensuring that more schoolchildren across the country have access to bank accounts is important for fostering sustainable change. In many countries, such as Japan, commercial banks and schools cooperate to create Children’s Banks, which allow schoolchildren to deposit and withdraw money from their accounts through schools, thereby fostering experience-based learning, and helping children develop saving habits.��

•

Effectiveness of financial literacy in the capital city vs. other areas: The SchoolBank lessons proved to be more effective in Tbilisi schools than in schools outside of the capital city. Further exploration is needed to determine possible causes. This finding should be kept in mind during teacher training and monitoring process to ensure that any challenges unique to schools outside of the capital city are identified and accounted for.

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Evaluation challenges: Some students did not complete post-program evaluation tests due to drop-outs, as well as technical issues related to administering tests, especially in schools outside of the capital city. The teachers were given a choice between web-based and paper-based tests. They were also given a flexibility in allowing students to fill out post-tests on different days. Nonetheless, stakeholders should ensure that they actively remind the teachers about the importance of pre- and post-tests during teacher trainings and program monitoring. Teachers should also be assisted in resolving administrative and technical issues related to holding the tests.

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Dropouts: Further investigation is needed to identify specific reasons for student dropouts and design appropriate strategies to prevent them in the future. The pilot SchoolBank lessons in Georgia were not mandatory, and participating schoolchildren were not graded, which could be one possible explanation for the dropouts.

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Financial education of teachers is crucial for the successful implementation of the SchoolBank project. It is important that teachers have a good understanding of personal finance and consumer issues, as well as healthy financial attitudes and a motivation to act in a financially responsible manner. This way, they will be able to help students appreciate the importance of money management and form beneficial financial habits. To resolve this challenge, it is recommended to dedicate part of the SchoolBank teacher training to educating teachers about the financial and consumer topics in more detail. To further support teachers, NBG organizes workshops for teachers after teacher training to discuss any content-related and administrative issues that arise during project implementation. NBG also conducted teacher surveys to identify existing challenges (discussed in more detail in Chapter 6 of this case study). Project coordinators should ensure that they provide teachers with additional informational and educational resources, as well as ongoing support through consultations, as necessary.

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Stakeholder engagement and participation: When implementing the SchoolBank project, it is vital to ensure the support and the involvement of key stakeholders earlier on:

•

•

Ministry of Education and other educational authorities play a crucial role in communicating with schools and teachers regarding the importance of financial education, and providing incentives for their participation. They are also instrumental in promoting financial literacy on the national education policy level.

•

Establishments offering informal or vocational education (such as National Youth and Children’s Palace in Georgia) and NGOs working on children’s education and development are similarly important players, as they can also provide the SchoolBank lessons, while teacher associations, forums and similar alliances can help establish direct communication with teachers country-wide.

•

As commercial banks have a crucial role to play in providing youth-friendly financial products, it is essential that the objectives of the project, as well as the benefits of banking the youth in a responsible way are communicated with them clearly. To that end, it is recommended to hold consultations with banks, and involve them in product development workshops and teacher trainings.

Stakeholder communication: To ensure continued involvement of key stakeholders, it is important to periodically demonstrate the success of the SchoolBank project to the public, as well as discuss existing challenges and possible solutions. After the SchoolBank pilot in Georgia, NBG and ISET Policy Institute, which conducted the evaluation of the project, held a presentation of the findings and a roundtable discussion with key stakeholders – NBG, Ministry of Education, commercial banks, and participating teachers. Such events serve as an important platform for stakeholders to share their practical experience, identify any challenges and weaknesses in the project implementation, and encourage new parties to get involved.

��For example, see the case of Brazil on using behavioral insights for improving financial education programs ��See: Shizuka Sekita, “Financial Literacy and Retirement Planning in Japan” (2011). https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1809681

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 Global Money Week Celebrations, NBG Money Museum, 2019

NEXT STEPS NBG and CYFI continue to cooperate with the Ministry of Education, commercial banks, educational establishments and NGOs for scaling up the SchoolBank project in Georgia, especially in the rural areas.

To raise the awareness of the project among rural schools, the Ministry of Education and NBG are planning to hold regional meetings during the upcoming years.

In addition, NBG will focus on establishing direct and strategic partnerships with schools through teacher forums and relevant associations, which helps ensure sustained interest in the program. In parallel, NBG is holding consultations with commercial banks to ensure continued provision of child and youth-friendly financial products on the market, as well as the involvement of more banks in the project.

The SchoolBank pilot in Georgia has set a strong test case for cooperation between the central bank and national educational authorities on a financial education program, by organizing first teacher trainings, conducting and assessing pilot classes, and raising awareness about the benefits of financial literacy as a subject in schools. As the Ministry of Education and schools across Georgia prepare to start delivering financial education as part of the national school curriculum, the local stakeholders can rely on valuable lessons learned from the pilot SchoolBank project in the process of developing curriculum content, conducting teacher trainings, and designing monitoring and evaluation tools.

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10. References

Babych, Y., M. Grigolia, D. Keshelava (2018) Financial Inclusion, Financial Literacy, and Financial Education in Georgia.

ADBI Working Paper 849. Tokyo: Asian Development Bank Institute. https://www.adb.org/publications/financialinclusion-financial-literacyand-financial-education-georgia Barbakadze, I. (2018) Effectiveness of financial literacy program at schools. The case study of SchoolBank in Georgia. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3206094 CFED (2014) Financial Education & Account Access Among Elementary Students: Findings from the Assessing Financial Capability Outcomes Youth Pilot. https://prosperitynow.org/resources/financial-education-account-access-among-elementary-students-findingsassessing-financial CYFI (2016) Financial Inclusion for Children and Youth. https://issuu.com/childfinanceinternational/docs/20160916_fi_ landscape_summary_-_pra CYFI, WSBI (2017) SchoolBanking: unleashing the youth financial services market. https://issuu.com/childfinanceinternational/docs/2017_wsbi_schoolbank_v0 IMF (2015) Georgia: Financial Sector Assessment Program-Detailed Assessment of Observance of the Basel Core Principles for Effective Banking Supervision-Technical Note. Country Report No. 15/10. https://www.imf.org/en/Publications/CR/Issues/2016/12/31/Georgia-Financial-Sector-Assessment-Program-DetailedAssessment-of-Observance-of-the-Basel-42589 IMF Financial Access Survey (2018). http://data.imf.org/?sk=E5DCAB7E-A5CA-4892-A6EA-598B5463A34C ILO (2016) Exploring the linkages between youth financial inclusion and job creation: Evidence from the ILO school-towork transition surveys. Work4Youth Publication Series No. 42. https://www.ilo.org/wcmsp5/groups/public/---ed_emp/ documents/publication/wcms_533567.pdf NBG (2016) National Strategy for Financial Education in Georgia. https://www.nbg.gov.ge/cp/uploads/stategy/FinLit_ Strategy_ENG.pdf NBG, Sonar (2016) Financial Literacy and Financial Inclusion Study. https://www.nbg.gov.ge/uploads/2016finganat/ Financial%20Literacy%20Study_ENG.pdf OECD (2014) Financial Education for Youth: The Role of Schools, OECD Publishing, Paris, https://doi.org/10.1787/9789264174825-en OECD (2015), OECD/INFE Core competencies framework on financial literacy for youth. https://www.oecd.org/daf/fin/ financial-education/Core-Competencies-Framework-Youth.pdf Young Money (2018) Financial Education Planning Framework https://www.young-enterprise.org.uk/wp-content/uploads/2018/11/Primary20Planning20Framework20WEB20Sept2018. pdf

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Child & Youth Finance International (CYFI) www.childfinanceinternational.org info@childfinance.org +31 20 520 3900 PO Box 16524, 1001 RA Amsterdam The Netherlands