The Struggles of Financial Literacy: Lessons from hostile Investment Club members.
November 26, 2024
Friends,
Last week, a dedicated gentleman, invited me to the WhatsApp group of their investment club to teach them about the opportunities in capital markets investments, especially Unit trusts and treasury bonds. Lately, I have grown weary of joining groups directly and prefer to send them my publications to read.
How the conversation started.
However, he insisted that for the past month, he had shared materials and information that fell on deaf ears. He convinced the Admin to bring me in as an expert to speak on the opportunities of Unit trusts and how to take advantage of them for free.
I agreed and shared my number. On Thursday, I was added to a group of around 40 people. From a quick review, many numbers reflected people in Dubai and Saudi Arabia, but also those in Uganda. I’m always excited to share my knowledge, and as someone who has been part of an Investment Club since 2015, I couldn’t wait to start sharing with what I thought were willing learners trying to figure out a path forward as a group. Oh, I was wrong.
I was added to the group at around 8 PM Uganda time, but I was busy and didn’t get time to text anything until around 11 PM Uganda time. Little did I know that those three-plus hours of not responding to direct questions would create one of the most hostile environments I have ever experienced.
In those three hours, a tirade of aggressive abuses and money-stealing accusations were flying around, along with spy accusations and demands for who I was and why I wasn’t responding to their question about what Unit trusts were.
I finally responded with an old article I had written about Unit trusts, explaining what they are, which companies offer them, and their benefits. This was immediately rejected; they said I wasn’t brought in to share links but to tell them what a Unit trust is and how they can make money. The few loud voices were more aggressive and already calling for me to be booted out, but I’m also stubborn.
At this point, it was past midnight Uganda time, and I recorded a 10-minute audio explaining what a Unit trust is, the different Unit trusts we have in Uganda, and followed it with verifiable reports from the CMA the regulator of Fund Managers in the Unit Trust space and performance reports from each Unit trust.
I explained what makes each of them unique, how to make money, and the opportunities for them as an investment club and individuals. I went further to explain the opportunities for the Diaspora, what investments in Unit trusts offer them, money earning, and the regulatory side.
Between midnight and 2 AM Uganda time, I dedicated myself to teaching by typing. I wrote close to 25 detailed texts, focusing not on the aggressive few but on the silent ones who might have wanted to learn and on the responsibility I owed to the gentleman who had invited me. I referenced Unit trust brands and their insurance products, benchmarking on Kenya and the growth prospects we have seen in the Unit trust industry over the last five years.
Because some of them are in Dubai or Saudi Arabia, I even shared common products in those countries to show them what this product is and the available opportunities.
I explained everything, or at least I thought I did, and then went to bed. Little did I know what awaited me the next day, Friday morning. In my over-explanation of what Unit trusts are and talking about what they invest in, I touched on Treasury bonds, which I explained as simply lending money to the government. Was this the trigger for what happened that morning?
The first question that greeted me was, “So you want us to give our hard-earned money to this Government?” This was followed by all sorts of negative rejections of the whole concept. The spy concept kicked in, and for close to two hours, the members engaged in a total rejection of this new concept, with some name-calling of the person who invited me and myself.
It continued until I was booted out around midday on Friday before I could convince this particular group of the opportunities and why the future of investments in capital markets and the six regulated Unit trusts are worth a shot.
The lessons.
Some really interesting lessons were learned, but not even I, in my personal capacity, can answer or address them. We always think we must do more to educate people about financial literacy. This group had around 40 people living and working in the Middle East.
How come a significant number of them had never heard about Unit trusts? Which methods do they use to consume information, especially financial and investment information? I know the majority of people working in the Middle East spend considerable time on TikTok compared to Twitter/X or even Facebook, were investment information flows more regularly lately.
How could a person with a bank account with Stanbic Bank Uganda mistrust the Stanbic Unit trust, a product of their sister investment arm company, to the extent of comparing it to an extended arm of the government tapping into their money?
How best do we, as a society, bring in the poorest people to start saving and investing in the smallest way possible?
At that point, I thought maybe they hadn’t heard of companies like Britam, Xeno, or Sanlam, but clearly, they had heard of NSSF. I talked extensively about the new NSSF Smart Life product that has all the characteristics of a Money Market Fund. Oh, that was outrightly rejected, even before they could learn that this benefit would allow them to access their money whenever they need it.
Why would they outrightly reject these products?
Had they figured out what to do with their saved money? After I got booted, I asked the person who invited me what they were doing with their funds. To my surprise, he said nothing yet; every idea is being rejected, and there is no consensus on what they should be doing as a group.
So what are you doing, I asked? Oh, we are just lending money to a few people who need it, but nothing substantial. For a moment, I thought they should at least be buying land like many other investment clubs do, but no, they aren’t. They are doing nothing, and over 8 million is just sitting on a mobile money line for the treasurer, doing nothing, earning nothing.
How did you meet? What is the bond of the investment club? I asked further questions. To my surprise, he said, “We met in a WhatsApp group as people working in the Middle East and decided to start this.” They are not known to each other by a good personal social construct but by an online construct that has rendered them directionless.
Is your investment club like that? Do you belong to one where you have no direction and are trying to figure out what to do as a club? How best do you help that group?
Maybe reach out and we talk.
Dear Alex,
You should be confirming why financial literacy alone is too inadequate (and the call for improved financial capability). Lack of financial education in our families, schools and workplaces continues to drive this financial illiteracy among majority of Ugandans.
I have always told people that Wealth is like Heaven. It is not meant for everybody. Some souls are destined for poverty (like hell, pun intended). There are people who love cash on-bank accounts/MoMo even when transaction costs and inflation daily devalues their deposits.
I work with 150 staffs and our Staff fund is huge. When I proposed that we diversify into Bonds and Unit Trust (let alone the various off-shore opportunities), the chorus was "no, no. no. The bank is safe enough." So far, I have got only 01 person to buy bond and 32 people to invest in Unit Trust.
Bottom line is, as a financial pastor, you never get tired. Push. Change strategy. Until we get majority of Ugandans to believe that "you can make clean money as you sleep," the job will be unfinished.
Thy shall not be equally yorked with financial non-believers in the name of groups