Financial Inclusion for Children and Youth
Child & Youth Finance International (CYFI)
This paper is part of the Child and Youth Finance International Landscape Series. Each paper in the Landscape Series looks back on the developments of recent years and looks forward to the future. This paper focuses on financial inclusion for children and youth.
It provides a comprehensive and objective overview of the current landscape of financial inclusion for children and youth. It includes the most important theoretical insights, principles, and frameworks. In addition, it provides an overview of the key players and current initiatives focusing on financial inclusion for children and youth. Finally, it gives insights into the focus areas for the upcoming years, including opportunities and challenges. The objective is to provide those interested in working on financial inclusion for children and youth with useful starting points and suggestions for action.
The topic of financial inclusion has seen significant progress in the past five years. Continuous advocacy by civil society and intergovernmental organizations such as the United Nations and the World Bank has placed the topic firmly on the international development agenda. Since 2011, three-quarters of a billion people have gained access to financial services, and the number of young adults (age 15-24) holding an account at a formal institution increased from 37 to 46 percent.1 The fact that this data is available through the World Bank Global Findex is already a great achievement. The work of the Child and Youth Finance Movement has resulted in a widespread awareness of the importance of including children and youth in national financial inclusion strategies, of adding financial, social, and livelihoods educations to school curricula, and of developing Child and Youth Friendly banking products. Large and long-running interventions have provided essential information about methods of effectively approaching financial inclusion for children and youth. Offering low-cost products by trained bank employees through innovative delivery channels can influence account uptake and usage. Complemented by other research, the influence of financial, social, and livelihoods educations on financial inclusion becomes clearer as well. Children learn more effectively when they can apply their financial learning through access to safe and appropriate financial services and are further empowered when financial education focuses on more than just the management of money.
But the work is not yet done. To achieve the United Nations 2030 Sustainable Development Goals, harnessing the dynamism and entrepreneurial spirit of youth is imperative. In a world that is dominated by children and youth, empowering them with financial inclusiveness and literacy is a sure tool to bring an end to poverty and increase economic growth. Still less than half of all young people worldwide (aged 15-24) currently save at a formal financial institution. Data on financial inclusion rates for children under 15, or additional data on how, where, and how much they save, is not even available. A further effort is also needed to collect this data to be better able to assess the scope of these problems and develop more effective interventions. While many financial institutions offer products to children, but restrictions on age, proof of identity, and control over the account mean most of these products are not very child-friendly. Financial education, let alone social and livelihoods educations, is still not a standard component of the educational curricula in many countries. The involvement of youth in developing national strategies and financial products remains limited, though it is key to having their voices heard and concerns raised. Further research is needed to better understand the long-term impact of financial inclusion and Economic Citizenship Education on behavior and skills. There have been successful interventions, but achieving significant scale and sustainability remains elusive. The business case has to be further refined so that financial institutions can commit to providing these services as part of their regular business processes. Only when these questions are answered, can financial inclusion fully contribute to economic citizenship for children and youth worldwide.
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