Young People Can Save: The Emerging Youth Savings Group Model and Why We Need Your Support
I’m passionate about the power of financial inclusion – particularly the financial inclusion of young people.
Why? Globally young people are disproportionately financially excluded for a myriad of often complex reasons. One illustration of this exclusion was highlighted by the World Bank’s Findex data released earlier this year, showing that in Sub Saharan Africa just 20% of young people have a bank account compared to 33% of adults.
Further, only 17% of young people had used an informal savings mechanism in the past year, compared with 28% of adults – yet almost half of young people had saved some money in the last year. There is clearly demand for youth savings.
Coupled with financial exclusion, young people are also faced with diminishing employment opportunities: they are three times more likely to be unemployed than adults. So how will financial inclusion – in particular access to savings – help the next generation?
Earlier this month I had the privilege of presenting at the ‘Making Cents Global Youth Economic Opportunities Summit’, alongside our Banking on Change partners Barclays and CARE International UK. We invited participants to imagine a simple, cost-effective model for giving young people access to financial services and the skills they need to generate an income. Then we presented our emerging Banking on Change Youth Savings Group Model which seeks to do just that.
The model adapts the traditional Village Savings and Loans Association (VSLA) methodology for youth, based on our extensive programme learnings. These learnings stem from forming over 11,000 Youth Savings Groups since 2013, reaching over 120,000 young people under the age of 25.
So how is the emerging youth model different to the standard VSLA methodology?
You need to go directly to the young people
It sounds obvious but we have found that young people don’t respond to the typical community meetings approach to forming savings groups. Instead you need to go to them, at school, sports centres, places of worship, social clubs. And to increase the attraction, use peer to peer outreach and training methods, as we do in the Banking on Change programme. Youth Village Agents had greater success in acting as advocates to their peers than adults.
One young person said that ‘The power of saving made me climb hills and get out of the valley’, a strong analogy of the impact they felt from joining a Youth Savings Group. This sort of personal testimony, combined with witnessing the regular savings habits, social network and other opportunities enjoyed by young people in the Groups, helps other young people in the community see the value of saving and seek to join a Group too.
In addition to direct youth engagement, it is vital to engage with parents and guardians to help sensitise them to the opportunities of Youth Savings Groups for their younger relatives. We have some interesting learnings on how Youth Savings Groups benefit the whole family too.
Engage young people with youth friendly training
One of our strongest learnings from our programme is that adapting training for youth in financial literacy and enterprise skills can achieve significant uplifts in the young people’s knowledge and skills. Evidence also supports a positive change in attitudes and behaviours to savings and business.
This was illustrated by a young person in one of the focus groups we ran as part of our programme M&E: ‘The additional training in my Youth Savings Group enabled me to know how to manage my expenses and also to keep separate records of all my businesses. Before, I had no plan for my business. I did not think about the risk and opportunities ahead. Now after receiving the training I have a good business plan and budgeting.’
Pre and post-tests to assess the knowledge gained through trainings found that our specialised youth enterprise skills curriculum, Enterprise Your Life, showed an uplift of 47% of knowledge after training. The training adopted a coaching approach, supporting young people with life skills as well as enterprise skills and ensuring that the sessions were interactive, participatory and fun. The returns for young people were higher than for older members, but we even had some of our older groups requesting this training as it was so engaging.
Research commissioned by Banking on Change with the Institute of Development Studies (IDS) also suggests the value of regular refresher trainings, both for the trainers and for the Youth Savings Groups members themselves.
Tailor the group to young people’s needs
Consider making adaptions to usual Savings Group norms to ensure the strength of the group. For example shorten the savings cycle, deliver the financial education in blocks (e.g. in the school holidays) rather than weekly sessions or adjust the sequencing of the trainings to allow for young people’s greater mobility. All of this calls for a needs assessment or youth scoping exercise first and regular opportunities for youth to feedback throughout the programme. Youth Savings Groups can be a strong platform to help young people develop leadership and governance skills, and begin advocating for their own interests more widely.
Banking on Change has also found that if the members of a Youth Savings Group are all of a similar age or life stage, the group’s solidarity can be increased. This was highlighted in recent research by IDS on the programme, where one young woman who was initially part of an adult VSLA said she preferred her Youth Savings Group as she feels she has more in common with other members; they share similar challenges and goals so they can support each other.
Similarly, young women in some of our single-sex groups benefited from the ‘safe space’ the Youth Savings Group gave them to discuss domestic and gender issues. More pragmatically, a Group where all members are in school can plan its meeting and training times around homework and school commitments. This is different from traditional VSLAs which tend to have a wider age range of members.
We are working to develop the Youth Savings Group Model, a ‘How To’ guide to help other INGOs, NGOs, funders and policy makers to integrate Youth Savings Groups into their work.
There are still areas where we seek further evidence from peers in the sector and from young people themselves, as we move towards publishing a final Youth Savings Group Model paper in early 2016.
How can we ensure that Youth Savings Groups reach more young women, for example? What is the role for technology in helping to scale Youth Savings Groups? Can Youth Savings Groups be as sustainable as traditional VSLAs?
Thank you to everyone who fed in at the Global Youth Economic Opportunities Summit. Please join us at the SG2015 Conference to share your views or email us at [email protected] by 31st December 2015 with your insights.
Read more about the Banking on Change Proposed Youth Savings Group Model Principles.