Micro-savings are starting to reverberate around the world as powerful development tools. At the recent G20 meeting in Seoul, micro-savings were recognized as key pillars of financial inclusion in the global development agenda. At the Global Savings Forum in Seattle, leaders from around the world discussed the role of savings in the developing world. And, Nick Kristof recently described micro-savings as the “Next Big Thing”.
But we are not there yet, particularly with regards to young people living in poverty.
The practice of saving among the poor is not new, especially in Africa, which has a long history of informal savings. People are saving through a range of tools—community savings groups in Mali and Rwanda and cell phones in Kenya. What’s still missing is the provision of large-scale access to secure and regulated savings accounts in an affordable and accessible manner. This is especially true for youth in developing countries, who seek access to formal savings accounts but face additional barriers due to regulatory requirements such as age limits and credit history.
The MasterCard Foundation is collaborating with partners around the world to test diverse approaches for youth-focused micro-saving programs. To date, we’ve invested more than $40 million in partnerships that are testing and developing innovative models for youth-focused micro-saving programs—from youth-led savings groups in Senegal, Sierra Leone and Niger to integrated financial education and services for youth in Mali and Ecuador that incorporates the opening of a savings account.
These initiatives are generating new knowledge about what strategies work for financial institutions and their young clients. What’s needed to spur more innovation are global platforms for the exchange of best practices and new insights among diverse organizations working in this area. That’s why we are excited about last week’s launch of www.youthsave.org, a platform to facilitate a global dialogue on youth savings as a high-impact development tool. The YouthSave study is the first and largest assessment of the financial and developmental impact of savings among low-income youth in developing countries with learning sites in Ghana, Kenya, Nepal and Columbia.
A global exchange such as this, among practitioners around the world, will help fill gaps in our knowledge, eliminate barriers for youth, and take us a step closer to realizing micro-savings as the “Next Big Thing”.