Earlier this year, I wrote about the young men and women I met in Uganda, Kenya and Senegal who told me that having “a safe place to save money” is important to them. Fatimah and Lekum, members of youth-led savings groups in Senegal, shared that these groups provided them with financial literacy and the self-confidence to manage their money.
Youth should be able to take control of their lives and economic futures. Yet, as I listened, one thing was apparent: while young people are acutely aware of what they need to become independent, the financial services and support systems required to manage their resources and make informed decisions are not always accessible.
One-third of the global population today is under the age of 19, but less than ten percent has access to any kind of financial services. A number of initiatives in developing countries are demonstrating that poor and vulnerable youth can save and build assets—if the right tools and services are available. Emerging research suggests that savings opens up economic opportunities, builds self-esteem, and improves education and health outcomes for youth.
How do we maximize the potential of youth savings as a high-impact development tool?
We must begin to tackle existing barriers. Many financial institutions in developing countries do not provide savings services to young people. Of those that do, the majority do not target or reach low-income youth. Those which would like to do so, lack knowledge and models on how to do this in a way that is both cost-effective and meets the savings needs of this population. Questions need to be answered. What are young people’s preferences when it comes to savings? What services will deliver the greatest benefit to them? How can these services be provided in a sustainable manner? In short, what will work for young people and financial institutions?
To answer these questions, The MasterCard Foundation today announced its support of a consortium of four organizations—Save the Children, Center for Social Development at Washington University, New America Foundation and The Consultative Group to Assist the Poor—who will launch a global study called YouthSave. This will be the first and largest assessment of the financial and developmental impact of savings among low-income youth in developing countries. It will test and document with a variety of approaches to deliver savings services, and benefit 170,000 young people in Ghana, Kenya, Columbia and Nepal.
The initiative will engage two groups that stand to gain the most from youth savings: young people and the financial institutions. What we learn will inform governments, donors, financial institutions and others about how to promote youth savings more broadly.
Savings could be the doorway to a more inclusive financial system for young people. And, it could facilitate the entry of millions of youth into more secure lives.