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Banking on Change: How Youth Savings Groups Fit the Complex Financial Lives of Young People

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Which of us would really want to revert to our 16-year old selves? All those life choices, changes and pressures, not to mention the many moments of mortification. It’s complicated, being young. And for today’s youth, their lack of opportunity and skills to save makes transitioning to adulthood even harder.

New research from the Institute of Development Studies (IDS) commissioned by Banking on Change, a partnership between Plan UK, CARE International, and Barclays, shows that the financial lives of young people can be complicated. But why and what are these complications?

IDS is exploring how young people engage with Youth Savings Groups (YSGs). Who saves, how, and why? Do socio-economic factors such as age, gender, location and family background make a difference? What elements of the programme do young people value most, and how can we make YSGs more effective?

To answer these questions, IDS conducted a series of in-depth interviews with 57 young people across Tanzania, Uganda, Ghana, and Zambia. These interviews combined with the data from the young people’s passbooks (their weekly records of savings and loans) enabled IDS to identify some common themes. While this is a relatively small sample size, when coupled with the emerging evidence of the Banking on Change programme the findings are compelling. We highlight our top five insights for you below.

  1. The financial lives of young people are already quite complex: IDS spoke with a 22 year old woman from Tanzania who worked as a hairdresser but also sold airtime and handbags, and a 21 year old woman in Zambia who grew and sold tomatoes, traded fish and made and sold fritters. Young people are economically active and may be juggling different income generating activities (IGAs), alongside studies and family responsibilities.
  2. Young people are a diverse group: A Youth Savings Group of predominantly young mothers has very different dynamics and needs from that of a group of single young men just out of school and seeking employment. We need to ensure that the approach to YSGs is differentiated to the life stage of the young people. This could be through trainings offered, the time of day the group meets, the length of the savings cycle, or where they meet. For example, a group of young women in Egypt took turns to host the YSG meetings in their own homes, which overcame objections from husband/fathers and meant young mothers could come with their children. In-school youth in Zambia chose to receive trainings in blocks during the school holidays, when they had more time.
  3. Savings for young people can be a family affair: Several young people said that money saved was given to them by a parent, partner, or relative. In some cases the young person might also take out a loan on behalf of a parent or partner. This surprised us at first – were the young people being exploited by older relatives? IDS research suggests not. The young people passed on the loan to family members freely. In one case, a 25 year old single mother had taken seven loans but only used two of them herself. The other five she had given to her mother to help meet the costs of her younger siblings’ education. The findings reminded us how ‘socially embedded’ relationships with money and family members are in many communities.
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  1. Youth clearly value training and skills development: One young man said he had become the ‘mouthpiece’ of the family on financial matters after joining the YSG thanks to the training and skills he had acquired. We have heard time and again the importance of financial learning games for setting and achieving goals and have seen an impressive increase of over 47% in enterprise skills knowledge post-training.
  2. Increase in confidence: The social empowerment impacts of YSGs can be just as important as economic empowerment. For instance, some young women saw savings and IGAs as a way to become more independent from their husbands, whilst others reported being more respected by their families and communities after joining a group and acquiring assets of their own. Young people gain confidence simply through participating in weekly meetings and taking on leadership and advocacy roles within the group, as well as through the financial, enterprise, employability, and life skills training offered by Banking on Change.

Drawing on programme learnings, IDS research, and sector-wide consultation, Banking on Change is now developing a Youth Savings Group Model. The aim is to produce a ‘how to’ guide to help other INGOs, NGOs, governments, funders, and policy makers integrate youth savings groups into their work. The scale of youth financial exclusion and unemployment means we need a global effort to tackle it, and we believe the Youth Savings Group Model can be part of the solution.

Interested in learning more about IDS research and the Banking on Change programme? Hear directly from Justin Flynn, our IDS researcher, and Naveed Somani, our MEL Officer, during the SG2015: Power of Savings Groups Conference  Research & Evidence Track on Wednesday, November 11th!

We’d love to hear your insights too; email us at bankingonchange@plan-uk.org by 31st December 2015 to share your experience on Youth Savings Groups and add to our emerging Model.

Additional Resources:

Rachel Lindley is Programme Manager at Plan UK for the Banking on Change Programme. Banking on Change is one of the largest programmes working with Youth Savings Groups globally; to date the programme has established 11,300 YSGs with over 120,000 members aged under 25. Rachel has 12 years of experience of charity and programme management, including nine years specialising in microfinance and, increasingly, microsavings programmes. She is passionate about enabling young people to fulfil their potential and sees youth economic empowerment programmes as a key part of that. Rachel read English Literature at Cambridge University and has a Masters in Development Studies from SOAS. 

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