Youth Savings Group Model Consultation Paper

Transcription

1 Youth Savings Group Model Consultation Paper I. Introduction Background People under 25 currently represent about half of the world s population in some developing countries the figure is 60 per cent. Over the next decade, more than one billion children, the largest group ever, will transition through adolescence into adulthood and 90 per cent will come from developing countries. With this demographic shift comes economic opportunities but also multiple challenges. Young people s lack of access to basic financial services is one such challenge, despite this being the very group where access to finance could help realise a number of transformational changes. Today, over 2.5 billion people have no access to formal financial services, such as savings, bank accounts and credit; services which can transform the lives of the world s poorest communities, especially young people and women, reducing poverty, increasing social equality and encouraging economic growth. Youth unemployment affects almost 75 million young people. 1 In developing countries in particular, rates of underemployment and working poverty remain high. Indeed youth unemployment is recognised as one of the most daunting challenges to global development and stability. 2 Where formal job opportunities are few, running a small business or being self-employed is a key way to support oneself and one s household. One of the key barriers faced by low income people in this regard is lack of access to finance to start or grow their business. 3 Youth are additionally disadvantaged. For example, the Global Findex report indicates that youth aged are 33 per cent less likely to have a bank account and 40 per cent less likely to have saved formally, as compared to those aged 25 and older. 4 Barriers include: difficulty obtaining documentation that is legally required; account costs (many young people are unwilling to pay even small charges on accounts); young people can be harder to reach through traditional delivery channels so it can be more expensive to reach them; and young people tend to have lower savings balances and be lowerreturn. 5 Savings groups are a key strategy employed by several international NGOs and a growing number of local development organisations to enhance the economic security and resilience of poor households. Savings groups are therefore one of the financial inclusion means through which economic 1 Youth Savings Group Model Consultation Paper

2 empowerment is achieved. They are simple in set-up and management: groups of people come together to pool their savings in a joint savings box. They put aside small amounts of money regularly, often weekly, and the money is used for loans by the same community members. These loans can be for income generating purposes, emergency expenses, or paying for health and education costs. Interest or a service charge is paid on the loans at rates determined by the group itself. By the end of the savings cycle the members receive a share-out of their savings including dividends from interest paid on loans. Globally, by September 2014, savings groups were estimated to reach over 10 million people, primarily women, the large majority in sub-saharan Africa. 6 There is now momentum to better understand how the principles of savings groups can be applied to youth and how youth savings groups can contribute to economic empowerment. A tri-partite partnership between Barclays, Plan UK and CARE International is aiming to do just this through the Banking on Change programme. In summary, Banking on Change aims to establish youth savings groups across 173,000 youth members aged 10-35, with a focus on year olds; provide them all with financial education so they can better manage their money; and provide a subset with entrepreneurship skills and employability skills, to support them to start and grow income generating activities and access decent jobs. Banking on Change also aims to link over 5,000 informal village savings groups to formal banking products and services. This linkage is always savings-led, encouraging disadvantaged people, and particularly youth, to begin their path to financial inclusion by saving collectively. Momentum on youth savings groups As part of the Banking on Change programme, Barclays, Plan UK and CARE International are working to develop a youth savings group model as a foundation for increased financial inclusion and as a contributor to youth economic empowerment. The model will outline good programming principles for youth savings groups and provide insight into their relation to economic empowerment. By linking up these areas, the importance of youth savings groups will move beyond the immediate results related to financial inclusion. The model will serve as a policy and practitioner framework, reflecting knowledge and expertise from across the sector. We are keen to understand the learnings from other actors as they apply to children s and young people s savings groups in order to drive the development of a robust youth savings group model within the wider context of financial inclusion and economic empowerment. In order to ensure the model is based on rigorous evidence both from within Banking on Change as well as through utilising expertise from the wider sector, we will be undertaking a year-long consultation process. The purpose of this process is to: seek the views of key stakeholders in the areas of financial inclusion, youth, livelihoods and economic empowerment on key components of effective programming with youth saving groups; inform the development of the youth savings group model as a framework for practitioners and policy makers in the respective areas mentioned above. Responding to the consultation Input to the consultation at this stage is requested on two levels: 1. Stakeholders are asked to review the suggested principles of effective youth savings group programming and provide comments. 2. Stakeholders are asked to answer the additional questions with a view to further building the content of the programming principles. The Banking on Change partners will collate feedback on this paper during the course of the next year, as well as conduct individual, group and face-to-face consultations with those working in the sector as well as with members of youth savings groups. Further research will also be conducted to inform the development of the model. The outcome of the consultation process will be shared with those organisations that have participated and the feedback will be built into the final youth savings group model. Reponses to the consultation, with both comments on the programming principles or answers to the additional questions, should be sent for the attention of Kerry Smith at bankingonchange@plan-uk.org. For further information on Banking on Change please visit Youth Savings Group Model Consultation Paper 2

3 II. Youth savings groups as change agents A key barrier faced by low income people, and in particular young people, is lack of access to finance and skills to start or grow their business. There is increasing evidence to suggest that youth saving groups may have an important role to play in overcoming this barrier, as summarised by the following six outcomes: 1. Young people can save Young people are often challenged by negative perceptions from formal financial and micro-finance institutions, hampering their ability to save. 7 Evidence suggests, however, that with a safe place to save and support to do so, low-income youth are able to save, usually through allowances from parents/caregivers or through income generating activities Youth savings groups provide an effective structure for low-income youth in developing countries to manage their finances and grow their assets The emphasis on small, regular savings deposits; social insurance; participatory management; low pressure to borrow compared to credit-led models; and access to lump sums that can meet household demands and emergencies, all make savings groups attractive to youth Youth savings groups provide access to appropriate financial services, and may alleviate some of the financial and other constraints faced by young people aiming to start up their business 10 Many young people who require funding to start up income generating activities require relatively small amounts. Savings groups provide an opportunity to enhance their economic independence. As well as lacking capital, young people may also lack confidence, skills, a support network and business advice Youth savings groups provide access to funds that can support social goals 12 Many young people join savings groups to support their own education and training needs, or those of their siblings or children. Alternatively, they use the finance to grow their small businesses, putting the profits into school fees. The social/welfare/emergency fund also provides resources in some emergency cases, backed up by the support network of belonging to the group itself. 5. Youth savings groups promote and strengthen young people s leadership capabilities 13 By actively participating in youth savings groups, young people can be empowered to take up leadership positions in their communities. For instance, by building the financial and leadership skills of young women, this often allows them to fulfil new roles within their households and communities, 14 either for social or business reasons Youth savings groups are a promising platform for the delivery of training in entrepreneurship, employability, life skills, and financial literacy 16 Youth savings groups provide an effective structure for additional learning. The structure of the groups, regularity of meeting, and responsibilities of their members to participate ensures a strong platform for further learning, particularly in those areas that are closely related to savings and loans. 3 Youth Savings Group Model Consultation Paper

4 III. Principles Section II highlighted six outcome areas that can be positively impacted by youth savings groups, as evidenced from various research findings and programme learnings. Based on initial experiences from the Banking on Change partnership and other initiatives, this section sets out the programming principles and emerging evidence that will contribute to reaching each of the respective outcome areas outlined in Section II. There then follow additional consultation questions for each programming principle. Outcome 1: Young people can save Programming principle A: Ensure access to youth savings groups is prioritised, reflecting the diverse backgrounds and needs of young people One of the strengths of the savings group methodology is its flexibility. A well-facilitated savings group designs its own constitution and rules around meeting frequency and timings, share size, loan interest rates, acceptable loan purposes etc. to best meet the needs of its members. Given there is sufficient evidence to suggest that youth in low income countries can save, it is important to ensure that the flexibility of methodology is applied appropriately. Depending on the profile and needs of the members, the methodology can allow young people from diverse backgrounds and needs to have an opportunity to join savings groups. Certain areas are known to have an influence on how savings groups are organised and managed: Gender influences membership in terms of meeting timing and locations. In some countries, single sex groups can be more appropriate. In others, parents/caregivers may need additional engagement, particularly in the early days of Emerging evidence Initial Banking on Change experience suggests that although access to youth savings groups should be open to those from various backgrounds, homogenous groups can work better a group of in-school youth for example will have similar time constraints (e.g. meetings need to be held after school hours) and literacy levels, whilst a group of out-of-school youth will be more likely to want enterprise skills training and their attendance may be affected by seasonal work opportunities. interventions, in order to understand and support the concept of saving groups, and to support the participation of girls and young women. Skills: While low literacy and numeracy levels don t need to be obstacles within savings group projects, it is worth noting that young people actually often have higher literacy and numeracy levels than their parents. Experience: Young people with different levels of experience in work, business and money management can all participate in and benefit from savings group membership, but as they have different time demands and requirements this needs to be taken into account. Location: Whether young people are based in rural or urban areas may have an impact on retention rates of the members and the type of income generating the members may wish to engage in. Savings groups can bring together young women and men looking to start up a business with those who are somewhat more experienced, facilitating this mentorship process or at least fostering the sharing of ideas and skills. At the same time, facilitators of groups that mix significantly younger and older members need to be careful that the voices of the older members do not come to dominate those of their younger colleagues, dampening the effects on youth ownership, leadership skills and self-confidence building. 17 Youth Savings Group Model Consultation Paper 4

5 Banking on Change has shown gender has a different impact on different groups. For example, single sex groups in Egypt are an example of ensuring young girls and their parents are comfortable for them to join. But sometimes young women cannot join as they have so many household chores they don t have time. This can be even more so for school-aged girls if they have homework too. On the other hand, it can sometimes be easier for women to join because they are not out looking for work or doing seasonal work in the daytime and can attend meetings and set up more home-based income generating activities. There are also cases of a woman joining a group and taking the loan but her husband then using the money for different purposes, or of a husband refusing to contribute to household expenses once he sees that his wife has some money of her own. On outreach to women, Banking on Change Ghana deliberately sought out women community leaders and asked them to support outreach, to encourage young women to join. Banking on Change Tanzania provided bajaji (motorised tuktuks ) rather than motorbikes as transport for field officers because women were unwilling to ride motorbikes but happy to drive tuktuks, and it is believed that having female field officers may encourage women to join the groups. Consultation questions: Are there aspects of standard savings groups practice that don t work for youth? Can these aspects be modified or adapted? Are more homogenous or more heterogeneous savings groups better able to support young women and men in their savings and livelihood goals? Does gender affect access to youth savings groups? What factors of power and marginalisation other than gender and age can also affect poor young people and their participation in savings groups? How do you facilitate and support savings groups to be inclusive of young people with disabilities or from minority ethnic, religious or linguistic communities, while maintaining the principles of self-selection and self-management? Outcome 2: Savings groups provide an effective structure for low-income youth in developing countries to manage their finances and grow their assets Programming principle B: All must save, all may borrow (responsibly) Banking on Change promotes financial inclusion through a savings-led approach rather than a creditled approach it is a low-risk form of microfinance where members save together and take loans from this pooled fund. Savings groups projects use an extremely low-cost model that enables the creation of fully sustainable institutions from the start. 18 Whilst youth accessing loans through the groups is a perfectly legitimate activity, it is important to build the capacities of young people in managing and building their assets to ensure the groups remain savings-led. There is another dimension to the credit question, however, which is the need for responsible lending. This becomes particularly pertinent when loans offered through the youth savings groups are no longer sufficient. 5 Youth Savings Group Model Consultation Paper

6 Emerging evidence One year after group formation, Banking on Change has seen positive trends with regards to savings ratios and loan utilisation ratios. For example, in Tanzania savings per member have increased from $23 in Q1 to $40 in Q3 of Average loan sizes have gone from $65 to $95. In Ghana, the average saving per youth member has increased from 43 Cedi in Q1 to 59 Cedi in Q3 and the average loan size has increased from 104 Cedi in Q1 to 109 Cedi in Q3. (Fluctuations in the Ghanaian Cedi to USD exchange rate mean that it is very difficult to measure average savings and trends in USD in a meaningful way). 20 Banking on Change has seen a strong demand and expectation for credit by young people. This is to some extent due to high levels of unemployment which drive young people to start up income generating activities. Many youth savings groups, particularly those with older youth who are growing their income generating activities, may express a demand for higher amounts of credit than can be generated in the group itself. Linking youth savings groups with formal financial institutions can offer a solution, but may entail additional risk. To reduce risk and increase benefits, linking with banks requires that legal considerations, in terms of minimum age and guardian co-signatories, are taken into account; that youth receive further bank education to understand their rights and how products and services work; and that youth, their parents and guardians, and formal financial institutions are sensitised on how to work together. The Children s Rights and Business Principles, and the Child and Youth Finance International (CYFI) Child and Youth Friendly Banking Principles 21 offer ways of ensuring that banks respect the rights of children and youth in all that they do. Consultation questions: Do youth members invest their savings and loans in income generating activities at comparable levels to older adults? Do participants in youth savings groups borrow and successfully repay loans from savings groups funds at comparable levels to savings groups made up of older adults? Is there a link between savings groups that have established relationships with formal microfinance institutions (that can provide access to bigger investments) and income generating activities that have scale? Programming principle C: Apply youth-focused and youth-friendly outreach, training, and support structures to youth savings groups In order to ensure youth savings groups help young people to manage finances and grow their assets, it is critical that targeted strategies are put in place for retaining young people. The first programming principle highlighted the need to ensure access to young people who have an interest in joining savings groups. The next step is to ensure some selection is done through outreach to ensure needs and aspirations are sufficiently manageable within groups. To this effect, mobilisation of young people needs to take into account the locations and timings of their activities, goals, backgrounds, and interests. This may include providing outreach activities with existing youth groups or youth-oriented media, and using youth friendly approaches and materials to provide access to complementary training in financial education and/or business, employability, vocational or life skills. It should always mean engaging with parents and caregivers, 22 sometimes intensively, including some who are savings group members themselves. It is anticipated that effective mobilisation will have a positive correlation with the retention rates of youth savings groups. Early evidence from Banking on Change and the Youth Microfinance Programme 23 also suggests that youth group attendance and retention (at least in the short to medium term) can be as high as adult groups attendance and retention. Youth Savings Group Model Consultation Paper 6

7 Emerging evidence Banking on Change has found that peer-to-peer (youth-to-youth) mobilisation is an effective approach. Young people often find it easier to engage with their peers and to follow the example of fellow young community members in joining groups. Banking on Change has also found that using youth village agents 24 is a highly effective mobilisation, training, and support approach. These agents are volunteers, working with NGOs in delivering microfinance programmes. They are young and from the local communities where the savings groups are established. It seems that for these two reasons other young people find them more approachable than for example a field officer from an NGO. There is a role for sensitising communities and parents in mobilisation. This will ensure it is easier for young people to join as their parents are aware of what the savings groups are about. Also, parents may wish to join savings groups themselves and as such provide an example for their children. For example, in Banking on Change Egypt, many of the young people are members because their parents are. Banking on Change has found that mobilising young people on average takes longer in comparison to mobilising adults for savings group. Some challenges that were initially encountered included youth who are used to spending money rather than saving, young women who are concerned that joining groups may not be safe for them, and working in areas where youth have been exposed to handouts from other NGOs or government, and so are unwilling to save. This has required allocating additional resources to sensitisation activities. Consultation questions: Are differences in approach necessary in order to mobilise and retain young people in rural, urban and (peri-) urban areas? What are they? What is the role of parents or carers in supporting mobilisation, given that many young people in savings groups are encouraged by their parents if they are part of savings groups too? To what extent can schools and TVET institutions work as places to mobilise youth and run youth savings groups? Does it depend in part on whether students are local or boarders? What is the most appropriate way to incorporate gender aspects in mobilisation strategies? How can we ensure that young people continue to be motivated to participate in savings groups? Is retention a problem in youth savings groups? How has your organisation overcome or mitigated this, or what complementary initiatives have you offered to support the economic lives of group members who leave? 7 Youth Savings Group Model Consultation Paper

8 Outcome 3: Youth savings groups provide access to appropriate financial services, and may alleviate some of the financial and other constraints faced by young people aiming to start up a business Programming principle D: Provide additional support to those youth who want to start up a small business Whilst some young people are interested only in saving and do not want to take out a loan, many, especially those who are no longer in school, are keen to start up small businesses. These young people face many barriers, including lack of access to investment capital, lack of skills, lack of confidence, lack of a support network and lack of business training and advice. In order to maximise their chances of success, young Emerging evidence Early data from Banking on Change suggests that demand for credit from youth savings groups is comparable with demand from adult savings groups, particularly amongst out-of-school youth. Banking on Change Ghana has found that homogenous life-stage groups can work better because savings and borrowing levels will be more equal and trainings can be tailored more appropriately. For example, in-school youth can typically save less whilst out-of-school youth show more demand for business training and support for income generating activities. There is some evidence that the sorts of businesses selected by youth differ from those selected by adults, with further differentiation in rural and urban people may need additional support, advice and training as compared with adult savings group members. Care should be taken, however, to ensure that loans are not taken out for consumption purposes or where members have no way to repay them (e.g. for school fees). It will often be necessary to tailor the training curriculum and delivery style to suit the region, age/life stage and literacy levels of a group. areas. This means that training manuals often need to be contextualised even within a country. Some in-school youth have taken loans for school fees and then been unable to repay, so care must be taken to deliver financial literacy and savings/borrowing training fully. On the other hand, other young people have used loans for school fees and been able to repay them thanks to side businesses or contributions from relatives. Banking on Change has introduced speciallyadapted youth enterprise skills training which takes a coaching/mentoring approach and aims to build young people s confidence as well as their skills. This is proving popular with youth savings group members. Consultation questions: Does business training increase young people s attendance and retention rates in savings groups? Is there any evidence that starting an income generating activity will make a young person less likely to migrate in search of seasonal or casual work? Or that it reduces the incidence of harmful work e.g. mining, prostitution? Recognising that savings groups will only ever be a partial solution, is there a need to engage with government and industry to support young people wanting to start businesses? In contexts with limited formal employment opportunities, can savings groups offer a springboard for young women and men away from necessary entrepreneurship towards less vulnerable forms of entrepreneurship and work? If so, how can this process be supported? Would it be better to overcome the obstacles to individual entrepreneurship via individual rather than group approaches to fostering youth savings e.g. linking individual young people (whether in youth savings groups or not) to banking products and services? Youth Savings Group Model Consultation Paper 8

9 Programming principle E: Use appropriate risk reduction / risk management mechanisms to ensure youth savings groups meet youth expectations Overall, the anticipated risks of participating in youth savings groups are few and low, but can include: time requirements are too high, meaning other responsibilities suffer or full participation in the group is not possible. caregivers or others using the savings or accessing the loans available to youth members. a failed savings group experience (particularly in terms of a stolen box or a savings group member or INGO/NGO staff member leaving with or losing money) leading to distrust in others in the community and in NGOs. the investment of group funds in speculative activities that are risky and put group assets in jeopardy. In order to ensure young people are given the opportunity to fully utilise the savings groups they participate in, it is important that appropriate risk reduction and risk management structures are considered. These include targeted outreach strategies, closely liaising with parents and caregivers, and sufficient training and follow-up support from the NGO and the wider community to manage potentially risky behaviour. Emerging evidence Evidence suggests that the best risk reduction mechanism is well-trained and supported field officers and community volunteers/village agents who are able to promote the savings group model to youth and their parents/caregivers in a clear, comprehensive and realistic way, and to manage youth expectations (of handouts or quick income gains). Banking on Change utilises youth village agents as a linchpin in its delivery structure. These volunteers play a crucial part in sensitising the wider community, working with youth, and keeping an eye on youth savings groups performance. In order to provide support to youth village agents, Banking on Change has introduced a number of effective methods. Banking on Change Zambia paired up youth village agents so that they can support each other and build their confidence in delivering support to the communities they work in. Banking on Change Tanzania has set up youth community volunteer networks whereby the young people meet once a quarter to share experiences and learn from each other. A similar structure is used in Ghana. Consultation questions: What further risks does your experience show there to be for youth savings groups and their members? What mitigation strategies have proved effective to protect and enable engagement by young people, including the most vulnerable groups of young people (women, minors), in savings groups? What emerging, if any, guidelines would help mitigate risk for youth savings groups? What is the role of parents/caregivers in mitigating risk? 9 Youth Savings Group Model Consultation Paper

10 Outcome 4: Youth savings groups provide access to funds that can support social goals Programming principle F: Ensure youth savings groups make use of the social/welfare/ emergency fund and include training and support for social goals within the programme A core part of the traditional Village Savings and Loans Associations methodology is the welfare fund. Members make a fixed contribution to this fund at each meeting. The money accumulated in this fund is held separately and is not lent out nor shared out at the end of a cycle. Instead, it is available for the group Emerging evidence Some youth groups in Banking on Change have re-named the Social Fund as the Education Fund, recognising that this tends to be their greatest need. Evidence from Banking on Change focus group discussions show that across all countries, young people want to save for their own education (or for that of their siblings or dependents). Banking on Change Tanzania is forming clusters of youth savings groups known as Intermediary Associations or IMAs. IMAs function exactly like savings groups but the members of the IMA are savings groups rather than individuals; thus at IMA meetings, a representative of each member savings group attends to buy shares and take loans on behalf of the group. In essence, the IMAs enable savings groups with excess liquidity to invest their surplus savings and generate return on them, whilst savings groups with excess credit demand can take loans from the IMA to add to to make emergency grants (or loans) to any members who apply for it for example, in the event of an accident or sickness. Youth savings groups should be encouraged to use this element of the traditional methodology with adaptations as required. the savings group s own loan fund. IMAs also operate a welfare fund but because individual members emergency needs can be met from their own savings group s social fund, the IMA fund is often known as a Special Projects Fund and can be used for community social projects. Evidence from a Microfinance Opportunities programme across five countries identified the social support element of savings groups as one of the key draws especially for vulnerable girls. Participating in groups came up again and again as something that girls loved about the programs. Early impact findings from Kenya show that girls who both save and participate in groups have a better understanding of health and money management, and are more likely to seek out health services, get tested for HIV, and have friendships, when compared to girls with savings accounts only. 25 Consultation questions: Does membership of a youth savings group impact on social expenditures (e.g. education) and community support activity? Is there evidence of simply belonging to a savings group giving young people additional resources (financial, emotional) to draw upon in times of need? Are there other examples of youth savings groups engaging in social outreach or support for more vulnerable members of the group or within the wider community? Are there innovations in the savings group methodology to make it more appropriate for young people looking to meet the costs of education? Are there examples of savings groups forming alliances with vocational training centres, so that members can access education and training? Youth Savings Group Model Consultation Paper 10

11 Outcome 5: Youth savings groups promote and strengthen young people s leadership capabilities Programming principle G: Ensure meaningful engagement from young people in establishing effective youth savings groups Youth savings groups require well-defined governance structures that allow youth members to be actively involved in decision making, and to be able to make decisions on an informed basis. Young people need to feel ownership and be able to Emerging evidence Plan has piloted the Youth Advisory Board (YAB) in the Youth Microfinance Programme (YMP) whereby young people had specific governance responsibilities in savings groups. Their role was to provide support to youth savings group members, including underperforming groups, resolving conflicts, monitoring group quality, providing technical training and collecting data. The final evaluation of the project showed that the YABs have played an important role in the programme, having added value to planning, sensitisation, and training. 26 Furthermore, evidence suggests that youth were role models and, even after programme completion, had remained active and committed to youth issues in their community. Through Banking on Change, networks of youth groups are established in several countries. For example, Banking on Change Zambia is forming apex committees drawing together elected representatives of youth savings groups within a region into a regional apex to help them feedback on the programme as well as access services (e.g. training or even funding) from other providers. Banking on Change Ghana has a Youth Governance contribute ideas, from programme design through to implementation and monitoring and evaluation. This engagement not only ensures that the youth savings group remains relevant to its members; it also helps build young people s capacity. Framework which provides for district, regional and national youth networks where representatives from youth groups will help outreach in new areas, participate in programme review and planning meetings, facilitate exchange visits between savings groups, champion savings groups for youth to educate the population on their benefits and hold quarterly meetings to network and share experiences. Banking on Change Ghana has also introduced a youth CV (community volunteer village agent) policy to ensure their effective role in the programme. The policy details the qualifications, responsibilities, training and support offered to their youth CVs. Support measures include quarterly networking/ sharing meetings, provision of bicycles and performance-based incentives such as the award of a household or livelihood asset at the end of the programme. There is also a formal assessment and certification process. Banking on Change Zambia has a similar Community Volunteer Retention Plan. These motivated, trained and effective youth volunteers are well-placed to become youth community leaders. Consultation questions: What are the best ways to engage young people in meaningful ways that improve outcomes for youth savings group members, and build ownership and skills, but do not overburden them in terms of time? What are the best ways to ensure supervision of quality? To what extent is the existence of a wider support network critical to youth members? Does the use of youth village agents impact upon youth savings group membership retention? Is retaining youth village agents/community volunteers a challenge? What ways are useful to improve retention? 11 Youth Savings Group Model Consultation Paper

12 Outcome 6: Youth savings groups are a promising platform for the delivery of training in entrepreneurship, employability, life skills, and financial literacy Programming principle H: Utilise savings groups as forums for additional training, learning and development The structure of youth savings groups whereby young people meet regularly, adopt specific rules and regulations, and gradually build up their asset base through regular savings, provides a strong foundation for discussion of and training in other topics. This includes business, employability and vocational skills which are closely related to the overall savings objectives and which have proven to be in high demand. Furthermore, youth savings groups create a space for social cohesion and a sense of community which may not be in place prior to the programme interventions. In return, this creates a trusting environment where youth feel comfortable undertaking additional training and skills development programmes for example in gender equality or entrepreneurship training. This sense of community/social cohesion created by being Emerging evidence Research on youth savings groups and how they support entrepreneurship and employment highlighted the experience in Zambia, where additional training provided to savings groups had helped them to start new income generating activities, diversify existing ones, and increase profits. 27 Banking on Change has seen youth groups used as a platform for young people to discuss and share information on issues affecting them such as HIV/AIDS, sexual and reproductive health and rights, alcohol and drug abuse and child marriage (Zambia, Egypt). It has also seen demand for training in proposal writing and business plan development skills support, in order to apply for government youth business loans (Kenya). The Youth Microfinance Programme said in its evaluation report that: In the hearts of many youth, Youth Savings and Loans Associations became a platform for discussion, information sharing and consensus building a place where they could find a friendly ear and solutions. part of a group was identified by youth in the Youth Microfinance Project as one of the most important attributes of the savings group programme. It is critical that savings group formation and additional training should be delivered in an interactive and youth-friendly way that offers opportunities for participants to link learning to their current needs and experiences. These include learning to save and borrow for educational expenses, starting or growing income generating activities, or establishing insurance funds for emergencies. Banking on Change is piloting a youth-focused enterprise skills training curriculum which uses coaching methodology to help youth identify their goals as well as their opportunities. Similarly, many parents reported gaining personal benefit from overhearing their children talk about all the knowledge they had acquired through the program, especially with regards to life skills. The YMP noted in its evaluation report that nine times out of ten, youth who had launched new income generating activities or enhanced existing ones said they had used financial resources supplied by the savings groups. Such financial independence seems to have given members a chance to overcome economic and social constraints. In Sierra Leone, young women and men reported using their loans to pay off their school fees or those of their children, with a view to building a better future. Youth who had cash flow problems in the past were now able to earn money through income generating activities and sustain their daily needs. We have seen in Banking on Change that in some countries particularly Kenya young people set up in business together. Youth Savings Group Model Consultation Paper 12

13 Consultation questions: Do all youth savings groups act as forums for additional learning and development? Are there other examples of particularly successful training programmes delivered to youth savings groups? If so what did they include? Is there a risk that the savings group platform becomes overloaded? Do youth savings groups lead to more group enterprises? Does the add-on training for enterprise and employability lead to a better income? Can members of youth savings groups more easily access employment? Please send responses to the consultation for the attention of Kerry Smith at bankingonchange@plan-uk.org For further information on Banking on Change, please visit our website 13 Youth Savings Group Model Consultation Paper

14 Notes: 1 ILO (2014) Global Employment Trends Risk of a jobless recovery? Geneva: ILO. 2 UNDP (2014) Human Development Report 2014 Sustaining Human Progress: Reducing Vulnerabilities and Building Resilience. New York: UNDP. 3 Schoof, U. (2006) Stimulating Youth Entrepreneurship: Barriers and Incentives to Enterprise Start-ups by Young People. Geneva: ILO, p Findex report: WDSContentServer/IW3P/IB/2012/04/19/ _ / Rendered/PDF/WPS6025.pdf 5 Case-for-Youth-Savings-A-Framework-Jul-2014.pdf 6 Allen, H. (2013) Global Outreach of Savings Groups. VSL Associates. 7 In a 2009 survey by Making Cents International, 45 per cent of microfinance providers indicated that their staff consider youth to be irresponsible, unable to manage money, and risky due to a lack of collateral: otf/makingcentsinternational2008stateofthefieldpublicationvpri nt.pdf 8 SEEP Network (2013) Understanding Youth and their Financial Needs. 9 Markel, E. and Panetta, D. (2014) Youth Savings Groups, Entrepreneurship and Employment. London: Plan UK, p3: documents/494816/ 10 Ibid, p4 11 Ibid 12 Ibid 13 Ibid 14 Ibid, p3 15 Global research indicates that social capital has improved repayment rates and increased savings and empowered women, see: Freedom from Hunger (2013) Saving Together: Group- Based Approaches to Promote Youth Savings: gether_eng_web.pdf, p11 16 Markel, E. and Panetta, D. (2014) Youth Savings Groups, Entrepreneurship and Employment. London: Plan UK, p4: documents/494816/ 17 Markel and Panetta (2014), p Allen, H. and Panetta, D. (2010) Savings Groups: What Are They? SEEP Network, p Banking on Change quarterly report, July-September Banking on Change quarterly report, July-September Child and Youth Finance International (CYFI) and MasterCard Incorporated International Banking a New Generation: Developing Responsible Retail Banking Products for Children and Youth. Amsterdam: Child and Youth Finance International and MasterCard Incorporated International, p Making Cents International (2010) State of the Field in Youth Enterprise, Employment and Livelihoods Development: A Guide for Programming, Policymaking, and Partnership Building. Making Cents International, p Plan Canada, Final Evaluation of the Youth Microfinance in West Africa Program, p Youth village agents (YVAs) are community volunteers who provide a number of services to youth savings groups including outreach, training, and support. YVAs are found in both urban and rural areas. 25 Jennefer Sebstad/Microfinance Opportunities (2011) Girls and Their Money: Strategies for Promoting Savings, Financial Education and Social Support for Adolescent Girls in Lowincome Countries. Microfinance Opportunities, p ploads/ resource/nike%20report% pdf 26 Plan Canada, Final Evaluation of the Youth Microfinance in West Africa Program, p Markel and Panetta (2014), p24. Youth Savings Group Model Consultation Paper 14