Savings groups are increasingly seen by development organisations and financial institutions as an ideal way to promote financial inclusion in Africa, including among young people. The idea is that access to financial services will support new income generating activities and job creation, which is particularly significant amidst a “youth employment crisis”. As highlighted in this report, published today, engagement with youth savings groups is influenced to a large extent by family and social relations, and this has important implications for how programmes to promote youth savings groups are designed, implemented and evaluated.
Some programmes create special groups for young people, while others use mixed-age savings groups. Some training (e.g. in financial literacy) is usually on offer, and in addition to savings, these groups often provide access to credit. Despite differences in how programmes are designed and implemented, they generally conceive of the young members as autonomous individuals, who are making and implementing independent decisions about savings, credit, investment and expenditure. This perspective leads to training being targeted at individual members, and impact typically being framed as the intervention’s effects on individual members’ knowledge, savings behaviour and economic activity.
Banking on Change
Our recent work with the Banking on Change (BoC) programme calls some of this into question. The last phase of the programme had a special focus on young people. In addition to forming youth savings groups, BoC provided group members with training in financial literacy, entrepreneurship and employability skills, and in some cases created links to formal finance. BoC operated in seven countries: Egypt, Ghana, India, Kenya, Tanzania, Uganda and Zambia, and reached over 250,000 young people.
Last year we interviewed 57 young people who were selected from amongst the members of eight youth savings groups in Tanzania, Uganda, Zambia and Ghana. Interviewees ranged in age from 13 to 36, some were still in school, while others had started families and/or were engaged in one or more income generating activities such as farming and livestock, farm labour, pretty trade, food preparation, hair plaiting and brick making.
Youth engagement in savings groups is a family affair
During the course of these interviews it became apparent that many of the young people were using the funds of other individuals (e.g. parent, spouse, boyfriend, ex-partner or other family members) or funds from other sources (e.g. existing savings or informal loans), to save and to re-pay loans; or were handing over shareouts and/or loans to parents or guardians. For example, nearly two-thirds of women with partners received money from their partners (or ex-partners) to save, and others reported borrowing from relatives or neighbours in order to save. In a school-based group in Ghana where most of the members were below the age of 16, all nine interviewees reported saving some of the pocket money they received from their parents or guardians. Additionally, four members from another group in Ghana reported saving and borrowing money directly on behalf of their parents or grandparents: the young members themselves did not use their own money to save (or only very rarely), nor did they use what was borrowed. They represent examples of what we termed “surrogate savers”.
At one level, there should be nothing surprising in the fact that a key resource, cash, flows readily along family lines. What could be less worthy of note than a husband helping a wife to save, or a student returning part of her shareout to her parents or fronting a small loan for a sibling? At another level, however, the fact that youth savings is clearly, and perhaps primarily, a family affair, means it is not viable to assume that there will be a direct relationship between project activities (e.g. in the form of training) and changes in the savings behaviour or level of income generation of individual members.
While it is true that this insight potentially complicates matters – e.g. in terms of what is an appropriate baseline, and how impact is conceived and measured – it also opens the door to a more sociologically informed understanding of how and why values and behaviours around savings change. There is, we believe, much to be gained if those working on financial inclusion of young people begin to acknowledge and work with the strong links between social relations and financial relations.