Youth Savings Patterns and Performance in Colombia, Ghana, Kenya, and Nepal
Center for Social Development (CSD) – Washington University
CSD Publication 15-01 YouthSave Research Report – Revised February 18, 2015 :: 223 pages Lissa Johnson, YungSoo Lee, David Ansong, Margaret Sherraden, Gina Chowa, Fred Ssewamala, Li Zou, Michael Sherraden – Center for Social Development
Moses Njenga, Joseph Kieyah KIPPRA, Kenya
Isaac Osei-Akoto ISSER, Ghana
Sharad Sharma, Jyoti Manandhar New ERA, Nepal
Catherine Rodriguez, Federico Merchán, Juan Saavedra Universidad de los Andes, Colombia
Ten Key Findings
The following ten key findings summarize highlights and may signal to the reader topics that merit closer attention:
1. Youth will open savings accounts if financial institutions make safe and affordable accounts available. Almost 100,000 youth across four countries opened accounts between the years of 2012 and 2014, of which approximately 70,000 are included in the research study.
2. Youth will save in the accounts as evidenced by the $1.8 million saved across the four countries (comparability based on 2011 purchasing power parity conversion rates).
3. As measured by average monthly net savings, younger youth (i.e., youth aged younger than 13 years) save more than older youth, in part because younger youth withdraw less than older youth. This result highlights the importance of starting to save early in life.
4. Female youth save as much and sometimes more than male youth. This finding and the lower female account uptake rate of 41% in Nepal and Kenya suggests that access to financial institutions may be a bigger gender barrier than saving itself.
5. Direct outreach from financial institutions to locations where youth congregate (e.g., schools, youth clubs) facilitates overall account uptake. Direct outreach at low-income schools and girls’ schools facilitates low-income (48%) and female youth (43%) opening accounts. Additional efforts are required to reach out-of-school youth.
6. About 39% of youth were actively using their account during the last six months of the study, which suggests the importance of focusing on ways to increase deposit activity. Deposit frequency is highest in Colombia where monthly deposits are part of a programmed savings goal. Youth receiving cash incentives in Nepal saved significantly more than other Nepalese account holders. These findings indicate possible directions for encouraging deposits.
7. Financial institution policies influence the number of accounts opened. In Nepal, where the age of majority is 16, 42% of the account holders own and operate their accounts. In Kenya, flexibility in banking policies allowed “trusted adults” to be cosignatories on minors’ accounts, a policy already allowed in Ghana. In these two countries, nonrelatives are cosignatory on 56% and 47% of accounts, respectively. In Ghana, the Central Bank approved use of custodial accounts rather than trust accounts, which allows minors greater control of their account. Greater flexibility in banking policies may facilitate greater youth financial participation.
8. When parents are the cosignatory, youth save significantly more. The majority of the youth (84%) indicated that savings would likely come from family. Engaging the parent in the savings process is important to help youth save and accumulate assets.
9. Account restrictions affect account uptake and savings performance. Stringent withdrawal restrictions hindered uptake in Colombia but facilitated stable savings in Ghana. No withdrawal restrictions or fees enabled use of savings accounts more like transaction accounts for account holders of majority age in Nepal.
10. Products and product features should be clearly defined and tailored to the development stage of the youth. A lifelong savings account accompanied by other products as the youth reaches employment age may satisfy both the need to save and the need to manage expenditures.
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Press Release
YouthSave Report Offers New Insights into How and Why Young People in Developing Countries Save Money
Study is the Result of Five-Year Project Involving 117,000 Youth in Four Countries
WASHINGTON, D.C. (March 16, 2015) — A groundbreaking project examining the attitudes and practices of young people in developing economies toward saving money has led to new findings that both confirm and challenge assumptions about youth saving at formal financial institutions.
The study shows, for example, that if there are equal opportunities to do so, girls will save as much money or more in formal financial institutions than boys. The study, which focused on youth aged 12-18, demonstrates that, under the right conditions, younger youth (those below the age of 13) will save more than older youth. It also finds that parental involvement in supporting saving by their children is an important factor in determining who saves money, how much, and how often.
The study was carried out by YouthSave, an international development consortium led by Save the Children in partnership with the Center for Social Development (CSD), New America, the Consultative Group to Assist the Poor (CGAP) and The MasterCard Foundation, a founding partner of the YouthSave consortium.
The report released today, Youth Savings Patterns and Performance in Colombia, Ghana, Kenya, and Nepal, outlines findings from a study of the largest known dataset on how teens in developing countries save money. Under this project, more than 117,000 youth in the four countries opened savings accounts. Of these young people, almost 70,000 agreed to take part in the research study; and about 48 percent of them were youth estimated to be living at or below $2.50 per day…
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