If You Build It Who Will Come?

This is the second installment of our latest blog series, Understanding YouthSavers, which highlights the findings of CSD's recent report, Savings Patterns and Performance in Colombia, Ghana, Kenya and Nepal.

Last week, we provided an overview of our findings from the YouthSave research study. Here, we delve deeper into the basic question: who are the YouthSave account holders?

A few quick statistics: Both girls and boys participate, most of the youth are in the 12-18 age range, and approximately 40% live on less than $2.50 US dollars per day. Almost 90% have never had experience with formal banking.

However, these statistics differ by country. For instance, in Colombia and Ghana, slightly more girls than boys took up accounts, whereas in Kenya and Nepal many more boys took up accounts than girls. Overall, we’ve found that girls, out-of-school youth and the very poor tend to be under-represented.

Gender

The discrepancy across countries when it comes to gender may stem from multiple factors. One is gender inequality rankings within each country. Among the four countries, gender inequality is lowest in Colombia and highest in Kenya. Another possibility is cultural differences and level of mobility that girls and boys have in their respective countries. In Nepal, for example, girls are less likely to go somewhere alone, thus limiting access. A third factor is the marketing and service delivery efforts employed by the financial institutions (FIs). In Ghana and Colombia, service delivery and financial education occur at mixed gender schools. In Kenya, however, FIs tend to target boys’ schools because it is easier to get permission to visit. In fact, during previous product piloting, gender account uptake was nearly balanced in Nepal but it was explained that more girls’ schools were targeted during that timeframe. Most recently, greater outreach by financial institutions to girls’ schools, has increased the number of accounts opened by girls. For both genders, access is the primary variable. Once accounts have been opened, we find no significant difference by gender in amount saved.

School Enrollment

The FIs quickly determined where youth are most likely to gather – at school. In terms of getting the message to the youth, FIs focused primarily on reaching youth at schools, with some effort to attract out-of-school youth. The predominance of youth enrolled in school in the YouthSave population suggests that it is a more educated group than corresponding national populations. That is, the YouthSave population of 97.6 percent in school contrasts with the primary school dropout rate, which ranges from 15 percent in Colombia to 38 percent in Nepal.

Only 2.4 percent of the YouthSave participants do not attend school. In Nepal, these youth are older and more likely to be between the ages of 16 and 21, the age of majority. In Kenya, out-of-school youth are younger and generally between the ages of 10 and 18. The limited number of those not in school who opened accounts largely reflect the focus of the FIs on schools, and at the same time reflects the challenges involved with both reaching out-of-school youth and obtaining the necessary documentation to open an account.

Poverty Level

YouthSave is attracting a poor population, but the percentage of poor youth opening accounts is less than that of the respective national populations. Across the countries, the estimated poverty rate of YouthSave account holders – those living under $2.50 per day – averages 40 percent, in contrast to the overall national population average across the countries of 53 percent. Similarly, the rate of the YouthSave population living below $1.25 per day is only 13 percent, compared to the national population average across the countries of 22 percent. It is logical and appropriate that an FI has an economically diverse clientele. Indeed, higher saving clients may compensate for the cost of holding small deposits. Financial products in YouthSave were designed around low-income youth preferences, but outreach was both targeted and offered broadly, and uptake likely reflects this mixed outreach approach. Very poor youth may not open accounts for a number of reasons. For instance, they may not attend the schools that the FIs are targeting. They also may not have a way to get to a bank, the documentation needed once they are there, or a trusted adult to co-sign on the account (regulations in three out of four YouthSave countries require this). Or they simply do not have any money to put in an account.

Conclusion

YouthSave accounts are being opened by a diverse group of girls and boys, many who are from poor households. The majority of the YouthSave account holders are in-school youth, which is a reflection of the prevalence of FI outreach to local schools. Almost none of the young account holders have had any previous experience with banking, meaning that YouthSave is contributing to the goal of financial inclusion. Although the YouthSave population does not exactly mirror the respective national populations in terms of poverty and education level, the FIs have widened the circle, creating more opportunity for youth participation at all income levels – and the youth are responding. So which of these characteristics was most important to savings performance? Actually, none of them are associated with the amount saved. For the factors that appear to drive savings, tune in next time.