Why Kenya Needs a Youth Financial Capability Policy

“The most effective way to influence positive financial behavior is when you put tools in the hands of young people – giving them the chance to own and operate an account.”

These insights, shared by Mr. John Kariuki, CEO of AAR Credit and YouthSave Kenya Country Advisory and Expert Advisory Board member, encapsulated the discussions and thoughts of 50 individuals drawn from NGOs, government, universities, and the private sector at YouthSave’s 2013 Multi-Stakeholder Meeting (MSM) in Kenya. Success, they agreed, would be achieved when adolescent youth are equipped with the right financial knowledge and skills; yet this requires an environment that supports and implements the right policies to influence positive attitudes and financial behaviour.

The MSM’s objective was to identify key policy issues for youth development and financial inclusion and to inspire relevant government agencies to prioritize the realization of supportive policies. Dr. Wainaina Gituro, Deputy Director of Kenya’s Secretariat for Vision 2030 (the country’s economic blue print) put it well when he said, “The topic of financial inclusion and education is an important and timely one, especially for adolescent youth, who have been excluded [from] mainstream financial initiatives and programs.”

He further pledged the Secretariat’s support for a national youth savings policy, which he noted, is aligned with the Vision’s goal of raising the national savings level from the current 16% to 30%. This is also against the factual backdrop that Kenya’s young people aged between 10 and 24 account for 31% of the total population. FSD’s Kenya 2009 study indicates that about 74% of youth aged 16-17 years are excluded from any form of financial access.

To achieve financial inclusion for children and youth, Dr. Gituro suggested four actions: - Rope in relevant government and development agencies to drive the agenda. This is a propitious moment to solicit government support since youth have emerged as a priority across all ministries. Notably the Kenya Institute of Curriculum Development (KICD) has recently added its voice in support of the institutionalization of a national financial literacy curriculum. - Promote interventions that lead to job and wealth creation. - Include out-of-school youth and the informal sector. - Design appropriate savings products and services.

Informed by project findings shared by in-country YouthSave partners, a panel session moderated by Dr. Mbui Wagacha, Chairman of the Board of Directors of the Central Bank of Kenya, highlighted the potential of mobilizing and increasing savings levels within the country. He illustrated this potential by noting that Kenyans, both in the formal and informal sectors, already have savings reaching Kshs.1.8 trillion. And all though there is much to be desired, the potential to mobilize more savings is great given the availability of access point options, particularly via mobile phone and agent banking.

The challenge however lies in understanding (a) what tools, knowledge and skill sets are needed to influence positive financial behavior, (b) the appropriate implementation and delivery methods, and (c) the right policies to promote youth financial savings and education.

In this regard, participants agreed on four recommendations: - Eliminate cumbersome regulations such as age and KYC documentation that inhibit promotion of youth financial capabilities. - Teach financial literacy as a life skill - a thread that should run through the life cycle of children and youth and be emphasized at ‘teachable moments’. Topics should include investment, job and wealth creation. - Increase efforts to ensure financial inclusion of the most vulnerable youth i.e. adolescent girls and out of school young people. - Conduct further study on (a) factors/drivers influencing savings mobilization and (b) the role of SACCOs and informal financial service providers in financial inclusion for targeted youth.

Using insights and recommendations from the meeting, a task force composed of Save the Children, Child Savings Kenya, KICD, Plan International, Smart Youth, Child Fund and Postbank was entrusted to (a) develop a national youth financial capability policy and (b) work closely with relevant government agencies to solicit national support and sustainability of youth focused financial initiatives. The task force has started the process towards developing a financial capability national framework.