Youth Savings Association: Not Just About Developing A Savings Culture
Research1 has shown that benefits from savings groups can go beyond asset building and savings for youth, and provide working youth with their own solidarity groups in which they find peer support and social security. They can also expose youth members to other financial service concepts, such as borrowing, banking, and income generating activities, which are taught through orientations and workshops. This blog seeks to further strengthen existing research on youth savings by showcasing MEDA's project titled Ethiopians Fighting Against Child Exploitation (E-FACE).
Village Savings Associations for Youth (VSAYs) are one aspect of a multi-pronged approach to supporting Ethiopian youth in the E-FACE project. MEDA's youth team recently undertook a visit to Addis Ababa to explore savings behavior among youth, including changes in their livelihoods, behaviors and working environment as a result of their participation in savings groups. Field observations, interviews and focus group discussions with VSAY members and their parents revealed a number of important changes.
VSAYs: What and How?
Youth (aged 14-17) who have completed skills training or occupational health and safety awareness programs are formed into savings groups, composed of 10 to 20 working youth. Like most savings groups, these develop by-laws as a framework for governance; establish a management committee; and meet weekly to register transactions into a lockable cash box. Members agree on a regular, fixed contribution by all to a Social Fund which can be used for emergency assistance, educational costs for orphans, etc. as agreed on by the VSAY. However, unlike most savings groups, the VSAYs do not lend to one another. Instead they collect and accrue their savings with the objective to either share-out their savings at the end of a one-year cycle or to start a group business/income generating activity.
Developing a Savings Culture
Youth, guardians/parents and community workers agreed that the VSAYs have helped to develop a savings culture amongst the youth-- a culture that did not previously exist. The majority of youth (and their parents/guardians) stated that they are not brought up with notions of saving and its importance. There is a tendency to live from one day to the next. VSAY members reported that participation in VSAYs resulted in a change in attitudes towards savings. Everyone wished that they had started saving at a younger age. Most felt that starting savings at 17 years of age was too late because it meant that the youth were moving into an 'adult' phase when it was more difficult to build trust within group members and when it was harder to absorb new ideas and knowledge on better financial behavior.
Planning for a Future – Investing in Income Generation Activities
Almost all VSAYs want to use their group savings to invest in some form of group income generation activity. Business ideas ranged from chicken-rearing to internet cafés to hair salons. The youth have plans for making money and investing in their future. Before participating in VSAYs, none of the youth understood the concept of saving for income generation, nor did they have the motivation to plan for a future in which they were entrepreneurs in a group business.
Life Changes – Personal Growth and Improved Relationships
There have been significant changes in the relations between VSAY members and their parents. Parents feel that participation in the VSAYs has made their child/youth more responsible, more conscientious, more helpful with household and work chores, more interested in earning a little in order to save, and more communicative with their parents. Many youth said they were not able to directly talk to their parents or communicate with them regarding school or other matters. After participating in a VSAY, they felt that their parents regarding them with more responsibility and trust and that they were able to talk more freely with their parents. Likewise, parents feel that their youth are now able to communicate with them and express their thoughts better.
Parents, community workers and promoters confirm that they have seen a change in how the VSAY members see their future. Their aspirations have changed – they have plans to study or start a business. Some parents cited instances when the youth have taught them to save as a household--as a family.
Youth also attribute their improved interaction with one another and with other community members to their participation in the VSAYs. Working with different youth in their communities and building trust within their savings group has taught them how to work in teams and how to better communicate with one another. Better teamwork, more patience with one another and better time management are changes cited by many youth and their parents.
Community workers and parents were quick to draw comparisons between youth who participate in VSAYs and those that do not. They shared that non-saving youth have less positive interactions with their parents and peers and that the lack of group interaction means they lack the motivation to change and improve themselves.
- "Having to show up every Sunday at the same time for weekly deposits has instilled a sense of discipline with timeliness and schedules – something that wasn't there before." – Community Worker
During the visit, success factors contributing to the changes observed among the youth were also considered. However, these will be explored in another blog!
If you program with youth and have experiences with youth savings groups, we would like to hear your thoughts – do you agree with what we have seen in the E-FACE project? Did we miss collecting information on other changes? Are there success factors that you can share? What do you think is the best age at which a person should start saving?
1] Experiences from 1) UNCDF's YouthStart Program (http://www.uncdf.org/en/youthstart); 2) Save the Children's YouthSave Program (http://www.youthsave.org/content/consortium-publications); and 3) Plan's Youth Microfinance Project in Senegal, Sierra Leone and Niger (http://plancanada.ca/downloads/mcf/Plan%20Canada_EmpoweringYouth_FINAL.pdf).