The financial diaries revealed useful insights into young people's savings, spending and income behavior
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Micro savings, maximum impact.
Our 'Young people in Africa' research focuses different age groups of young people ‒ in three countries: Morocco, Nigeria and Senegal. It examines their experience in respect to financial inclusion, support structures and opportunities for young entrepreneurs. The main methodologies employed included a 13-week diary study, in addition to macro-quantitative analyses of publicly available data and qualitative research.
Savings Patterns Young People
A generation of savers
Young people engage in a broad variety of economic activities, ranging from hairdressing and welding to working in the music industry. They also save, mostly to smooth fluctuations in their living costs, buy more expensive items, or ensure they have money to cover unforeseen emergencies. As young adults, they may save to buy a car, a home, or to pay bride price.
Earning money
Diary respondents’ net daily incomes ranged from US$1.05 among mid-teens to US$3.75 among young adults in Morocco, US$0.52 among mid-teens to US$8.58 among young adults in Nigeria and from US$0.19 among mid-teens to US$1.64 for young adults in Senegal.
Youth spending patterns
The more young people earn, the more they save
Many young people are regular savers. In Nigeria and Senegal about a third of weekly diary observations saw some sort of saving by young people. This suggests that more than half of diary participants in the two countries engaged in saving during the survey period. Savings activity was much less evident in Morocco – barely one-in-six survey responses indicated a saving event – but even this is compatible with up to half the survey group saving at some point during the survey period. Overall, there is a positive correlation between economic activity and saving. Furthermore, young people generally become less financially dependent upon their parents as they move through life stages.
Youth income patterns
Many want to become entrepreneurs
One of the most striking findings from both our diary and our qualitative research was the desire among many young people in each of the countries we studied to become entrepreneurs. Among our diary respondents, just 6% of those in our Moroccan sample operated a microenterprise, whilst 43% had a full-time job. In Nigeria, 13% were entrepreneurs and 30% employed, while in Senegal 5% were entrepreneurs and 13% employed. Yet when asked about their ambitions, in Morocco, 66% declared an aspiration to self-employment, 81% did so in Nigeria and 64% in Senegal. At national level, Gallup World Poll data for 2018 shows actual employment among 15-24 year olds in Morocco balanced fairly evenly between waged and self-employed. In Nigeria more than three times as many people were self-employed (52%) as in employment (17%), whilst in Senegal 28% were self-employed, compared to 20% in employment.
Social expectations and gender influence behaviour and financial inclusion
Social expectations introduce gender-related issues that influence financial inclusion. Patterns vary. In Nigeria, both young women and young men are expected to marry around the age of 25. In Senegal and Morocco, it may be acceptable for young women to work, but they are often expected to end formal employment when they marry. Social expectations based on gender influence financial behaviours.
Scale2Save
Driving formal savings: What works for low-income women
Scale2Save Campaign
Micro savings, maximum impact.
Gender-inclusive products need to be designed with women’s needs in mind. Yet, the real question remains: What services do female customers value, prioritize and need? This learning paper aims to contribute to the growing evidence base around this topic, building on findings from a recent Scale2Save Customer Research.
While financial inclusion is expanding globally, the gender gap in access to financial services and products persists. To close the gender gap in financial inclusion and improve women’s meaningful use of financial services, there is a clear need for financial service providers to transition toward gender-aware strategies to build tailored products that create opportunities for women and lower barriers in their lives.
This paper found that by carefully crafting the customer experience for women, financial service providers considerably amplified the adoption of formal savings products, thus significantly expanding their customer base while also contributing to financial inclusion for a traditionally excluded customer segment, such as women.
Scale2Save is WSBI’s most recent programme for financial inclusion. It operated in six African countries.
Download Learning Paper Here
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Driving financial resilience through formal savings among the low-income population
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Micro savings, maximum impact.
This paper provides a syntesis of research findings that help understand to what extent savings allow customers to increase financial resilience, being a key learning question for the programme.
For customers unable to use savings to cope with shocks, they primarily faced physical and service related challenges to using their savings for resilience purposes, in addition to barriers posed by the product features.
Approximately 70% of the FSP’s customers reported having used part of their savings.
FSP's customers using their savings
The research observed notable differences in financial security between young adults and older adults; young adults were more frequently unemployed, studying, or working temporary jobs compared to older adults. This was also reflected in reported incomes, as a higher proportion of young adults are earning less than
or around the national minimum wage in the target countries than older adults. Young customers were more likely to have been saving informally (42%), or not saving at all
(15%) prior to opening their savings accounts, compared to adult customers. This underlines the program’s impact in deepening access to formal savings products for young customers. Young customers were most compelled to save in case of unexpected emergencies, as reported by an average of 44% of them. (By comparison 34% of adults were saving for unexpected emergencies.) Given that the majority of young customers opened their savings accounts during the COVID-19 pandemic and have lower earnings
than adults, it is not surprising that many aimed to establish ‘safety nets’ that would enable them to cope with unforeseen emergencies.
Additionally, about 30% of young customers were also saving toward a specific goal, such as a dowry, celebration, studies, or others. Lastly, a quarter of young customers were saving with the intent of investing in a business. Research commissioned by Scale2Save in 2019 found that young adults exhibited a strong preference for self-employment. Young adults expressed a greater preference for self-employment over a steady job, and this appeared to strengthen with age. This study also found that young adults, and particularly young men seek to diversify their income sources to reduce risk. Together these factors likely contributed to young adults’ increased resilience to provide for their futures.
Download Learning Paper Here
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Unpacking the customer through demand side data
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WSBI's Scale2Save programme launched the sixth case study of its Savings and Retail Banking in Africa research series. The publication 'Unpacking the customer through demand side data' gives examples of financial service providers who have used public data to develop customer-centric products and services.
Available in English and French, it presents examples of financial service providers (FSPs) who have used data to better understand and serve low-income customers by developing customer-centric solutions. It includes examples from WSBI members Awash Bank Ethiopia, BRAC Uganda Bank Limited and Zambia’s Zanaco.
Why read this case study?
Because it shows that data and research are valuable tools to acquire and retain customers and expand the customer base. This is crucial to attracting new customers in Africa, where informal employment is commonplace.
The development of customer centric products and operations helps ensure that customers who engage with the bank continue to do so, by aligning products with customer needs, and retiring them if they no longer do.
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Digital platforms serving the agricultural sector
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Micro savings, maximum impact.
BRUSSELS, 18 November 2021 - The World Savings and Retail Banking Institute (WSBI) programme for financial inclusion, Scale2Save, launched today ‘A case study on digital platforms serving the agricultural sector’, the fifth of its State of the Savings and Retail Banking Sector in Africa research series.
This new publication, co-authored with FinMark Trust, an independent non-profit trust for making financial markets work for the poor, explores the topic from the point of view of Financial Service Providers (FSPs). It aims to answer two key questions FSPs must consider when weighing whether to launch an online platform for farmers: Why should I participate – and if I do, what must I keep in mind? This case study looks at a variety of African agricultural platform providers and more closely at three platform models: bank-led (First City Monument Bank in Nigeria), fintech-led (DigiFarm in Kenya) and telco-led (EcoFarmer in Zimbabwe).
The emergence of digital platforms serving farmers in Africa is of enormous importance as the agricultural sector employs more than half of the continent’s labour force, and accounts for almost 20% of the continent’s gross domestic product.
Platform models are still very new in the agricultural arena. However, the use of platform services to support smallholder farmers has blossomed. During the pandemic they proved a valuable lifeline, enabling farmers to stay in touch with their value chain partners, from financial service providers to farm input suppliers and off-takers.
Looking forward, agricultural digital platforms clearly have the potential to play a powerful role as a catalyst for financial inclusion and to transform the food sector into a more inclusive one that offers viable opportunities for smallholder farmers.
This case study is guided by the overarching objective of the WSBI research series, which is to inform FSPs about developments in the finance industry that affect services to low-income customers.
WSBI’s Scale2Save programme is a six-year partnership with the Mastercard Foundation.
The publication is available for download free of charge here.
Downloads
The publication is available for download here.
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Digitalisation of financial service providers to serve low-income customers
Scale2Save Campaign
Micro savings, maximum impact.
New Scale2Save case study: BRUSSELS, 30 September 2021 - The World Savings and Retail Banking Institute (WSBI)’s programme for financial inclusion, Scale2Save, launched today ‘A case study on connecting with low-income customers through digitalisation’, part of its State of the Savings and Retail Banking Sector in Africa research series.
Digitalisation is revolutionising the way financial service providers conduct their business. In Africa, the spread of mobile phones over the past two decades allowed the development of new forms of mobile transactions. Now digitalisation of African financial service providers is entering a new phase, as the widening use of mobile phones to access the Internet enables the roll-out of profitable digital services for low-income customers.
This new publication, co-authored with FinMark Trust, explores the answers to a question that many executives are asking: How best to digitalise a financial institution? The case study draws upon management consulting literature to assess digitalisation strategies in a pragmatic way. It also assesses three leading African financial organisations against this framework: Al Barid Bank, Morocco; Equity Bank, Kenya; and Consolidated Bank, Ghana.
The aim of this publication, as of the Scale2Save programme, is to identify the elements for financial service providers to serve low-income people and therefore boost financial inclusion. By opening the doors of remote access to formal savings and payments to people long excluded from them, these new customers get opportunities to improve their economic situation. They are enabled to smooth consumption, build assets, prepare against risks and improve their ability to cope and recover from shocks. In the context of Covid and its consequences, this case study highlights the importance of speeding up digitalisation by financial services providers not only in their service offer but also as dynamic organisations and as part of a digital financial ecosystem. It also underscores customer centred initiatives as a key to success.
WSBI’s Scale2Save is a six-year partnership with the Mastercard Foundation.
Scale2Save
Scale2Save case study: innovative business models
Scale2Save Campaign
Micro savings, maximum impact.
Explores innovative business models and partnerships for financial service providers to effectively access the mass market of low-income customers. Part of Scale2Save's annual State of Savings and Retail Banking in Africa research series.
BRUSSELS, 20 May 2021 – ‘A case study on innovative business models: partnerships as a key to unlocking the mass market’, launched today in partnership with FinMark Trust, is the third of the Scale2Save series on the State of Savings and Retail Banking in Africa.
This study contributes to answering some of the Scale2Save learning programme research questions. Particularly, it sheds light on what constitutes a viable business model for small scale savings. The objective of this series is to inform retail banks and other financial service providers (FSPs) about developments in the industry affecting services to low-income customers.
Scale2Save is a partnership between the World Savings and Retail Banking Institute and the Mastercard Foundation. Its goal is to establish the viability of low-balance savings accounts and to understand the extent to which savings allow vulnerable people to boost their financial resilience and wellbeing.
About this study
Financial services in Africa still have great potential for expansion, particularly in the low-cost market, which remains under-served.
Financial service providers (FSPs) who serve low-income customers face a threefold challenge. Digitization is becoming the norm, both within the financial services industry and in the fast-emerging FinTech sector. They wrestle with the effects of the COVID-19 pandemic and its impact on their customers. And they must simultaneously adapt to changing and more demanding customer expectations. These FSPs are under pressure. How they should adapt to these new, unfolding realities?
New and varied business models are emerging from efforts to address these issues. These models range from cooperation with other FSPs to the use of digitization and FinTech, to tackling addressing infrastructure shortcomings and addressing customer expectations.
This study describes six models, linking each to case studies:
- Cooperate with other FSPs– FSPs can compensate for their lack of physical infrastructure by partnering with service providers who have a more extensive network to offer their products. Similarly, FSPs with a limited range of products – often prescribed by regulatory or legal considerations – can enhance their value proposition to customers by incorporating products from other FSPs. These models are beneficial to both parties, because the overall business volume will exceed their individual efforts.
- Cooperate to build and extend financial infrastructure– Despite progress in the past decade, the financial infrastructure in many African countries is still inadequate for the needs of savings-led FSPs. FSPs can work together to tackle these shortcomings, especially in retail payments and credit information systems. Cooperation can be either directly with other FSPs to improve infrastructure or through engagement with financial regulators to establish what the FSPs need to serve customers better.
- Cooperate with mobile money operators– Mobile money operators (MMOs) are the dominant retail financial service providers in some African countries. This strong market position, combined with the reach of mobile money agents, makes these FSPs attractive partners for banks, enabling them to offer banking services to mobile phone customers. These partnerships are also attractive to MMOs, enabling them to generate additional revenue and enhance their appeal to customers by offering banking services without the challenges of seeking a banking licence.
- Use FinTech– Innovation in retail financial services is often achieved by independent technology-based companies or FinTech. These companies develop ways of providing financial services digitally, but typically lack direct access to customers. By working together, savings-led FSPs can incorporate the services into their value proposition without having to acquire or develop the internal capacity necessary. FinTech services span a wide range of financial capabilities, from client-onboarding, payments and savings and investments to credit and credit-assessment services.
- Establish a purely digital FSP– FSPs with strong digital capabilities or commitment can establish a purely digital bank, with no branch network and all client services and interactions done digitally. This may be simpler than trying to digitize an existing operation but is resource-intensive.
- Cooperate with non-financial service providers– Increasingly, FSPs need to link directly into the economic ecosystem in which they operate. They must enable customers to obtain goods and services where required, and provide the financial service embedded in that interaction. This can take various forms, from the digitization of value chains across all actors (for example in agriculture), to incorporating the FSP’s products in the services of a non-financial service provider (such as remittances sent or received at grocery stores).
In each case we identify the key points that FSPs should take into account when considering a particular model, and give an example of the model, identifying the success factors and hurdles to be overcome.
The study concludes by summarising the strategic questions that FSPs should answer when looking at alternative business models. We provide a decision tree that FSPs can use to guide them in selecting an alternative business model best suited to their situation and environment.
Other studies in this series will address specific approaches to some of these models.
Downloads
Download case studies, in both English and French, to find out more about our Scale2Save research series.
Scale2Save
A case study on Covid-19: from a customer, retail banking and regulatory perspective
Scale2Save Campaign
Micro savings, maximum impact.
First case study of WSBI's Savings and Retail Banking in Africa research series. WSBI's Scale2Save programme produced this case study on the waking of the Covid pandemic.
The Covid-19 pandemic is the most profound interruption to social and economic activity experienced in much of the world for
more than a century. The scale, timing and exact nature of disruption varies from country to country, but the pandemic has
caused a global recession, millions of job losses, and sharply increased poverty.
The financial sector plays a critical role in softening this macroeconomic shock. As the pandemic and its social and economic impact unfolded this case study aimed at answering the questions:
- How has the Covid-19 pandemic changed banking customer behaviour during the first months?
- How has the Covid-19 pandemic affected banks?
- How have African regulators responded to the pandemic?
Scale2Save
Young people in Africa Research showing opportunities for financial service providers in Morocco, Nigeria and Senegal
Scale2Save Campaign
Micro savings, maximum impact.
Africa is young. Almost 70% of its people are estimated to be under 30 years of age. It faces a youth challenge, at a time when population growth elsewhere has already slowed or stalled.
Across sub-Saharan Africa, young people account for half of the remaining financial excluded, but they have been catching up fast. In Northern Africa, where demographic trends are more mature the young are a smaller proportion of the unserved. But they remain oftentimes still disproportionately unserved. Given this backdrop, young people in Africa can benefit from financial inclusion. Financial service providers can support them. Within the remaining excluded group one finds young adults living in the parental home. Transitioning into full adulthood, they are expected one day to become heads of household. Mid-teens and youth already set up businesses and find ways to save through digital means. All young people are more at ease with digital technologies than their parents. New initiatives can reach these unserved young people
Research found in this report looks at how younger sections of the population manage their money. Drawing upon data collected in the field, this study aims to find the best paths by which financial institutions can connect with young people. Data drawn from internationally recognised bodies and fieldwork feed the study’s quantitative research element. Qualitative research done through focus group discussions and working sessions enriches the information.
Young people in Africa Research showing opportunities for financial service providers in Morocco, Nigeria and Senegal
Scale2Save
COFINA Senegal signs MoU with WSBI
Scale2Save Campaign
Micro savings, maximum impact.
On the occasion of World Savings Day 2021, Tanzania Commercial Bank Plc (TCB), a WSBI member and learning partner of its programme for financial inclusion, Scale2Save, shared the experience of working with savings groups in rural areas. TCB developed the digital product M-KOBA to address five main challenges savings groups face. Now, TCB is taking M-KOBA further by targeting Village Savings and Loans Associations.
- Aim to widen financial access for low-income women in Senegal
- MaTontine’s innovative digital solution will help make small-balance savings
>> Learn more about Scale2Save programme
Updated: 22 November 2018 (Includes programme branding changes. Replaces MTripleSW with Scale2Save)
BRUSSELS, 5 September 2018 – More than 50,000 low-income Senegalese women will gain access to basic financial services like savings thanks to a new tech-savvy project by COFINA Senegal and WSBI as part of the Mastercard Foundation-funded programme Scale2Save to help small-scale savings work.
Outlined in a Memorandum of Understanding between the two organisations, African financing company COFINA will partner with MaTontine, a fintech enterprise focused on reducing poverty through the widespread adoption of digital financial services, targeting traditional savings groups in French-speaking Africa – commonly known as “tontine”.
COFINA Senegal Chief Executive Officer Amadou Boudia Gueye said: “The project will enable disadvantaged low-income segments of the population, especially women, to acquire a stable culture of saving and give them an easier access to lending and other services through the use of new technology.”
The project aims to conduct all the tontines’ financial transactions digitally via mobile phones through the MaTontine platform. In addition, COFINA will facilitate access to small loans – packaged as advances on earnings – and other financial services to the individual members of the traditional savings groups. By 2022, the project foresees women making up 90 per cent of the more than 48,000 active customers signed up. More than 24,000 small loans will be granted during that period and savings collected reaching US$429,000. The project also aims to build up people’s mindset towards savings and provide a pathway to access small loans and beyond, including microinsurance.
Financial inclusion challenge in Senegal, especially for women
There is huge potential to widen inclusion in Senegal, home to some 15 million inhabitants. Just 15 percent of the population aged 15 years or older have an account at a financial institution, according to the latest FINDEX data. That figure is lower for women at 11 per cent in the same age bracket, a demographic that comprises some 5.5 million people and a literacy rate of 46.6 per cent versus 69.7 per cent for men. That will mean creative approaches through mobile accounts, which today has a market take up of only six per cent of the total 15+ population. Appetite for savings is high, with 59 per cent of that same segment saving money in some form. Only 6.6 per cent of whom squirrel it away at a bank or other deposit-taking financial institution.
WSBI Managing Director Chris De Noose said: “The project is important because it helps lower the financial inclusion barrier that women face thanks to COFINA’s gender-based approach. It will lift women’s lives in urban and rural areas living on less than US$5 dollars a day who face generally more exclusion than men.”
The pilot phase will begin immediately in two areas of the Dakar region.
Notes to editors:
About COFINA
COFINA’s mission is to create added value for our partners and participate sustainably in the development of the African continent. Founded in 2014, COFINA Senegal has a network of seven branches, 40 Cash Points and 200 sub-agents. Its ambition is to expand nationwide. Its customer portfolio revolves around 47,407 customers made up of small- and medium-sized businesses, young people, women, private individuals and start-ups. In four years, COFINA Senegal has carved out a leading position in the Senegalese financial services market with a 15% share of the microfinance institution (MFI) market.
COFINA’s strategic priorities until 2022 are to strengthen human resources and technological capabilities; simplify our organisation to achieve efficiency; enhance close relationships with our customers and regulators; and double the customer portfolio (individuals) in Senegal to 100,000 customers.
About Groupe COFINA
Groupe COFINA comprises six microfinance institutions branded as Cofina Sénégal, Cofina Guinée, Crédit Solidaire du Gabon, Compagnie Africaine de Crédit en Côte d’Ivoire, Cofina Mali and Cofina Congo. This network aims to develop financial solutions to boost SMEs and entrepreneurs and do so in a secure way to nourish business projects by the middle class population. Groupe COFINA is also specialised in meso-finance, with the goal of being the reference pan-African financial inclusion model and driving the continent’s sustainable development efforts with maximum social impact.
About WSBI, the World Savings and Retail Banking Institute
WSBI represents the interests of 6,000 savings and retail banks globally, with total assets of $15 trillion and serving some 1.3 billion customers in nearly 80 countries (as of 2016). WSBI focuses on international regulatory issues that affect the savings and retail banking industry. It supports the aims of the G20 in achieving sustainable, inclusive, and balanced growth, and job creation, whether in industrialised or less developed countries. WSBI favours an inclusive form of globalization that is just and fair, supporting international efforts to advance financial access and financial usage for everyone.
