The financial diaries revealed useful insights into young people's savings, spending and income behavior

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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

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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

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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

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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.

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Application of CGAP Customer Outcomes Framework in Uganda

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The case study has applied the CGAP customer outcome indicator framework to test the impact of a new basic savings product positioned in the financial inclusion market and designed to encourage digital and/or remote account opening and transactions.

As a member of the WSBI and part of the Scale2Save program, a prominent retail bank volunteered this product for a case study.

The objective was to assess if the CGAP customer outcome indicator framework could be applied as a measuring tool to determine whether or not:

  • The design, positioning, performance and management of the product are working as intended;
  • The product is indeed improving the lives of target customers;
  • The bank is contributing to Uganda’s Financial Inclusion goals.

The CGAP customer outcomes indicators are generated from supply-side data and can be used internally by providers to measure their levels of customer-centricity. The ultimate objective, however, is for the jurisdiction’s authorities to have a quantifiable, comparable and consistent way to:

  • Detect which strategies, policies, practices, activities, products/services work for or against the customer;
  • Assess the impact of financial services at a market level for all customer segments; and
  • Determine if, and to what extent, providers in the sector are improving or detracting from national goals.

Since the focus of the Uganda case study is Financial Inclusion, focusing on savings, the jurisdiction-specific context was informed by the Bank of Uganda’s (BoU) Financial Inclusion Strategy, 2017. The five main strategic goals classified twenty gaps that the BoU had set out to address. These gaps were therefore used as the basis to map the global CGAP indicators to Uganda’s context.

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Driving formal savings: What works for low-income women

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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.

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Driving financial resilience through formal savings among the low-income population

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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.

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Remote coaching to prevent dormancy among low-income savers

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Micro savings, maximum impact.

Research findings from Uganda

This research was conducted by Scott Graham, Anahit Tevosyan and Nathaniel Mayende at FINCA International, together with Ester Agasha from the Makerere University Business School, Dr. Joeri Smits and Sally Yacoub. We wish to thank FINCA International and FINCA Uganda for their support throughout this project, especially James Onyutta, Ciprian Panturu, Alice Lubwama, Scovia Swabrah and Justine Nabawanuka. We are also grateful to the Scale2Save team, in particular Weselina Angelow, Anton Simanowitz, and Apphia Ndungu for their many contributions to this work, and to our partner, the Mastercard Foundation, whose sponsorship made it possible

One of the challenges of providing savings services to the unbanked is that many new customers fail to use the account beyond the initial deposit, a problem known as dormancy.

In our study, a low-cost coaching intervention produced significantly higher levels of account activity and use of banking agents, with stronger effects on women. The pattern of account usage reflects the role that formal savings plays in helping customers satisfy short- and medium-term cash needs. In qualitative interviews, women explained that coaching fostered a greater sense of trust and relationship with the bank, and that it encouraged them to set aside even small sums as a form of protection against an uncertain future.

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End Term Evaluation of the Scale2Save Programme

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Abridged report July 2022

End Term Evaluation of the Scale2Save Programme

Scale2Save Programme created a lasting Legacy:
1.3 million more low-income women, farmers and youth are financially included on the African continent

1.3

MILLION

The World Savings and Retail Banking Institute (WSBI) and the Mastercard Foundation engaged Genesis
Analytics to conduct the end-term evaluation of the Scale2Save programme

The purpose of the evaluation was to provide lessons learnt against key learning questions of the programme related to the supply-side.:

  • How does the institutional model affect the ability to offer low balance savings accounts (LBSAs)?
  • What impact has the programme had on partner Financial Service Providers (FSPs)?
  • How has the Scale2Save programme contributed to the ecosystem?
  • What has been the value of partnerships in the delivery of LBSAs under the Scale2Save programme?
  • What is the combination of supply-side and demand-side drivers that emerge for LBSAs?
  • What factors impeded the ability of partner FSPs in the provision of LBSAs during the Scale2Save programme?
  • What factors influence the sustainability of LBSAs developed under the Scale2Save programme
  • Learnings from the evaluation will be used to inform future efforts of increasing demand and supply for low balance savings accounts and for broader ecosystem learning.


The programme
helped FSPs to
overcome obstacles
that would have
been prohibitive
without the
Scale2Save
team’s constant
support.

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Persona Segmentation Toolkit

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Data is an essential tool for creating customer-centric financial products and services that are sustainable for financial service providers and truly work for low-income customers.

To drive inclusive finance in Nigeria, EFInA and WSBI’s Scale2Save programme are launching the Persona Segmentation Toolkit which allows bankers to use the EFInA financial access data, demographic, and socio economic household data in a simple, practical way.
The toolkit is an online interactive data portal to support market development and data-driven product development

The advantages of the toolkit :

  • Determine the size of business development opportunities specifically for under-served market segments, such as smallholder farmers, informal traders, and young people.
  • Offering insights into customer characteristics, such as livelihoods, income, and financial portfolios
  • Support strategic business development discussions and segmented product innovation process.

 

Access Toolkit

A guidebook and video will help financial sector professionals, consultants and researchers to navigate the portal

Watch the VideoBrowse the guidebook

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An opportunity for the banking sector to work with informal savings groups in Morocco

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Micro savings, maximum impact.

Télécharger l'étude de casDownload the case study

Tontine, an ancestral practice, is tending to modernize : thanks to digital technology

Tontine, an ancestral practice, is tending to modernize thanks to digital technology.
The objective of the research is to conduct a qualitative and quantitative study case based on qualitative and quantitative identifies opportunities related to the launch of a digital tontine offer. Tontine from an ancestral practice to a modernized version thanks to digital technology
Download the study in French or English to access key findings around mobile payment, funding sources, participation to informal savings groups, smartphone and mobile internet penetration in Morocco.

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Young people matter: A case study from Postbank in Kenya

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Scale2Save partner drives financial literacy to impart entrepreneurial skills. ​
BRUSSELS, 12 August 2020 —​ David Rutere needed help as he navigated how to pay for a double-major in mathematics and economics from The University of Nairobi. “I faced financial constraints that greatly hindered realising my educational and investment goals. Although I was on campus, I struggled to pay for my fees and meet daily needs."

In 2016, he attended one of the financial literacy sessions on campus organised by Postbank, a Scale2Save partner and government-owned postal savings bank primarily engaged in the mobilisation of savings for national development. ​​

“The PostBank-led sessions equipped me with life skills,” he said, “and inculcated a saving culture within me. Many will say that savings without a source of revenue is impossible, however, I think that savings from miscellaneous expenses is possible to do and wonderful to achieve. Through the programme, I learned how to save, budget, set financial goals and how to invest.”

The lessons learned paid off for David. In 2016, he opened a savings account and signed a three-year saving contract, where he committed to save KSh150 (US$ .50) a day. He saved 150 shillings every day consistently for three years and on maturity of the funds in 2019 he amassed in hand to invest KSh180,000, roughly equal to US$1,800.

“Immediately, I invested in horticultural farming where I began back in my rural home in Embu by constructing a greenhouse worth KSh200,000. A short while later, I started farming capsicum, a common type of pepper,” he added.

Rutere views the venture as a way to realise food security in the country, thereby contributing to the UN sustainable development goals, namely SDG1 on eradicating poverty as well as SDG2 on ending hunger, achieving food security and promoting sustainable agriculture. Similarly, his efforts also contribute to the “big four” agenda of the Kenyan government on improving livelihoods by ensuring food security in the country.

He shared: “I am now a proud, self-employed student because of my simple savings. I have a monthly income of KSh40,000 ($USD400) that enables me to fully pay for my school fees at the university and cater to my daily upkeep.”

Why Kenyan youth matter

According to the 2019 Kenya national census, three-fourths of its 47.6 million population are children and youth, with youth aged 18 to 34 years of age making up 29% of Kenya’s populace. The youth age bracket offers a huge potential to be a force to build a positive economic future for the country, both collectively and as individual agents of progress and change. With youth unemployment in Kenya standing at a staggering 22 per cent according to 2018 ILO estimates, there is need to constantly equip youth with entrepreneurship and life skills to help them navigate through this challenge.

Postbank Kenya, financial literacy, and youth

Postbank Kenya has been on the forefront in running financial literacy programmes for both in-school and out-of-school youth. Students in universities and colleges become empowered through sessions on financial literacy, entrepreneurship skills and enhancing soft skills in the workplace. For those out of school, the programme equips youth with entrepreneurial skills to start and run small businesses in line with their interests and passions. Since the onset of these initiatives, youths have been able to set financial goals and work towards them. There has also been an attitude change in youth entering the job market and informal sector. Most of the youths involved in the PostkBank effort have been able to set up small businesses ranging from agri-business and online stores to boda boda operations, which provide bicycle and motorcycle taxis commonly found in East Africa. Similarly, the savings habits of the youth that have been involved in the programme have proven encouraging.

Postbank Kenya continues to visit sectors where youth are employed to impart financial literacy. A case in point is Kitui County, east of capital Nairobi, where youth like David Rutere have now started saving for their financial goals after such training.

Paying it forward

David advises youth on the need to gain entrepreneurship skills: “There was a time when all you needed to succeed was the ability to read and write English, and thereafter, a university degree, followed by a masters and Ph.D. That has now changed, however, as we are now in the era of skills and what matters is the skill set especially needed in the digital era.”

On savings, David views saving at personal level as an obligation, not a privilege, of every responsible citizen with a clearly articulated vision and desire to invest.

“Set realistic goals and maximize the opportunities presented. Soon enough, you’ll have a successful story to tell. Let’s realign our priorities and discipline ourselves to savings that will help us realise our dreams.” ​

Scale2Save, partners celebrate International Youth Day
International Youth Day on 12 August presents an opportunity for Scale2Save partners like PostBank in Kenya to showcase their stories. That includes how partners serve and empower youth and young people through their projects. Project partner share stories from real people who benefit from their efforts to raise awareness around the need to mobilise savings among – and strengthen the resilience of – low-income populations, which includes financially excluded youth and young people.

The campaign matters because interest exists within governments, NGOs and international bodies to learn more about how financial institutions address the needs of youth, young people and young adults. For example, financial inclusion features in eight of the 17 UN Sustainable Development Goals. This year’s International Youth Day theme, “Youth Engagement for Global Action”, seeks to highlight ways in which engagement of young people at local, national and global levels enriches national and multilateral institutions and processes, the UN says. It also draws lessons on how their representation and engagement in formal institutional politics can be boosted.

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Unpacking the customer through demand side data

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Micro savings, maximum impact.

Téléchargez l'étude de casDownload the case study

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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