No matter where one lives, financial capability is a vital life skill for the modern world. It is true that an ability to deal with money effectively has always been important, particularly since the end of the bartering age, this skill is especially important given the global reach of the marketplace. It is easy for people who live in the developed nations to forget about those who live outside their sphere, but if people who live in the developing world are to gain something of an equal footing, as far as the movement toward a more equitable standard of living progresses. There are quite a few worldwide initiatives designed to help young people in the developing nations start to build their own financial footing, and the tools that these initiatives are putting into place represent an extremely promising trend in finance. After all, increasing financial capability can yield rewarding results, but research has identified several barriers to achieving that, especially for youth in developing nations:
Cultural attitudes that look down on saving for the future
Familial history of thinking more short-term in terms of financial planning
Lack of exposure to successful financial management
External challenges to maintaining a savings plan (Pathak, Holmes & Zimmerman, 2011).
One of the savings programs designed at targeting youth from developing nations is the YouthSave Consortium. Supported by the MasterCard Foundation, this group includes the Center for Social Development at Washington University in St. Louis, Save the Children, the New America Foundation, and CGAP (the Consultative Group to Assist the Poor). While this consortium carries out a number of initiatives, YouthSave is the one that targets low-income youth in the countries of Nepal, Kenya, Colombia and Ghana (YouthSave). Just one of the programs that YouthSave has set into motion is the Enidaso account in Ghana – which serves youth between the ages of 12 and 18. HFC Bank has established the Enidaso (which means “hope”) for young adolescents so that they can develop the habit of saving – which is crucial for creating a future that is financially secure. The minimums suit the levels of income and spending trends of adolescents from low-income families.
Another program aimed at helping youths in developing nations develop the tools of financial capability is YouthStart, an initiative of the United Nations Capital Development Fund (UNCDF). This initiative was created because of the immense challenge that faces people between the ages of 15 and 24 in sub-Saharan Africa: 78 percent of the 200 million people in that age bracket live on less than US$2 each day. Almost half of them live on less than $1 a day. The reason for this low level of material existence is the immense levels of unemployment in that age bracket. More than 95 percent of these young people to not have any access to financial services of any kind (UNCDF). Between 2010 and 2014, YouthStart has established as its goals the “designing, testing and scaling up sustainable services targeting the needs of young people” and “helping to create an enabling regulatory environment to allow young people to access financial and other services they need” (UNCDF). The cost of the project is US$12,000,000, the vast majority of which has been funded by the MasterCard Foundation. This initiative targets the countries of Uganda, Senegal, Rwanda, Ethiopia, Burkina Faso, and Malawi (UNCDF).
Another international NGO (non-governmental organization) that is involved with helping boost the financial capabilities of young people is Making Cents International. Realizing that fully half of the world’s population is below the age of 25, and that 85 percent of those young people live in developing countries, there is a coming crisis of resource distribution. Making Cents International, in collaboration with BRAC and the SEEP Network, is reaching out to youth in Bangladesh and sub-Saharan Africa with a series of programs focused on youth financial services and creating resources and tools that young people can use to access quality financial services (KDID).
Ultimately, ensuring that there is global access to financial services could stave off a coming crisis of resource distribution over the next few generations. The vast majority of the world’s young people are in the developing nations, and the worldwide availability of information means that they will grow in their knowledge of what is available in the developed parts of the planet. Giving them the ability to start saving their own money and building their own financial future will give them a sense of freedom and ownership. As more and more developing countries create markets that can collaborate with Western investors, more and more capital will flow into those countries – as is currently the case in the recently opened markets of Myanmar, with has 60 million people who had never had access to foreign markets before this year (Barta, 2012). As time goes by, more countries will open up – meaning more opportunities for resources to move to those peoples who have never had them before.
Barta, P. (2012). Final frontier: Firms flock to newly opened Myanmar. Wall Street Journal 12
KDID (2011). Financial inclusion for youth: Reaching the next generation.
Otoo, A. (2012). Enidaso account opens a new dawn in child and youth financial services in
Ghana. YouthSave 6 November 2012. http://youthsave.org/content/blog-post-enidaso-
Pathak, P., Holmes, J. and Zimmerman, J. (2011). Accelerating financial capacity among youth:
Nudging new thinking. CGAP Microfinance Gateway June 2011.
UNCDF (2012). YouthStart. http://www.uncdf.org/en/youthstart
YouthSave (2012). Welcome to YouthSave. http://youthsave.org/.