Savings Groups and Skills Development: A Pathway for Youth Economic Strengthening

A previous post on Microlinks discusses the future of economic strengthening programming and the growing call for an innovative portfolio of strategies and interventions.  The author of the article noted that there is emerging evidence that savings groups – in combination with skills development and entrepreneurial activity – are promising strategies to build the economic capacity of youth.

Plan International’s Youth Microfinance Project (YMF) has demonstrated success in this area through an integrated youth economic empowerment program that has promoted youth savings groups (YSGs) and delivered financial education, life skills, and entrepreneurship training to nearly 90,000 youth (age 15-24) in Niger, Senegal, and Sierra Leone from 2009 to 2014. 

YMF has demonstrated that when provided with appropriate financial instruments and training, youth can make informed choices about how they manage their financial and non-financial assets. They enhance their economic self-reliance and contribute to household well-being through increased investments in nutrition, education, and health.

The Youth Microfinance Project has used multiple approaches to measure outcomes and document learning, including the SAVIX MIS, a rolling baseline and impact study, financial diaries and most significant change stories. Results of these evaluations are synthesized in Findings and Lessons from the Youth Microfinance Project, which discusses the program pathway, its impact on youth economic empowerment, and key lessons for improved service delivery. Highlights of those findings follow.

Evidence of Impact

“By belonging to [a savings group], it has opened my eyes to the possibility of what I can do with my savings. I have learned a lot through all the training, especially about saving from your income, setting goals in life, and having the courage and determination to fight. I have become independent and respected.” - Fati Hamidou, YMF participant in Niger

1. Increased economic activity – Program participants in all three countries increased their participation and investment in income-generating activities (IGA). In Senegal, the percentage of economically active youth increased by 17 percent; and in Sierra Leone, YMF participants more than doubled the amount of working capital in their IGAs over the project period, from US$213 to US$448. 
2. Enhanced capacity to save – YMF demonstrates that youth have a high propensity to save, and savings groups are appropriate for the provision of basic financial services. Savings groups in Senegal and Sierra Leone report US$28 annual savings per member, the equivalent of nearly 6 percent of Gross National Income (GNI) per capita. Within 12 months, groups managed on average to save more than US$664 in total assets. 
3. Greater asset accumulation – There is a notable increase in assets (livestock, agricultural and business tools, household appliances and lifestyle goods). Significant across the three countries, was a three to five-fold increase in agricultural and fishing tools.
4. Increased social investment – Participants spent more on health and education over the project period. In Senegal, YMF participants increased their annual contribution to household medical expenses from US$6 to US$30. In Sierra Leone, spending on education nearly tripled, from US$107 to US$300 per year.       
5. Enhanced self-confidence – In all three countries, YMF participants reported increased confidence in their ability to earn and control income. They also felt more comfortable speaking in public and an increased ability to influence household and community decisions (outcomes attributed, in large part, to life skills training). 
6. Improved gender roles – As evidenced in final evaluations and Most Significant Change stories that describe personal advancement as part of YMF participation, life skills training and financial education enabled girls and young women to improve their communication with men and their role in community development. Greater economic activity and control over income decreases their vulnerability.
7. Stronger youth leadership – Large numbers of youth developed leadership skills by serving as YSG management committee members, community volunteers, peer educators, and members of Youth Advisory Boards. In all three countries, participants reported a significant improvement in the ability to influence household decision-making and resolve disputes.

“I’m a Community Volunteer (CV) and Peer Educator (PE). This experience has been significant for me; I’ve gained a level of respect in my home, my family, and my whole village.” - Fati Seyni, YMF participant in Niger

Lessons Learned 

1. Youth engagement is a pivotal factor for youth economic empowerment – The YMF targeted youth and provided many services using youth. A core activity of YMF has been establishment of more than 4,100 YSGs through training and monitoring services delivered by field officers and unpaid volunteers, the majority of whom are local youth. Democratically elected Youth Advisory Boards composed of YSG members are a central element of YMF’s governance structure, providing guidance and support in all aspects of the project, including planning, implementation, advocacy and evaluation.
2. Integration and recognition of gender is a key to success – There is a need to better understand gender constraints in the YMF pathway; particularly equitable access to economic opportunities among young women and men. YMF participants reported that attempts to have open discussions on life skills topics associated with gender or reproductive health generated resistance within the groups. In Niger, the opposition from male members was so great that these sessions were replaced. 
3. Formal and informal approaches are necessary to further skills and learning – Opportunities for experiential learning contribute to continued skill development, attitudes and behaviors advanced by the YMF financial education and life skills components. These may include formal approaches (integration of life skills-based education in local school curricula or extra-curricular programs); or informal approaches (the involvement of community-based organizations or delivery of life skills training to parents and community leaders).
4. Improve the delivery of life skills training – Outcomes of life skills training vary and underscore the need to adapt training so  it is more learner-centered, participatory and age appropriate. Timing, sequence and duration of life skills sessions, delivered through YSGs, varied due to operational constraints and were sometimes rushed or merged, which may have diminished their effectiveness.
5. Leverage the social capital of YSGs for greater program impact – Project results exceeded expected outcomes in several areas because YSGs engaged in a myriad of social initiatives – supporting emergency services, using their social funds to support educational and health expenses, and contributing to the cultural events of member households and the community (particularly weddings and funerals). Leveraging the social capital of YSGs to promote social enterprise and the civic participation of youth builds greater success. 
6. Formal financial inclusion should be studied – There is demand by YMF participants for formal financial services, and youth-forged linkages exist with local financial institutions as a result of project activities and other efforts. Formal financial inclusion could be an exit strategy of the YMF pathway and enhance its sustainability. Review of the YMF bank linkage pilot initiative is needed before further program design to determine long-term outcomes, formal demand, and risk.

This blog series is courtesy of Microlinks, part of the Feed the Future Knowledge-Driven Agricultural Development project. Its contents were produced under United States Agency for International Development (USAID) Cooperative Agreement No. AID-OAA-LA-13-00001. The contents are the responsibility of FHI 360 and its partner, the International Rescue Committee, and do not necessarily reflect the views of USAID or the United States Government.