Profiling Credit Risk for Smallholder Farmers

Lending to small-holder Zimbabwean farmers is important for food security, household income and economic growth. Agriculture has traditionally been the largest employer of the Zimbabwean economy and the importance of financing small-scale and communal farmers is evident so as to reposition the country as the breadbasket of Southern Africa.

The 2012 Census showed that the highest proportion of employed people, including self-employed, in the country had their occupations in agriculture. This is more or less the same proportion, considering the mid-1980s when agriculture employed about 53 percent of the population.

Agriculture occupied a central place in the Zimbabwean economy, contributing 15 to 18 percent of Gross Domestic Product (GDP). It contributed over 40 percent of national export earnings and 60 percent of manufacturers are dependent on agriculture for raw materials or as a market for inputs. This shows that agriculture has been and will remain the backbone of this economy and therefore deserves great attention.

It is essential to complement the growing number of farmers with a growth in terms of output, productivity and quality as the performance of the agricultural sector determines the overall level of people’s living standards and development of the local economy.

By analysing closely our agricultural sector, large commercial farmers are very important. However, there is a group, perhaps a large group, of farmers that though individuals may seem insignificant but are the greatest asset to this sector. This is your small-scale and communal farmer. The challenges these small-scale farmers face include lack of skills, lack of market information and market infrastructure but significant challenge is the limited access to finance including credit lines. Small-scale farmers heavily rely on third parties for access to inputs, equipment and technical know-how.

The agricultural sector has been constrained greatly in terms of financing and this motivated the current drive by Expert Decision Systems (XDS) Credit Bureau to tailor make credit profiling and assessment solutions that assist the private sector and development agencies to commit financial resources to smallholder and communal farmers under commercially viable terms and conditions.

On this point, my strong assertion is that private sector and financial institutions must play a much more active role in agro-credit as there is a viable business case for this.

There are clear drivers that should be achieved which include promotion of contract farming and facilitation of bank funding which seem to be key. As financial institutions are mostly compelled by return, it is important that lending to this sector be made a lucrative investment.

Small-scale farmers are in most cases refused access to credit as they are assumed high risk borrowers.

The inability of the farmers to provide collateral for any financing provided has rendered them unable to utilise the land that was allocated to them. Therefore, it is to the best of the industry that we assist these farmers to create sound profiles that can assist them to be less risky borrowers and be able to compete better in the market for finance.

Use of a sound credit bureau system will enable creation of farmer profiles, though built over time, but will eventually enable small-scale farmers to have a comprehensive track record that can assist in accessing finance.

XDS Credit Bureau products, not only promote creation of scorecards, but assist in enabling that unexposed farmers are granted better terms with regard to credit and easily access these lines.

 All credit providers to the agricultural sector need to ensure that rigorous risk management solutions are engaged and this goes for all contractors, micro-finance institutions, input and equipment suppliers and finance institutions. As these solutions are being put to use, this will also stop the unrelenting cycle of side marketers, and defaulters.

As more and more institutions realise the importance of risk management, the more our economy will be revived. To that end, XDS will host an agriculture conference bringing together all service providers to the agriculture sector and will be centred on how agriculture can be enhanced through the use of relevant technology such as the Agro Axcess application developed by XDS and sound credit management tools.

The success of the all productive sectors and thus this economy is dependent on agriculture and it is in our hands to ensure that we revamp this sector.


Considerations for the Pursuit of Financial Inclusion – Beyond Account Access

Especially since the Global Findex report made headlines around the world with its finding that the number of financially excluded dropped from 2.5 billion to 2 billion during the period 2011-2014, I have been increasingly uneasy with equating account access as financial inclusion, and especially as equivalent to the essential concept of full financial inclusion as defined by CFI. The Center’s new publication “By the Numbers” does an excellent job helping people to digest all the publicly available data about financial inclusion, and make sense of them. It also reinforces my unease.

Despite the progress in account openings, the report makes it clear that the number of people actually using accounts is unfortunately not growing. Even more worrying, it argues that most accounts “are not really functioning as the hoped-for ‘on-ramp’ to financial inclusion.” The risk, as I see it, is that by adopting a stunted definition of financial inclusion that emphasizes account openings, we may be measuring and incentivizing the wrong things. The report wisely urges “caution regarding the value of mass drives for account opening, such as mandated no frills accounts…”

While the available data may overstate progress in some areas, the data may understate it in others due to the tendency to focus only on transactions at formal financial institutions. As the report notes, the percentage of people in low and middle income countries who save increased from 31 percent to 54 percent — quite a jump! — over three years, but this “is not reflected in a commensurate increase in saving in financial institutions.” Global surveys tend to miss savings groups and microfinance institutions, which in many markets play important roles. The alarming gaps in data related to access among vulnerable populations are also noted.

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Trade finance gap is holding back Africa’s growth, says Stanbic

A bank official said there is a need for a better understanding of risk.

A lack of access to affordable trade finance is holding back the economic and employment potential of African countries, according to a Stanbic Bank Tanzania official.

Head of Trade Sales Charles Kapufi told Tanzania Daily News that a great number of jobs could be created if small and medium-sized enterprises (SMEs) in Africa could do cross border transactions.

“There is an opportunity for trade financiers to help fill this void but there are a number of barriers to trade that need to be removed. This is why creating uniform rules and standards across various facets of trade will go a long way to closing these gaps and removing these barriers,” he said.

Mr Kapufi stressed there is a need for a better understanding of risk and how trade will grow by taking on more risk in an appropriate manner.

“There needs to be more understanding of risk, not just counterparty credit, country, currency risk, but also compliance risk, which is on the rise in Africa (and other emerging markets) and there is a growing concern of de-risking by certain players, who would rather step back than face the higher risks”, he said.

According to estimates from the African Development Bank’s recent report on trade finance in Africa, the value of unmet demand for bank-intermediated trade finance stands between $110 (€98.1 million) and $120 billion.


Capture The Remarkable Ways Poor People Are Improving Their Lives With Financial Services

As CGAP celebrates ten years of successfully highlighting exceptional photography from amateurs and professionals from around the world, its 2015 Photo Contest is now open for entries.

Over the past decade, the annual CGAP Photo Contest has documented the remarkable ways that access to formal financial services can improve poor people’s lives. Much has changed and evolved throughout these years and innovative platforms such as digital financial services offer both hope and challenge to the over 2 billion unbanked people around the world.

To focus on the changing financial inclusion space, this year’s contest will focus on four key themes:

  • digital financial services
  • women’s use of financial services
  • micro-finance for small business enterprises
  • smallholder farmers and their families

Submissions may represent a range of products, institutions, and approaches within these themes, and may touch on a broad variety of social, economic, developmental, and technological issues. Entries are welcomed from all regions, in both rural and urban settings.

Past winners include stunning and creative images that have been featured in top global media. The Guardian credited the 2014 contest, which received nearly 5,000 entries from 95 countries, with “raising awareness about the importance of increased access to financial services,” while Business Insider said the contest highlights “uplifting photos of entrepreneurs in the developing world.”

Several prizes will be issued in 2015, including a first, second, and third prize, as well as regional winners and a People’s Choice winner determined by popular vote. The voting will take place between September 10 and September 17.Help show the world, through photography, the “face” of financial inclusion and how increased access to financial services can improve the lives of the poor.

Read the full announcement >>

Financing agriculture and rural areas in sub-Saharan Africa Progress, challenges and the way forward

In spite of investments and policy reforms, Sub-Saharan African countries lag in supplying financial services for agriculture and rural areas. New products, delivery channels, and partnerships, along with greater attention to savings, provide fresh optimism that this situation will be corrected.
This paper examines several examples, with special attention to developments with savings groups and financial innovations with mobile phones and information and communication technologies (ICT). The telecom revolution and other innovations suggest that their use may leapfrog some difficult transportation and communication problems that drive up transaction costs and risks, and restrict financial inclusion for the poor.

Read More on: Financing Agriculture

The Big Advantages of Being Small: How a mobile money startup beat the major players in Zambia

“The best kept secret in Africa.” That’s how Chrissy Martin and Azalea Carisch of Mennonite Economic Development Associates described Zoona, a money transfer provider in Zambia, in an April 2012 blog post published by CGAP. The post emphasized Zoona’s promise to demonstrate the viability of a lean, third-party provider in a market where multinational telecom operators and established banks have network advantages. At that time, the company had recently secured investments from three big investors: Omidyar Network, ACCION Frontier Investments and Sarona Asset Management. But considering how essential scale and penetration are to the success of a digital money product, Martin and Carisch wondered if a third party provider could actually compete with the likes of MTN or Airtel. The analysts explored the factors that made Zoona different from other providers, including value-added services that went beyond what mobile wallets typically offer. They concluded that these characteristics could give it an edge in the market.

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Agriculture financing gets Uganda spotlight

KAMPALA, Uganda – Three organisations have launched an Agriculture Finance Platform (AFP) intended to create a conducive agriculture finance environment for Ugandan farmers.

Uganda Agribusiness Alliance (UAA), together with SNV Uganda and the Economic Policy Research Centre (EPRC) are behind the move to get agriculture financing higher up the government agenda.

A former agriculture minister, Victoria Sekitoleko and the UAA chairperson said last week, “There is a lot of mistrust between financial institutions and farmers which has blocked any kind of understanding between the two parties. Hence farmers continue missing out on financial assistance from banks, because they think banks are there to cheat them. On the other hand, banks are also missing out on these customers, because agriculture is a productive business to venture in.”

She said agriculture still lacks a good financial institution that understands farming and is passionate about it.

The present levels of low funding have prevented agriculture from becoming a commercial activity that farmers can depend on to earn favourable income.

Sekitoleko said finance is a key enabler in developing profitable agricultural value chains and in addressing issues of community mobilization, cooperative development, production planning and management plus harvesting and marketing. She also highlighted the many unclear agriculture policies in Uganda which do little to encourage growth in the sector.

 “Accordingly, access to finance is critical to agricultural and rural transformation in Uganda. However, notwithstanding this, agricultural finance has been termed a ‘policy orphan’, given the rarity of policy frameworks dedicated to agricultural finance and the lack of coordination among stakeholders, with often fragmented policies falling into a void among government ministries and regulatory and supervisory authorities, or even undermining one another. This lack of coordination in turn inhibits the strengthening of coherent, sustainable and socially responsible agricultural finance policies and supportive underlying legal and regulatory systems,” Sekitoleko said.

According to Irene Sekamwa Kajoro, the Project Coordinator Finance for Agriculture SNV Uganda, this platform was initiated in June 2011 when Uganda hosted the ‘Zipping Finance and Farming in Africa’ conference in Kampala. The conference generated a common set of policy principles, dubbed the ‘Kampala Principles’, to improve agricultural finance on the continent.

The AFP will bring together key stakeholders in the agriculture finance industry to advocate for, coordinate and steer improvements in policy response, access, delivery and usage of agriculture finance products and services among actors along the agricultural value chains in Uganda.

Furthermore, it will create a framework for dialogue between agricultural entrepreneurs on one hand and financial institutions on the other.

As a host institution, UAA will work with agriculture finance stakeholders in the country to identify and coordinate solutions to increasing the access of farmers, processors and agricultural entrepreneurs to information on financial products and services. The platform will address systemic agriculture finance bottlenecks that can have a catalytic effect on agribusiness development across the country.

“This platform also aims to improve policy and regulatory environment and coordination within and between government agencies, farmers’ apex organisations, the private sector and development partners, improved outreach, speed, cost effectiveness and appropriateness of agricultural financial products and services by financial institutions and other intermediaries; Improved provision of agribusiness development services by all sectors to increase bankability of farmers and agricultural SMEs,” Musa Mayanja from EPRC said.

The Platform will at the micro level, improved awareness, demand and usage of a range of financial products and services by farmers and agricultural SMEs; improved usage of agribusiness development services by farmers and agricultural SMEs to improve bankability.

By Sharon Kyatusiimire


Three Questions for Determining if a New Product is a Deposit

Answering the simple question of “what is a deposit?” is getting to be more difficult as innovations with digital financial services continue and unserved and underserved customers use products in new ways. The appearance of electronic wallets, prepaid debit or virtual cards, online transaction accounts and other “savings” instruments is making it harder for authorities, providers and consumers to clearly identify what products are or should be considered deposits – and which only look like deposits. That apparently simple question impacts what products can be covered by deposit insurance, who needs to be licensed or prudentially regulated, and which providers of deposit-like products could have access to central bank facilities.

Defining an insured deposit (and consequently what deposits are not insured) is a fundamental starting point for determining whether deposit insurance is available for a particular product. The definition potentially drives the scope of deposits to be insured and the types of institutions that will be within the deposit insurance protection offered or might be brought within coverage. The definition also affects the size of the deposit insurance fund and potentially even the basis used to charge insurance premiums. This first blog post of a three-part series on deposit insurance and digital financial inclusion focuses on the basic, but not easy question, of how to define a “deposit.”

We find that at present policymakers are asking three key questions when determining whether a new product is a deposit and eligible for deposit insurance:

1. Is it redeemable for at least face value?

Unlike an investment product which may appreciate or depreciate, conventional deposits all over the world are redeemable for at least face value in nominal terms, or more if interest is offered (and assuming the institution is still operating). Although a response to this question seems quite straightforward, this is not always the case. For example, cash collateral or compulsory savings often required by traditional microfinance providers, can generally only be redeemable by the customer after the related credit is paid back and, even at that time, the amount can be netted from outstanding customer credit. Similarly, in the case of cooperative member shares, which may be redeemable upon a member’s exit from the organization, the cooperative may have a right to refuse redemption, or redemption could be fully or partially prohibited by the cooperative charter or by the legal or regulatory framework; these member shares are not considered deposits but loss-absorbing equity instruments. These seemingly “deposit-like” transactions, therefore, fail the “redeemable for at least face value” test.

2. Is it redeemable for cash?

Deposits are a liability of the organization holding the funds and are redeemable in cash, not shares in a company or as a product or service. An implication is that the definition of a “deposit” would not include closed-loop payment cards that can store value which is only redeemable for products, services and/or airtime, etc. (and often the products and services of the issuer).

3. What is the key functionality of the product?

For some products an affirmative response to the first two questions would not be enough to clarify if it is a deposit or if it just looks like a deposit. The functionality of the product must also be considered. This has a big impact on customers’ expectations, which are important in the deposit insurance context. Authorities in different jurisdictions may look at similar products and categorize them differently depending on what functionality they consider more important, who is offering them and the legal framework of the country (particularly its regulation of the financial system, including the deposit insurance scheme, assuming there is one). If the product is seen as a means of payment or transfer that temporarily stores value in a more secure place than the customer’s pocket or wallet, or serves as an entry platform to access a wider array of financial products (perhaps sometime after the value in question is stored), then it would be unlikely to be considered a deposit but rather would be treated as a payment instrument. The functionality would often be accompanied by certain restrictions on providers for prudential reasons, for example limits on permitted investments or any intermediation of customers’ funds by the provider. Some examples of products considered to be payment instruments and not deposits include e-money in the Philippines and Peru, non-reloadable prepaid debit cards in the US, and goal-linked electronic savings in Mexico.

If authorities consider that the main function of the product is value storage, then it is more likely that the product would be considered a deposit. Higher emphasis on value storage functionality would recognize that even low amounts of money may represent most (or all) a customer can actually save, or that apparent temporary storage time may be longer than the time customers would otherwise keep their money if they were merely holding funds between payments. In these cases, authorities might perceive a higher potential for systemic consequences of rapid growth in the uptake of these stored value products, especially by unserved and underserved customers (to name just a factor that might drive decision-making in favor of, or against, treating these products as insurable deposits).

An angle that has thus far not been much considered is whether there are different customer attitudes toward a deposit or a payment product, which would likely be influenced by previous local experiences. In countries with recent pyramid and Ponzi scheme experiences, consumers may be more prone to distrusting any product that look just like a deposit but is not treated as such for regulatory purposes. Also, countries where consumers have suffered losses due to recent failures of non-bank institutions where their deposits had lower insurance coverage than bank deposits may have consumers afraid of putting their money in products that are not bank deposits even if they are offered by formal financial institutions.

In all cases policy makers, and deposit insurers in particular, are working to determine the new rules of the road tailored specifically for the structure of their markets. This is true especially in the large and growing number of countries where authorities are trying explicitly to balance increased financial inclusion with their core role as promoters of financial sector stability. In our next blog post we will explore the implications for policymakers of how they define a “deposit” for innovative digital deposit-like products and how the decision affects protection of customer funds.


Savings Groups Fuel Digital Design for Smallholders in Rwanda

It’s no secret that savings groups are the lifeblood of the informal financial economy, especially for smallholder households in developing economies such as Rwanda. Savings groups are seen as a social and financial safety net for those who weather seasonal hardships related to the variability of their harvest or unforeseen emergencies.

After seven weeks on the ground in Rwanda taking a human-centered design approach and interviewing over 75 farmers, banking officials, traders, co-ops, and savings groups, it is apparent that a deeper understanding of these groups provides key insights to drive the design of new digital financial services and products. The following is a glimpse into our early insights and their implications for designing mobile financial solutions.

1. Savings groups have the ambition to grow, but often lack the systems or knowledge to translate their financial goals into reality.

Many savings groups who gain momentum in size, both in membership and finances, see a parallel rise in their collective aspirations. Savings groups on the cusp have ambitious goals – they seek larger loans, more profitable investments, and community revitalization. However, they often lack the knowledge, leadership, and formal tools to take actionable steps towards these ambitions. This is complicated by the cumbersome nature of manual management and the lack of reinvestment into the collective.

A mobile-based financial channel for savings groups can equip them with a more usable management platform and translate their implicit rules, disciplines and processes into better mechanisms for understanding their own potential – such as better tracking of payments and contributions and assessment of member creditworthiness.

2. Informality brings with it distinct limitations as savings groups grow.

The ceiling for comfortable growth within a savings group revolves primarily around the pain points of a manual process. This includes bottlenecks around accounting, logistical challenges, human error and the insecurity of a cash-based system. Community implications of scale are just as crucial. Increased size makes it more difficult to maintain trust, transparency and an engaged sense of collective responsibility.

Many of these scaling issues can be addressed by facilitating internal group transactions and communications via a mobile-based platform. For example, using mobile money to make contributions rather than doing so manually improves safety by reducing the amount of cash transacted at any single aggregation point and decreases the error rate by precisely tracking contribution details.

3. Savings groups understand that financial emergencies are not just for moments of crisis, and they have the needed agility and familiarity with members to respond quickly.

Unforeseen agricultural expenses often disrupt a farmer’s budget, especially at times in between harvests. However, the need for urgent access to capital isn’t always due to hard times. Opportunities surface, such as a competitive price to purchase a cow at the market. Additionally, celebrations – such as unplanned expenses for a holiday feast or a wedding – also require rapid access to capital. Savings groups, as community-based organizations, understand the ebbs and flows of their neighbors’ lives. Their intimacy and relative speed often make them better equipped than banks to act as a safety net for their community. However, there is a limit to savings groups’ effectiveness in serving at times of urgent need. Still, as Clement and Vestine from a Musanze savings group put it, “[they] are good because you are not alone, you feel like you are part of a family and if a calamity comes your way you will be covered.”

A mobile wallet feature associated with a group account could enable tracking of individual credit histories and payment behavior for both group and individual members. This would enable the bank to provide more favorable credit terms to disciplined savers and thereby reduce their risk exposure, creating opportunities for greater access to credit over time.

Bosco, a 33-year old farmer in Huye, told us, “If a goat is available at a lower price than usual in the market, then that’s an ‘emergency opportunity’ for me. I’ll even borrow money from anywhere to buy it. I’ll do whatever it takes to seal the deal.”

4. In the “community trust economy,” there’s a need to continuously empower leadership when seeking to streamline their operations.

Leadership in savings groups is voluntary and comes with the opportunity to build reputation and trust in the village. These leaders are a crucial force for the health and success of savings groups, and rely on two primary factors: (1) the president’s ability to translate her/his leadership into collective empowerment through group decision making and (2) the strength of the accountant – the quieter but often more important link in a savings group’s prosperity – who must manage the savings group’s funds accurately, reliably and transparently. While the president may have nominal control, it’s the accountant that often carries the organization’s trust. Savings group leaders seek tools and systems that ease their accounting and management burdens, but not at the expense of empowering their members and substituting for their capable leadership.

A multi-party authentication mechanism built around a mobile savings group solution could grant equal access and control to a number of individuals in a group (such as the entire leadership committee) – and minimize the possibility of any personnel taking fraudulent advantage of their positional powers. The group can be enabled with sufficient digital ‘checks and balances’ to ensure that the group trust and integrity stays secured as they scale and evolve towards more formalized working practices, while also ensuring that real-world group dynamics and cohesion are preserved.

Emma is proud of being the SLA accountant because it means that people trust her. Although her reputation depends on managing the money properly, she feels it is “too demanding to keep everyone up to date on where the money is, how much is lent and who has already been paid.”

When applying human-centered design to financial inclusion, it’s often revealing to look to informal solutions to better understand gaps and opportunities in formal systems. While these insights about the mechanics, agility, trust, and intimacy of savings groups suggest compelling opportunities for mobile innovation, we recognize that past experiments to bring technology into these contexts have often fallen short. Designing mobile solutions given the real technical limitations (i.e., feature phones and USSD menus), the requirement for extensive demand generation and training, and ensuring commercial viability is not easy. But given the size of the opportunity and the fact that these key pain points continue to exist, the need to experiment remains.

The authors of this post – Sebastian Barrera, Montana Cherney, Ashish Kumar, and Melanie Kahl – are all part of The Design Impact Group (DIG) at Dalberg.


Five Things Any Youth Savings Program Needs

A piggy bank can be a fun and effective way to teach kids about saving money, but those little containers only go so far. They eventually run out of space, and they’re too easy to access for impulse spending. Working with Women’s World Banking, the Dominican Republic’s Banco ADOPEM introduced a more promising strategy in 2010 for teaching kids how to save money: opening a savings account in their name.

With support from Barclays, Women’s World Banking was able to return to Banco ADOPEM four years later and analyze the impact of this youth savings and financial education program called Mía (‘mine’ in Spanish) on the financial institution. Emerging principles from the Mía youth savings program demonstrate how to build a sustainable youth proposition with a positive, lasting impact on kids and their families.

Banco ADOPEM gives kids an alcancia, an aluminum-can piggy bank popular in the Dominican Republic, once they open an account. When the can fills up, kids are encouraged to take the money to the bank to deposit, and the bank gives them another alcancía. Banco ADOPEM’s Mía program targets specific youth segments with different offerings: a Mía Menores account for youth ages 0-15, and a Mía Mayores account for youth ages 16-24. Menores accounts must be opened by a parent or legal guardian, while older kids can open a Mayores account themselves. Both accounts are set up under the youth’s own name and designed to give kids experience in managing their own savings. Opening a Menores or Mayores account requires a small initial deposit ($2.50 or $5 USD, respectively). Dormancy fees kick in if an account remains inactive for six straight months.

At first glance, Mía has been a success for the bank: More than 35,000 Mía accounts have been opened, 57% of them for girls (the bank initially created Mía for girls only, but later offered it to boys as well). Among all clients who opened Mía accounts – including parents opening accounts for their kids – 19% were new to the bank. Those numbers were even stronger for accounts opened by youth themselves (without a parent/guardian): 52% were new to Banco ADOPEM. The Mía accounts did not always remain active, however. Forty-four percent of the Mía accounts opened by parents lost all their deposits to dormancy fees compared to only 13% of the accounts opened by youth.

After holistically studying the bank’s approach to and investment in youth savings, analyzing client profiles, and examining how youth and their parents managed – or in some cases neglected – their accounts, Women’s World Banking and Banco ADOPEM learned five key lessons about sustainably serving youth with financial services.

1. Banks must take a multi-generational approach, focusing both on the youth and on the parents who are saving for their children’s future. A financial institution’s approach to youth savings should reflect the financial needs, preferences and behavior of both youth and parents or guardians – which not only better serves these clients over their lifetime but also ensures the long-term sustainability of a youth savings program.  Youth clients represent the bank’s future, and designing products that win their loyalty helps guarantee a robust customer base for generations to come, in addition to instilling positive savings and banking habits from a young age. However, this longer-term payoff should be balanced with the shorter-term profitability of reaching parents as well – at Banco ADOPEM, parents and guardians with Mía accounts had higher balances and also borrowed more from the bank, resulting in a more profitable value proposition as a whole.

2. Youth accounts should be optimized for onlending. Incentivizing clients, particularly youth, to grow their balances helps to increase onlending revenue (a more stable source of profitability for the bank). This can mean the end of dormancy fees, which raise revenues in the short term but threaten to drive away clients, reducing long-term sustainability of the program.

3. To realize the long-term profitability of serving youth clients throughout their lifetime, financial institutions must build in retention strategies. Banks must engage youth and earn their loyalty early on, help them shift to appropriate products as they grow up, and track their behavior to understand their customer needs and their lifetime impact on the institution.

4. Investing in marketing and financial education can encourage clients to build confidence with formal financial services, become better savers, and maintain healthier balances – a win-win for both clients and banks. Banks also need to create reliable mechanisms for tracking the impact of financial education on account performance, to better assess education and marketing investment decisions.

5. If banks receive grants for the development and launch of a youth program, they must prepare for the end of the grant-funded period and find ways to fund the strongest elements of the program with their broader budget.

Women’s World Banking is currently helping implement youth savings programs in Nigeria and Tanzania, and these lessons figure prominently into how our team designs these products. Once banks fine-tune their youth offerings to provide a more valuable product for clients and build a more sustainable business case for the institution, the benefits promise to be far-reaching.