MICROFINANCE PAPER WRAP UP: “High-saving Youth in Smallholder Households: An Untapped Market,” Published by CGAP

This is a summary of a paper by Jamie Anderson, Ramesh Karuppusamy, Paul Enrico Neumann and Vijendran Thangavel; published by CGAP (Consultative Group to Assist the Poor); November 2018; 4 pages; available at:
https://www.cgap.org/sites/default/files/publications/Brief-High-Saving-Youth-Nov-2018_1.pdf

As in many places, mobile financial services are becoming increasingly popular in rural parts of developing countries. However, the authors of this paper argue that efforts to promote mobile banking have failed to adequately reach younger individuals in smallholder families, who often have more savings than their more mature counterparts. The youth of smallholder families, defined as individuals between the ages of 15 and 30, prefer to “rely on informal forms of savings, which can be risky and do not leave ‘financial footprints’ that can unlock access to other financial tools.” This is true even though members of this group are likely to have mobile phones, which can give them access to digital savings.

The authors review the content of financial diaries that track the cash transactions of 270 smallholder families in three markets as well as six national surveys that collected financial information from a total of 18,000 smallholder families. Youth in these families saved two to five times as much as their older family members, while borrowing less. The authors argue that financial service providers (FSPs) should “discover what motivates youth to save and design a responsive solution.”

By Tiannah Steele, Research Associate

Sources and Additional Resources

CGAP publication
https://www.cgap.org/sites/default/files/publications/Brief-High-Saving-Youth-Nov-2018_1.pdf

CGAP homepage
https://www.cgap.org/

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