Connecting Youth to Savings-Linked CCTS?

In the paper, “Youth Savings in Developing Countries,” the YouthSave Consortium explores savings as a tool towards achieving the nexus potential: financial inclusion and youth development. But what if an evolved social protection scheme could give this hypothesis a little nudge forward? This month, the Global Assets Project partnered with the Ford Foundation, United Nations Development Program, Citi Foundation, and Proyecto Capital, to organize the first-ever Global Colloquium on Savings-linked Conditional Cash Transfers (CCTs). This one-of-a-kind event gathered experts in inclusive finance and social policy to explore the potential of linking social protection programs to achieve financial inclusion for the poor. Though complex issues were raised on the technical and logistical aspects of implementing this concept, Henri Dommel of the United Nations Capital Development Fund raised an issue that drew the attention of many –can we connect youth to Savings-Linked CCTs?

A valid question indeed – and undoubtedly conditional cash transfers are already  benefiting youth throughout the world. Present at the Colloquium for Savings-Linked CCTs was Director General of BANSEFI in Mexico, Jaime González Aguadé. BANSEFI partnered with the Mexican government to deliver the Jovenes con Oportunidades program, a savings-linked CCT policy initiative, which incentivizes the advancement in education and asset building among low-income youth. Through this program the Mexican government deposits “points” into an individual savings account for every year a student completes middle school. Only upon graduation from high school, are the points converted into $336 cash. Today, graduation rates have increased, and over 330,000 youth have opened a savings account.

Though CCTs are popping up all over the world, for youth, savings is an important linkage. As Carolina Trivelli, Senior Researcher at Instituto de Estudios Peruanos, among others at the Colloquium maintained, conditional cash transfers alone tend to promote immediate consumption and medium-term solutions to what are long-term development challenges in health, education and economic security. Emerging evidence of asset effects, explained in Colloquium participant, Ray Boshara’s paper, “Savings and Assets Over the Life Course,”shows that there is an important space for savings and asset building in public policy to address long-term socioeconomic needs of youth. Providing access to savings through CCTs, then, has the potential to promote both development and financial inclusion for youth, which are the largest unbanked population in the world.

Though Mexico has spearheaded a successful Savings-linked CCT program, the fields of financial inclusion and social protection have to work through several questions to make this concept a reality for low-income adults, let alone youth. Key topics raised by Colloquium participants that are relevant to youth include, but are not limited to: overcoming age restrictions on minimum age requirements for account holders, developing a product delivery mechanism to reach low-income individuals that can’t easily visit a bank branch, creating a low-cost delivery platform, and advancing financial inclusion to a citizen paradigm by ensuring all unbanked youth are provided with identification to meet KYC norms.

Interested in learning more about these and other issues presented at the Global Colloquium for Savings-Linked Conditional Cash Transfers? Visit: gap.newamerica.net/slcct.