Taking lessons from SEED to Nigeria

SEED (Saving for Education, Entrepreneurship, and Downpayment), is an initiative designed to “test the efficacy of and inform policy for a national system of savings and asset-building accounts for children and youth.” Recently SEED National Partners published their findings from a 10-year study on Child Development Accounts (CDA), linking them to long-term asset building and economic security. “Lessons from SEED: A national demonstration of Child Development Accounts”, authored by a group of scholars including New America Foundation’s Ray Boshara and Reid Cramer, demonstrates the potential of savings policies to create positive “asset effects” starting at an early age. But the findings from SEED are not just relevant for informing universal or progressive savings policy initiatives in the United States, its lessons can be applied globally, starting with Nigeria, the first developing country to pilot a progressive child savings policy initiative.

The Global Assets Project is providing technical assistance for the Bayelsa State Child Development Account Program, a child savings pilot sponsored by the Nigerian government, involving the randomized selection of 1,000 school-going youth between the ages of 11-15 who will be given a seeded savings account of $100.00. If SEED’s findings can be generalized to a developing country context it seems that the Bayelsa State Government (BYSG) is already headed in the right direction. According to the report’s findings, “outreach and enrollment in SEED is challenging when account opening is not automatic.” Drawing from this and previous studies, financial institutions partnering with the BYSG will automatically open a savings account for the students selected; the students can then decide whether they would like to opt out of the program. Second, the SEED report shows that low-income families find it difficult (but not impossible) to save due to other economic barriers or priorities, such as household expenditures. Thus, account incentives are instrumental in increasing savings. Recognizing this, the Project has designed a program in which the BYSG will match depositor’s savings by a 2:1 ratio. This should prompt Nigerian youth to save continuously and inculcate a habit of saving beyond the life of the program.

Still, there is much to learn from SEED’s findings in Nigeria and beyond. While bank accounts will automatically be opened for Nigerian youth, SEED has shown that an effective communications strategy and education program is important in order to gain community support, trust and demand for savings initiatives. With this in mind, Alena Tansey, the Project’s consultant in Nigeria, is working with radio stations, newspapers, and television stations to get the word out on this exciting pilot. Furthermore, as the Project moves forward in randomly selecting youth for the pilot, another component is being considered, financial education. The report has shown us that engaging participation in financial education is challenging, so the best approach is to integrate it into a school curriculum. But in Nigeria, it's unclear whether teachers, most who are paid very little, will be motivated to integrate a financial education curriculum into their lesson plans. Then would an after school financial education curriculum even be effective?

Marketing and communications strategies along with increasing the financial capabilities of youth are two issues that are definitely on the minds of the YouthSave Consortium as well. As the Consortium advances in creating savings products for low-income youth in Colombia, Ghana, Kenya and Nepal, lessons from SEED and other relevant studies will be an important reference for our market research and product design.  And while the BYSG savings pilot and YouthSave initiative will require tweaking to local contexts, findings from SEED are part of a growing body of evidence showing skeptics that low-income households and youth globally can and will save.