Ethiopian Savings Program Enables Financial Success
Youth make up nearly 60% of Ethiopia’s overall population. Many children and young adults are able to make their own money by finding work, though this is oftentimes more difficult for girls. However, compared to boys, girls are often more eager to save their money. Yet, a large portion of young people save their money at home or give their money to someone that they trust to hold for them, rather than depositing it into a savings account, which would secure their funds and earn them returned interest.
Women’s World Banking (WWB) has recently collaborated with PEACE MFI S.CO to develop and launch a youth savings program for young people in Ethiopia. The Lenege (meaning “For Tomorrow”) program was piloted in December of 2011 and officially rolled out additional branches throughout 2012. The savings program provides financial education to those enrolled and was crafted to match the needs of young Ethiopians.
In-depth market research was performed by WWB to discover the needs, aspirations, and goals of children and young adults. Through their research, they found that youth in low income countries around the world, including kids as young as ten years old, accumulate their own money and have a desire to begin saving, but may not have the knowledge or opportunities to fulfill their ambition.
Elements of Lenege include a youth savings account, a youth friendly marketing and outreach strategy, and complementary and integrated financial education. There are no withdrawal restrictions and no fees, and each savings account earns 6 – 7% interest annually, requiring a minimum of only 5 Birr (about 25 US cents) to open an account. Each child is also given a free passbook to keep track of and manage their savings.
Lenege is a part of YouthStart, an initiative of the UNCDF in partnership with The MasterCard Program. YouthStart was created to benefit the youth of sub-Saharan Africa by providing access to financial services and the necessary education to allow them to make informed financial decisions.
Because females in Ethiopia have a strong desire to save their money, the Lenege program targets not only in-school and out-of-school semi-rural youth, but also out-of-school married girls in rural communities. Certain regions of Ethiopia have some of the highest rates of early marriage in the world. It is important for married women to have access to financial education programs and understand the benefits of a savings account so that they can have an active role in their family’s management of finances.
In partnership with the Population Council’s “Meserete Hiwot” Program for Married Adolescents in Ethiopia, Lenege was piloted to the young, married girls of Amhara. The “Meserete Hiwot” program provided mentor-facilitated weekly groups discussing HIV prevention and reproductive health, while the Lenage program provided these same women with a savings account and financial education.
To date, nearly 13,000 young adults have benefitted from financial education, 9,000 of which have opened Lenege accounts. 45% of these accounts were opened by girls. A strategic plan was developed to specifically target young girls by engaging female staff for outreach and by purposely conducting outreach in regions with high concentrations of girls.
Currently, Women’s World Banking is looking to replicate this program in Nigeria and India.