Stipends Can Promote Financial Asset Accumulation and Financial Capability
Evidence from Africa and elsewhere suggests that encouraging saving activities and the accumulation of financial assets amongst low-income households, and young people in particular, can have significant positive effects on a range of social outcomes (for example, see YouthSave Initiative, 2010).
Many national youth service programmes in the region provide participants with a stipend. Although stipends tend to involve small amounts of money, the regular payment of a stipend provides young people with an opportunity to build their financial assets, particularly if the stipends are accompanied by financial education and access to savings products (Lough & Sherraden, 2012). Where stipends are paid into bank accounts or young people save through formal channels, national youth service programmes can play a role in linking youth to the formal financial services sector, particularly for young people from low-income households who may not previously have had access to a bank account.
Where programmes include financial education modules as part of their training, they develop young people’s financial capabilities to manage their money and savings. The stipend gives the young people the opportunity to put their skills and knowledge into practice.
The role of saving is recognised by some national youth service programmes in the region, although in several cases it is carried out by stakeholders or the programme rather than by participants. In the Gambia, participants are given a stipend and receive training on saving and financial management, which banks or other financial institutions are invited to provide or support. In Nigeria, participants receive an allowance and are encouraged to save some of it. In some cases, participants who are placed with employers have a portion of their allowance saved on their behalf by the employer. The programme in Burkina Faso retains a set amount per volunteer at a national level and disburses these funds to the participants at the end of service as a contribution towards education costs or setting up an enterprise.