Integration of savings groups and youth
entrepreneurship in Africa
By Quegas Mutale, Zimbabwe
Introduction
The savings groups approach to development and
women empowerment was introduced by Care Niger in 1991, an international Non-Governmental
Organization (NGO). Although people have always been saving for different purposes
such as festive season food and clothing, purchase of cars, etc., Care Niger formalized
the approach in the women empowerment sector in 1991. The savings groups model
has been proven to drive entrepreneurship amongst the vulnerable populations,
especially young people. In like with the mandate of Kick Against Financial
Illiteracy (KAFI) HQ, promoting a saving culture amongst the young people helps
meet the entrepreneurship goals, and creates sustainable development amongst
the vulnerable population in Africa. This article shares the savings groups
models, challenges faced by youths in entrepreneurship, forms of entrepreneurship
for youths, impact of youth entrepreneurship, and the linkage between savings
groups and entrepreneurship.
Savings groups models
World Vision defines a savings
group as a voluntary group of people, predominantly women, who save together in
a safe and convenient way. Care
Niger introduced the savings groups concept after realizing that women needed
income to move out of abject poverty (Care, 2017- see: CARE’s Savings Groups are Changing the World - CARE
Australia). Different organisations
use different saving approaches and wording for the savings groups concept when
dealing with communities. Examples include Village Savings and Lending
Associations (VSLA), Internal Savings and Lending Schemes (ISALS), Village
Banks, Saving and Internal Lending Communities (SILC), etc. Regardless of the
model, the most important thing is to engage youth to participate in saving
their funds through the savings groups. This can help them drive into
entrepreneurship. This is what KAFI HQ promotes and seeks to achieve amongst
the young people aged 18-35 years. Since inception, the community-based
Village Savings and Lending Association (VSLA) model has become a cornerstone
of financial inclusion, shaping policy, Rotating Savings and Credit
Associations (ROSCAs), influencing economic systems, and transforming
development practices worldwide (VSLA
Resources - CARE). Saving is
a key approach needed for one to start entrepreneurship and meet other life
goals. Though others use the merry- go round approach, others use the saving
and lending where one borrows money from a group and returns it with interest after
an agreed period of time.
Types of entrepreneurships for youths
In their business, youths may engage into green
entrepreneurship or social entrepreneurship. Green entrepreneurship, in the
words of Global Entrepreneurship Network (2014) pays particular attention to
the environmental needs. With the current trend of climate change, green
entrepreneurship helps youths to have enterprises that focus on addressing
environmental problems whilst making youths to earn more money. Thus, the
sustainability movement is manifesting in youth entrepreneurship through the
establishment of businesses that prioritize sustainable practices, green
technologies, and social impact (Global
Entrepreneurship Network, 2014). For instance, a waste collection enterprise
helps to create clean environment and reduce possibility of incidences of
communicable diseases whilst earning money from the service. On the other hand,
social entrepreneurship focuses on entrepreneurship that creates impact in the
communities. This helps to provide social goods and services even though the
aim is to make profit. For example, a business that sells bicycles to school
children help to reduce travelling time for learners to school, hence promote school
enrolment and reducing levels of illiteracy in the communities and achieve an
educated society. Also, a stationery business increase access of stationery to school
communities whilst the business makes profit. The social
entrepreneurship movement is manifesting in the rise of youth-led startups that
prioritize solving social, environmental, and community-based challenges (Global Entrepreneurship Network,
2014). Therefore, KAFI HQ encourages youths to be involved in at least a
certain form of entrepreneurship.
Challenges facing youth in entrepreneurship
Young people are encouraged to join entrepreneurship
to achieve their life goals. However, as they do so, they need to be aware of
the challenges that youth entrepreneurship face. These span around four policy
focus areas which are pipeline, business environment, finance, and growth
support (Global Entrepreneurship Network, 2014). Challenges related to policy making include
lack of up-to-date analysis of youth entrepreneurship ecosystem in many
countries, lack of coordination on entrepreneurship strategy at national level,
and limited voice of youths in entrepreneurship policy making (Global
Entrepreneurship Network, 2014). This calls
for improved coordination at national level in developing entrepreneurship
strategy and policy making, inclusion of youth in designing entrepreneurship
policies and integrating national youth entrepreneurship policy in development
interventions. Basically, there is lack of awareness amongst youths in rural
areas of Africa that entrepreneurship is a career. There is lack of delivery of
entrepreneurship education amongst youths in certain circumstances such as
schools. Teachers also in certain contexts lack training on entrepreneurship.
To this end, the Global Entrepreneurship Network (2014) suggest solutions such
as career guidance, national promotion campaigns, teacher training on
entrepreneurship and creating entrepreneurship educator networks. This also
points that youths and schools need to embrace the financial literacy opportunities
that KAFI HQ and partners avail to the youths in Africa. The other set of
challenges focuses on the immediate barriers that young people who decide to
become entrepreneurs face (Global
Entrepreneurship Network, 2014). Plan International (see: Savings
groups, microfinance and financial inclusion | Plan International) alleges that majority of people
live in developing countries and are unable to become financially included
because of having little money, lack access to banks nearby, or are not aware
of the available services. In reviewing literature, scholars have noted
that young people face a challenge of accessing financial services, hence
limiting the scope of their successful entrepreneurship
Other challenges that youths face in
entrepreneurship relate to limited access to finance. On this note, youths are
encouraged to save through the savings groups where they can save and borrow at
low interest rates as they fund their enterprises. Plan International confirms
that Around 8% of the global population live in extreme poverty. Therefore, engaging
in some form of saving by youths can help them fund their business and build
sustainability. To grow their business, youths face a challenge of physical
workspace. The Global Entrepreneurship Network (2014) suggests the provision of
entrepreneurship hubs for the youths. This may be through establishing the
youth entrepreneurship incubation hubs where young people can learn about their
businesses and also get operational space. To overcome the challenges in
entrepreneurship, young people are leveraging digital platforms for
crowdfunding, participating in mentorship programs, and forming networks to
share knowledge and resources (Global
Entrepreneurship Network, 2014). Despite these challenges, young people are called
upon to understand them and come up with innovative means to deal with them.
Impact of youth entrepreneurship
Youth entrepreneurship helps create wealth for
the youths and communities. KAFI HQ is interested in promoting youth
entrepreneurship because it helps address challenges facing communities and
promoting sustainable development. According to Global Entrepreneurship Network
(2014), youth entrepreneurship helps to achieve the United Nations Sustainable
Development Goals (SDGs). Under SDG 8 (economic growth and employment), youth entrepreneurship
promotes sustained, inclusive, and sustainable economic growth by
creating jobs and increasing labour productivity. According to World Vision, savings
groups provide skills training so that members can invest in their own
income-generation activities while also contributing to ending child labour
(SDG 8.7). Under SDG 9 (innovation and infrastructure), young entrepreneurs are
often at the forefront of innovation, developing new technologies and solutions
that drive industrialization and infrastructure development. To promote gender
equality (SDG5), youth entrepreneurship helps to empower women and reduce
gender inequalities. According to Plan International, savings groups promote
socio- economic change, can be used to deliver entrepreneurship training. An example
provided by Plan International is in Senegal, Mali and Niger where women
invested in energy entrepreneurship. A study
in Kenya revealed that village savings and lending associations form a key
roadmap for Small-scale Entrepreneurs capitation (
The link between savings groups and
entrepreneurship
Scholars propel that youth
savings groups are engineered as an initial step towards inclusion and economic
empowerment
Conclusion
The savings groups concept has been widely
accepted in the development sector as an instrument to build entrepreneurship
amongst the young people. KAFI HQ provides a financial literacy training to
young leaders, with emphasis on saving, investment and entrepreneurship as part
of the modules. This discussion centred
around the linkage between saving through
savings groups and entrepreneurship. It concludes that saving is key in
building towards successful entrepreneurship as it helps address key barriers
that youths face in relation to business investment. Saving is not
merely a financial habit; it is the foundation upon which sustainable youth
entrepreneurship is built.
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