Category: Financial Literacy

Category: Financial Literacy

Cissy Namboira’s story

Initially Cissy Namboira, mother of Patricia Mpindi (Nakabango Senior Secondary school in Jinja), used to do tailoring with a hired and old machine that occasionally broke down yet it was her sole source of income to pay her daughter’s school due. When Empowerment for Girls’ Education (EGE) project, Households Income Generating Activities (IGAs) intervention opportunity arrived, she immediately decided to ask for a new sewing machine, which she received in January 2019.

Right now she is working on school uniform orders placed by two schools within the Nakabango community (Jinja).  Her daughter has also acquired tailoring skills which she plans to pass onto her colleagues in the project at the school, using another sewing machine donated to the school by the project to assist girls in making reusable sanitary pads so they do not miss attending classes during menstruation.

Patricia Mpindi (EGE club member) sewing a school uniform

Ms Cissy is saving with Opportunity Bank and a Village SACCO to buy another machine that her daughter can also use during holidays and weekends especially when she is overwhelmed by school uniform orders. To her, EGE project has not only enabled her to pay school fees for her daughter and also meet other family needs but has also transformed her entire family by giving it a stable source of livelihood

Smoothing the Cost of Education: Primary School Saving in Uganda

Smoothing the Cost of Education: Primary School Saving in Uganda

Even when there are no official school fees, the financial burden of purchasing uniforms, books, and other school supplies prevents low-income students from remaining in school. In Uganda, researchers tested whether a school-based savings program improved academic performance and reduced dropout rates by enabling students and their families to save for school-related expenses.
A version of the program that labeled savings for educational purposes, rather than fully committing money to educational expenses, increased the amount students saved, expenditures on educational supplies, and test scores.

Policy Issue
 Although many countries in Sub-Saharan Africa have close to universal primary school enrollment, many students drop out before completing primary school or fail to continue to secondary school. While children drop out for a number of reasons, financial concerns are often an important factor.

Even when governments eliminate school fees, there are still many costs associated with attending school. Providing basic school supplies such as uniforms, pens, pencils, and workbooks is often a significant challenge for low-income families. Furthermore, these families may lack access to formal savings services, making it difficult to set aside money for education. Even when families do have some savings, there is no guarantee they will use the money for educational expenditures. This evaluation assesses the impact of a school-based savings program that aims to encourage students and their parents to save for educational expenses.

Context of the Evaluation 
Uganda’s primary school enrollment rates have greatly increased since the government began providing free universal primary education. Retaining pupils, however, is more difficult and as few as 32 percent of children entering primary school complete all seven grades. While the government covers the cost of teachers and schools, many Ugandan primary schools require uniforms, and families are responsible for providing school supplies such as stationary and workbooks. The financial strain of buying these supplies is often too high for the family to sustain, and is cited as a major reason for children dropping out of school.

Details of the Intervention
 Researchers partnered with the Private Education Development Network (PEDN) and FINCA Uganda to implement and test the “Super Savers” program in public primary schools. Children in grades five through seven, the final three years of primary school, were given the opportunity to deposit money into lockboxes on a daily or weekly basis. The money was deposited into the school’s bank account at the end of each trimester. The bank accounts did not earn interest. At the beginning of the next trimester, bank representatives returned to the school to disburse the funds. On the day the funds were paid out, PEDN organized a small market at each school where students could purchase school supplies or school services such as practice exams or tutoring sessions. 

Schools were randomly assigned to have students’ savings returned in one of two ways:

  • Voucher payout: students received their savings in the form of a voucher that could only be used to buy supplies or school services at the market set up at the school. This created a binding commitment to spend savings on educational expenditures.
  • Cash payout: students received their savings in cash, which meant they could spend the funds either at the market set up at the school or however else they chose. 

Students were notified of the kind of payout they would receive at the beginning of the program. There were 39 schools in each group, and an additional 58 schools served as a comparison group  received no savings account. 
Half of the schools in each payout group were also randomly assigned to receive parent outreach, in which workers from PEDN hosted a workshop for sixth- and seventh-grade parents to describe the various ways they could support their children’s education and to promote the savings program as a tool to help families finance school expenditures.

Results and Policy Lessons
Researchers found that students deposited significantly more when their savings were returned in cash, rather than vouchers. On average, students in schools that received cash payouts deposited between 2,200 and 2,340 Ugandan shillings, while the average student who received voucher payouts deposited between 1,120 and 1,180 shillings. 
The purpose of the voucher payouts was to commit students to spend their savings on educational expenses. Cash payouts, on the other hand, imposed no restrictions on the use of savings, but did provide a weak commitment to spend savings on educational expenses by basing the savings program in schools and timing payouts to correspond with markets for school supplies.
This weaker commitment may have appealed to students who value flexibility on how to spend their savings, while the voucher treatment’s stronger commitment may have discouraged them from saving. When combined with parent outreach, students who received cash payouts were significantly more likely to have a complete set of school supplies. They also had test scores that were 0.11 standard deviations higher than the comparison group.
There were no significant positive effects on school supplies or test scores among students who received cash payouts without parent outreach or among students who received vouchers, with or without parent outreach. These results suggest that combining cash payouts from savings accounts with parental outreach can lead households to spend savings on education and improve student learning.

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How Can Children and Youth Become Financially Capable Adults?

Uganda has one of the highest primary school drop-out rates in the world. Though the country abolished most primary school fees in 1997, a recent UNICEF report found that 81% of parents cited financial constraints as the reason why their children dropped out of school. In a new op-ed in Uganda’s Daily Monitor, Oliver Schmidt points out: 

Many Ugandans say education takes the number one spot in their expenses…Our qualitative fieldwork revealed that a large proportion of microfinance loans are used to pay for education, even if those loans are by name for business or agriculture. 

Schmidt goes on to summarize the promising impacts of a pilot program through which primary school children were offered school-based savings accounts to help them save for education-related expenditures. A rigorous evaluation conducted by Innovations for Poverty Action (IPA) in Uganda found that a savings account that nudged children to set money aside for school supplies successfully encouraged students to save more. When the account was offered in combination with a parent outreach program, students were more likely to invest their savings in school supplies, uniforms, and education services such as tutoring, and had higher test scores.  The promising impacts of this school-based savings program show that access to a simple savings account combined with a gentle nudge toward saving and responsible spending can be effective in improving the financial capability, and ultimately the welfare, of poor families in developing countries.

Accordingly, access to savings for youth has long been on the agendas of organizations from Aflatoun and Save the Children to UNCDF and Women’s World Banking. The importance of providing savings vehicles for young people – and building a business case for such vehicles – echoed throughout the agenda at this year’s Global Youth Economic Opportunities Summit, where these organizations and a multitude of others championed the idea of providing well-designed savings accounts to promote youth financial capability. In a parallel – and possibly complementary – effort, governments and NGOs worldwide are focusing on programs that aim to develop youth financial capability through financial education.

The theory behind such programs is simple: by learning financial concepts from an early age, children will become financially capable adults who take optimal, welfare-enhancing financial decisions. An evaluation of a large-scale financial education program for Brazilian secondary-school students demonstrated that a well-designed curriculum can, in fact, significantly improve the financial knowledge and savings behavior of youth. So what is the best way to mold youth into financially capable adults? Should financial capability programs for youth combine education and savings tools, or is it enough to just offer savings? Another IPA study in Uganda is testing this question among 16- to 28-year-olds by comparing the impacts of a group savings product, a financial education program, and a combination of the two on the participants’ savings behavior.

After one year, participants reported similar increases in total savings and earned income regardless of whether they received a savings account, financial education, or both, suggesting that there may be no added benefit to offering education and savings tools in combination, at least in the short run. Unfortunately, this short-run evidence cannot provide a definitive answer on how best to turn youth into financially capable adults. We need longer-term results. This is why IPA, with support from the Citi Foundation, plans to conduct a long-term follow-up with the participants of this study next year. Gathering evidence on the impact of financial education and savings accounts on savings behavior nearly five years after the initial program was offered will give us important clues about whether impacts of financial capability programs can persist in the long term, and help us understand whether these strategies are best offered individually or in combination.

Our findings will be critical in helping to define the direction of youth financial capability policy and practice. You can learn more about IPA’s work evaluating financial capability-enhancing interventions for children and youth here. Beniamino Savonitto is an Initiative Director and Pooja Wagh is an Initiative Coordinator with IPA’s Global Financial Inclusion Initiative.

Studies: Smoothing the Cost of Education: Primary School Saving in UgandaStarting a Lifetime of Saving: Teaching the Practice of Saving to Ugandan Youth
People​:Pooja WaghBeniamino Savonitto
Country: Uganda
Program Area: EducationFinancial InclusionFinancial CapabilityFinancial Services for the Poor
Topics: Behavioral DesignCommitmentsFinancial CapabilityRural FinanceSavingsSchool AttendanceYouth
Partners: FINCA UgandaThe Private Education Development NetworkChurch of UgandaStraight Talk Foundation

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Financial literacy tips as you manage COVID-19 financial impact.

FINANCIAL LITERACY TIPS AS YOU MANAGE COVID-19 FINANCIAL IMPACT. It’s no longer a secret that we are facing a global pandemic which we expect to come with financial impact not only at the global level but straight into our homes and pockets during and after the pandemic.

Due to this PEDN will be running online financial literacy tips to guide you manage your personal and family finances during these hard times effective 1st April, 2020.

For any feedback or questions directly reach out to

Women Empowerment

Nandugwa is a 22 yr old member of our ‘Girls Take Lead’ project in Masaka district. After undergoing our training in financial education and social empowerment.

she has inspired 7 other AGYW in Buwunga sub-county to start a saving group dubbed “GTL savings group” with an aim of starting a small group enterprise whose proceeds will be used to meet their personal and financial needs, hence reducing their vulnerability to situations that expose them to catching HIV/AIDS

Girls Take Lead project is funded by Aidsfonds and implemented by #PEDN and International Community Of Women Living With HIV East Africa. Opportunity Bank Uganda Ltd Aflatoun International UN Women #unwomenuganda #womenempowerment

Determined to succeed

Akampa Rita from Kabonera sub-county Masaka district is one of our beneficiaries of the “Girls Take Lead (GTL) pilot project”.

After being trained by PEDN in Financial literacy aspects and Enterprise set up, she developed an idea of making baskets using locally available materials. She sells her products to community members around Kabonera and saves the proceeds in the GTL saving club. Part of the income generated is also being used to support her family and also buy her personal needs. She shares that with this enterprise, she won’t need to beg money and gifts from men as she’s able to get all the needs through her own effort.

Rita is one of the 500 Adolescent Girls and Young Women (AGYW) in 5 sub counties in Masaka district being supported by the project with knowledge and vocational skills to be able to challenge situations that expose them to sleeping with men for gifts/money (also called transactional sex), which exposes them to the danger of catching HIV AIDS.

The project is implemented by PEDN and supported by Aidsfonds