MILLIONS of extremely poor Bangladeshis are living in our golden country seeking opportunities to participate in the economy to survive. They face barriers in attaining an education, job, health services, clean drinking water, or food. In desperation, they pray for a chance to do something, anything that will enable them to get onto the bottom rung of the economic ladder so they can heave themselves out of poverty. Let's give them a chance to achieve prosperity. What will it take?
Allowing extremely poor people to open bank accounts gives them a mechanism to save. This is a basic human necessity, if one is to have any form of resilience to shocks.
We are all vulnerable to all sorts of shocks, the extreme poor more so than anybody else.
Research shows that financial inclusion can help people overcome conditions of poverty. Providing individuals with access to savings instruments increases savings, productive investment, consumption and female empowerment.
Many of the 8 million extremely poor Bangladeshi youths live in urban slums. Most of these children are working in terrible conditions to support their families. While they are undoubtedly living in hardship and not going to school, the truth is, after supporting their families, they are unable to channel what little money they have left towards a better future for themselves. This is the trap they are in. Instead, the excess money is wasted -- sometimes on drugs -- or even lost, as these children have no pillow to store their money safely under.
In March this year, Bangladesh Bank, led by Governor Atiur Rahman, introduced an exciting financial product enabling working street children to open basic savings accounts, under guarantee of a registered NGO in their community. Children under 18 require an NGO guardian signature but they remain the sole owner of the money in the account. With a minimum deposit of Tk. 10 taka and a compound interest rate of 10%, this product is ideal for the street children it means to serve. Children above 18 with accounts also have an option to take a loan from the same bank if they want to do business or go to school. Thank you to the governor for making this refinancing possible.
I am very glad this ambitious plan to extend basic banking services across the country was launched. This policy creates an environment conducive to the current government's vision of an extreme-poverty-free Bangladesh by 2021. This is a formidable step forward for our children. I hope other members of society feel the energy created here and join the momentum, each with his or her contribution. We all have a role to play.
The street children I met in Khulna, who had opened accounts at a state-owned bank, said they were thrilled, inspired and motivated, by virtue of owning a bank account, to work harder and save. The scope and scale of their dreams, aspirations and confidence had changed.
Speaking to the manager of the bank, I learned that 292 street children had opened bank accounts. He said: “As a child, I studied in a school but I had no idea about money. These kids have an opportunity to learn about the banking system from an early age. This will help them build resilience.”
The executive director of an NGO said that developing a “savings mindset” among the children is not as challenging as convincing their parents to come on board. Parents, she says, require significant counseling and convincing to recognise the advantages of opening bank accounts. She opines that there are no funds available for NGOs to help do this advocacy work with parents or to raise the financial literacy of the children who are opening accounts, though she hopes that new funds will emerge from the private sector or NGOs to fill this gap.
In this case, the children were able to deposit on average Tk. 50-500 a week. Many of the children work at home, preparing shrimp for factories. Some work at wholesale fish markets, stocking fish, breaking ice, carrying things. Some are domestic workers, some work at restaurants or tea stalls, while some are 'tokais.'
None of these children are in school, so the NGO has taught them basic literacy so they can sign their own names to open accounts. In a generous spirit of giving, a privately-owned bank, last Eid, put gifts of Tk. 1,000 into each and every bank account that had been opened to date by street children. Other banks and philanthropic individuals can follow this path.
This Bangladesh Bank initiative makes it easier for funders to contribute monetarily to the empowerment of street children directly, if they choose to. Private and public funds can now easily be deposited into these accounts to supplement savings for the child.
Bangladesh Bank has also created a 2.5% mandatory CSR requirement for banks to contribute to corporate social responsibility activities this year. This is a wonderful policy that facilitates redistribution of wealth to create a more inclusive, equitable nation. Smart pro-poor policies are exactly what Bangladesh needs right now to bring about the dreams we have in our hearts.
In Guatemala, 4.3 million youths were introduced to Youth Savers in a programme launched in 1996. In Kenya, Tap and Reposition Youth (TRY) project created youth savings accounts for out-of-school adolescent girls and young women aged 16 to 22 residing in slums and low-income areas of Nairobi. In Senegal, Poste Finances, a postal savings bank, made an agreement with the National Agency for the Welfare of Young Children to open free savings accounts for underprivileged children. In Uganda, Youth Start is an initiative to provide safe and smart savings products for vulnerable adolescent girls.
Some critical best practices that emerged from these programmes was that youth receive most benefit from financial services when they are offered in tandem with non-financial services such as mentoring, financial education, internships and social asset building. There are some risks involved and we must be careful to ensure that our poorest, most vulnerable children are not exploited by banks or NGOs. Safeguards and conflict-resolution policies need to be put in place. Overall, this is a promising step in the right direction, and I speak on behalf of many mothers and fathers when I say that we hope to see this blossom into a garden of opportunities for our children.
The writer is an activist for the extreme poor.