Africa is known as a young continent for a reason. It is estimated that 75% of Africa’s population is under the age of 35, which means that many of the continent’s sectors depend on the welfare of the youth. When youth spend, save, and invest money, they have a huge impact on their country’s economy.
It is against this background that we recently surveyed over 2,000 respondents aged 35 and under in Kenya, Uganda, Tanzania, Ghana, Nigeria, and Cote d’Ivoire to examine how Africa’s youth in six nations are engaging with financial services.
Without further ado, let’s go through some findings from the survey, specifically on how the youth in Africa spend, save, and invest.
Where do the youth get their money?
To spend, save, and invest, you must have income. So, we started by looking at the main sources of income among the youth. 77% of the respondents said their main source of income was employment, including self -employment. Parents provide income for 34%, and some even get money from betting!
What do the youth mostly spend on?
The study found out that the largest average share of monthly spending was for food, school fees (education), rent, and clothing, in that order. In an era of massive digitization driven by the youth, mobile airtime forms a sizeable spend for the youth. There are other common spends by the youth, such as beauty and hygiene products, entertainment, and gambling.
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How do they spend?
Even as the use of mobile money and credit cards continues to grow, GeoPoll’s study finds cash remains the most popular payment method. Cash is especially popular with day to day spends like transport, beauty products, non-alcoholic drinks, and groceries. Mobile money, also quite popular, is used for online betting, internet, airtime, and pay-TV. Credit/debit cards are mostly used for video streaming services, insurance, nicotine products, and betting.
Bigger payments like school fees, savings, insurance premiums, and rent respectively, are mostly made through bank deposits.
Do you save before you spend, or do you save what remains after you spend? Do you set aside a fixed amount, a percentage of whatever you earn, or simply whatever remains? Well, we sought this information in the survey, and the results are diverse across the countries.
For example, more youth in Tanzania and Uganda set aside a fixed amount to save than in Nigeria and Ivory Coast, who are more likely to save what remains after spending. The good news is, most youth frequently set aside some money as savings, although there are some who rarely save or don’t have a savings account.
Why the youth save money
We asked the respondents who said they were saving why they save. With insurance uptake not particularly a priority for most of us, emergencies and medical care are some of the top driving forces for saving among the youth. Other reasons for saving are future goals, education, and to accumulate wealth and buy property, in that order.
Speaking of wealth accumulation and property, we found that Nigeria was by far the country with the largest investment culture among the youth – an impressive 84% of the respondents said they invest their money. Kenya, Tanzania, Uganda, Ghana, and Ivory Coast followed in that order in the rate of youth investing, compared to those that don’t.
Where the youth most invest in
Among the youth that do invest, business (42%) and farming (34%) were the most popular investment categories reported across the six countries surveyed. Could this be due to accessibility and the fact that business and farming can be invested in little-by-little over time with relatively low risk? This is as compared to buying land, building real estate and stock exchange, which, overall, come third, fourth and fifth, respectfully.
Challenges keeping youth from investing
Given that most youth would want to invest and create wealth, there are challenges that cause many from investing. Lack of money was the most commonly cited challenge, followed by other commitments and low income and lack of knowledge in investment.
This survey gives good indications on the use of and access to financial services, as well as financial practices by the youth in Africa. So, which category do you and your friends fall into in each of the sections? Tell us on Facebook!
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