In Bangladesh, child labor is a fact of life: About 7.4 million children aged five to 17 are estimated to work to support their families, or simply to survive. Some of them return home at night while others live full-time on the streets, but all face an issue often overlooked by non-governmental organizations (NGOs) and policymakers focusing on their basic needs: How do they keep the money they earn safe?
Bangladesh law permits children aged 14 and over to engage in non-hazardous work, but their economic activity had been unmatched by services that enable their money to work for them.
Financial exclusion creates a particular paradox for working and street children in that their resourcefulness and industry may even undermine their security with their wages making them the target of thieves and cheats.
A scheme pioneered by Bangladesh’s central bank, the Bangladesh Bank, hopes to change their situation. The bank introduced a service in June that allows children to open a savings account with participating banks for as little as 10 takas (US$0.13).
Bank Governor Atiur Rahman said the initiative aims to “prevent the derailment of street children through developing their financial position”.
“Permitting children to open bank accounts will hopefully lead to a higher level of physical security [for them], and bring relief from the fear of their hard-earned money being taken by others,” said Michael McGrath, country director of Save the Children, which had lobbied Bangladesh Bank since 2011 to extend its financial inclusion program to marginalized children.
The move is significant as it drops an earlier requirement for the co-signature of a parent or guardian — impossibility if the child is an orphan or has been forced to leave home.
The central bank is coordinating 10 banks that are piloting the scheme in partnership with approved, legally-registered NGOs working on financial exclusion of children.
New accounts require a co-signature from an NGO, whose staff retain control of it until the child turns 18. For the poorest children, NGO involvement is aimed at ensuring the children’s money works for all their chief needs: survival, emergencies and planning for the future.
“The accounts will increase the incentives for these street and working children to come into contact with community-based organizations and NGOs [who can then help with] building their skills in numeracy, saving and financial planning,” McGrath said.
Having NGOs as co-signatories does raise new issues though: How do you prevent a vulnerable child from any corrupt behavior by their NGO? What happens if the NGO who cosigned their account closes down?
Save the Children said that the NGOs act as mentors for the children rather than deciding how the money is spent and that participating NGOs will be monitored. It acknowledges that some street children may be put off by the requirement to link up with an NGO.
Meanwhile, Bangladesh Bank has its own system to monitor the working children’s accounts. NGOs participating are those that participate in the NGO Street and Working Children Banking group. It is a self-monitoring group, with any issues arising during field visits and case studies documented in monthly progress reports.
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