London, UK (BBN)- In Bangladesh, child labour is a fact of life: about 7.4 million children aged 5-17 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 NGOs and policy makers 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, the Guardian reported.

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 (BB), 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 Taka (7p).


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,” adds Michael McGrath, country director of Save the Children, which had lobbied BB since 2011 to extend its financial inclusion programme to marginalised children, according to the British newspaper.

The move is significant as it drops an earlier requirement for the co-signature of a parent or guardian – an 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.

McGrath says: “The accounts will increase the incentives for these street and working children to come into contact with community-based organisations (CBOs) and NGOs [who can then help with] building their skills in numeracy, saving and financial planning.”

Having NGOs as co-signatories does raise new issues though: how do you prevent a vulnerable child from any corrupt behaviour by their NGO? What happens if the NGO who co-signed their account closes down?

Save the Children stresses 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. BB meanwhile 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.

For the initiative to have most impact, says McGrath, the backing of BB and Atiur Rahman, in particular, was crucial. “The private banks would not have agreed to bring children into the formal banking sector without BB saying that this was an initiative that they support.”

The Bangladesh initiative may benefit uniquely from the support of the central bank, but it is built on a principle that underpins other financial inclusion schemes for street and working children: microfinance must incorporate financial education to offer a sustainable way out of poverty.

McGrath says: “The accounts will create a key and hopefully lasting connection between children and the banking system.”

BB estimates that 1,700 bank accounts will have been opened by the end of November, six months into the project, but it is not the first street children banking scheme of its kind. The Children’s Development Khazana (CDK) opened in India in 2001 and now operates in eight countries across South Asia with 12,410 members, teaching financial literacy to adolescents who often go on to expand family businesses or establish their own. Rita Panicker, director of NGO Butterflies, which founded the children’s development bank, describes it as “not a bank but a life skills programme”, where child members are trained to run the banking service for their peers, taking turns as volunteer managers and advisers.

McGrath and Panicker reject any claim that banking services for children indirectly encourage child labour.

McGrath says: “There are more than 7 million child workers in Bangladesh, the majority of which are financially excluded. We are being realists with respect to banking, and in other areas of our work continue to work hard to keep children in school.”

For once, he adds, their work is not invisible. “The very existence of the accounts is a recognition and acknowledgment by Bangladesh Bank and, by extension, the financial system, of the importance of these children’s everyday struggles, lives and their work.”

BBN/SSR/AD-13Nov14-11:55 pm (BST)