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Opportunity EduFinance
Level 18, 100 Bishopsgate, London EC2M 1GT

Telephone: +44 (0) 7768599834

© 2021 Opportunity International Education Finance functions under its US and UK affiliates. Opportunity International United Kingdom is registered as a charity in England and Wales (1107713) and in Scotland (SCO39692). Opportunity International United Statesis a 501(c)3 nonprofit.

SPOTLIGHT: Abaco Peru & ‘Ahorro Educación Futura’ (Saving for Future Education)

By Antonella Abategiovanni

Abaco Peru is one of the more than 60 financial institutions around the world that Opportunity EduFinance partners with. As one of the three largest Saving and Credit Unions in Peru, lending to over 1K low-income borrowers, it was not surprising that Abaco saw an opportunity during the pandemic to incentivize families to save for education. Over the last 16 months, Opportunity EduFinance and Abaco worked together to develop the Ahorro Educación Futura’ (Saving for Future Education) savings product to offer families committed to investing in their children’s futures.

School boys in Cusco

Why offer ‘EduSave’ during a pandemic?

In 2019 Opportunity EduFinance and Abaco began collaboration with the intention to develop financial services for schools and parents, developing school improvement loans and school fee loans tailored to the context in Peru. Partnership plans also included developing a unique saving product for parents to invest in their children’s higher education, commonly referred to as an ‘EduSave’ product.

However, as Covid-19 forced temporary school closures, slowed lending and created uncertainty, the EduFinance team held numerous calls with financial institution partners to listen to their immediate concerns. At Abaco, the teams mutually agreed that helping parents to save toward higher education was the best product to offer during the pandemic, delaying the development of the school improvement loan and school fee loan until schools reopened. The teams discussed both concerns and opportunities related to an EduSave product:

  • Parents might be under pression with existing financial commitments and be reluctant to undertake a loan to pay for school fees.
  • Under financial distress, parents might send children to public schools where the implicit financial cost of education may be lower.
  • Saving is a skill that can be trained through financial literacy.
  • Financial literacy empowers people by helping them to make informed choices, which is beneficial in a time of crisis.
  • Saving towards education will enable parents to afford higher education and/or access a loan when their ability to pay is more stable.

“We believe that saving is a good habit that we seek to encourage in our members and collaborators,” explains Saori Yabiku, Head of Child Savings Programs at Abaco. “It is a financial tool that will bring benefits for them and their families in the medium and long term.” The launching of the “Ahorro Educación Futura” product allows Abaco to continue instilling this good savings habit in clients, whether it is for their own goal, their children’s, or their family.

Juan Vega, EduFinance Senior Technical Assistance Advisor for Latin America notes “This is taking us back to the origins of microfinance, where even before microcredit, clients financial literacy was a key goal. Through EduSave, EduFinance promotes both financial literacy and saving culture. The parent’s monthly direct debit into the saving account supports the saving discipline. Once the saving goal has been reached, the parent can complement or leverage the saving balance for a loan in case extra funds are needed to pay for their child’s higher education.”

What is unique about Abaco’s ‘Ahorro Educación Futura’ Savings Account?

Abaco offers its clients a number of ‘programmed’ savings accounts, which gives parents preferential interest rates on achieving set targets. The goal of the new Ahorro Educación Futura savings account is to provide parents with the opportunity to save for their children’s higher education in a dedicated account, setting a savings goal.

While the savings is not used as collateral for a potential loan, by building savings with Abaco over multiple years, the parent can establish a history of positive savings behavior, which is then considered when approving a loan application.

The focus groups showed that many of the mothers interviewed were anxious about not knowing how to support the higher education of their sons and daughters or not knowing if they would be able to support the studies of all their children.   In the past, they only supported their children as far as they could with the money they had available.  With a savings account programmed a few years in advance and the possibility of taking a loan if necessary, today it is possible to support the education of ALL their children.

A frequent question Abaco received from parents is about how to start saving. Abaco recommends to parents to start with a small monthly amount that they can define before spending income on other expenses.

Are parents choosing to save for education?

While Opportunity EduFinance just completed the EduSave product development work with Abaco in January 2021, they have already opened 66 new savings accounts, with an estimated total deposit of US$8000. Abaco’s senior leadership has already set an ambitious goal to help families open at least 720 Ahorro Educación Futura accounts by year end, representing an estimated US$100,000 dedicated to educational investments. If the team meets this goal, they have already projected to increase the target to 1,000 new accounts in 2021.

Because Abaco believes in the success of this savings product, it appointed an EduSave Manager. The EduSave Manager invested significant time and resources to champion the new savings account, holding trainings with relevant staff to ensure they understand how to offer the savings to clients.  They have used multiple electronic marketing strategies to increase visibility of the new EduSave account since in-person marketing efforts have been limited by COVID-19. This has included Facebook campaigns, direct email and WhatsApp messaging to current members. Abaco offers financial education to its members via multiple training sessions. Abaco has found financial education is key to driving the interest and motivation of its members to open programmed savings accounts and maintain the discipline of saving.

Social media Abaco

The EduSave Manager will also track the growth of the EduSave portfolio over time to identify trends and opportunities to increase parents’ awareness of the benefits of saving for education. Research in client savings behaviour across many countries has found that access to savings accounts integrated with financial education encouraging positive savings behaviour results in greater savings than offering an account only. In many cases, without training and follow-up, programmed savings balances do not grow very much at all. 

What is unique about Abaco's approach?

Around the globe, the pandemic has highlighted the systems and safety nets that must be strengthened to meet critical needs – like education access – without leaving behind the most vulnerable. While there are many factors to ensuring education access for all, especially during a crisis, encouraging savings behaviour that builds a family’s safety net over time can play a critical role. A family with dedicated education savings could mean the difference between a student forced to drop out when income is tight, versus having the opportunity to complete her education and ultimately earn more future income to provide for her family.

Financial institutions like Abaco are critical now more than ever. Amidst uncertainty, Abaco was able to evaluate the needs of its clients during the pandemic and recognize how important education is to the entire family. They saw the tremendous challenges caused by the pandemic and school closures as an opportunity to add value to their clients’ lives. This type of innovative client-centred approach will be essential to rebuilding financially inclusive systems that are more resilient and do not leave the most vulnerable behind.  

Saori Yabiku

 Saori Yabiku is Líder de Programas de Ahorro Infantil Abakids/Abateens y Banca Joven (Head of Child Savings Programs) at Abaco.


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