Turning Street Children into Entrepreneurs

The UN estimates that 500 million people around the world are homeless, and UNICEF estimates India alone has 11 million homeless children on its streets (though it is difficult to pin down the figure). In order to survive another day, these children will work in one way or another. While there are many campaigns to ban children from working, and charities dedicated to getting them off the streets and into shelter, the raw fact remains: many of these children slip through the cracks and remain vulnerable, poor and neglected.

Most street children suffer from malnutrition, hunger, health problems, and abuse. They make ends meet by working various jobs or by stealing. While they have dreams, there is no mechanism for them to save for the future. It is a live-for-now existence that, if they survive to adulthood, means they will probably remain homeless and vulnerable.

Street and working children have money: it is a natural consequence of having to be resourceful to survive. But what they don’t have is access to banking services or trustworthy financial advice that can help them to gain wealth and move out of poverty and into a brighter future.

The Children’s Development Bank in India is one initiative that seeks to turn these neglected children into the next generation of entrepreneurs. The bank works on banking and co-operative principles, where savers are members and joint owners of the bank. Any child can save money with the bank and earn interest, as well as take out loans if they are over 15 years old. It was started in 2001 and was inspired by the Youth Bank in the UK. Interest made by the bank is shared by its members, as with many co-operative banks and credit unions.

The bank is managed jointly by children and adults. The children have a say in how the bank is run and on what conditions it should lend money. They also keep an eye on borrowers to prevent them from running off without repaying loans.

For these vulnerable children, it has many advantages: they can put money aside without fear of it being stolen or lost, save for important things like clothes, or pay for their education.

A key part of the bank’s mandate is helping the children build entrepreneurial skills for business. Mentors help the children choose a business model, select an occupation with minimal risk and more benefits, get training and solve business problems.

The bank has branches in India, Afghanistan, and Sri Lanka.

Ten-year-old Deepak Prahlad, a street child in Delhi, dreams of being a doctor.

“I know what it takes to be a doctor. I need to study hard and need to save a lot of money,” he told the Hindustan Times. For now, he works as a rag picker but has started saving 30 to 40 rupees a day in the Children’s Development Bank. The bank has 1,300 members in the city. It pays 3.5 per cent interest on savings accounts.

“Some of them want to fly very high,” said Rita Panicker, who helped set up the bank in 2001. “We have been working with street children for the past two decades. Some of these children are very talented and have entrepreneur qualities. One of the biggest problems facing these children was that they did not have a safe place to keep their hard-earned money. In fact, it was the children who came up with the idea of the children’s bank. It started with 20 members in 2001 – and now it has 1,300 members in Delhi.”

Sudesh, a 15-year-old manager who looks after the bank’s current accounts, said: “We are extremely careful about whom to offer loans since we do not want to see our members’ savings lost because of bad loans. The skills I have learnt here are going to stand me in good stead in life.” Managers are chosen every six months by the children and they compete for the job.

By David South, Development Challenges, South-South Solutions

Published: November 2007

Development Challenges, South-South Solutions was launched as an e-newsletter in 2006 by UNDP's South-South Cooperation Unit (now the United Nations Office for South-South Cooperation) based in New York, USA. It led on profiling the rise of the global South as an economic powerhouse and was one of the first regular publications to champion the global South's innovators, entrepreneurs, and pioneers. It tracked the key trends that are now so profoundly reshaping how development is seen and done. This includes the rapid take-up of mobile phones and information technology in the global South (as profiled in the first issue of magazine Southern Innovator), the move to becoming a majority urban world, a growing global innovator culture, and the plethora of solutions being developed in the global South to tackle its problems and improve living conditions and boost human development. The success of the e-newsletter led to the launch of the magazine Southern Innovator.  

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