Rural Youth Financial Inclusion: A Bridge too Far? · PDF fileEmpowerment Project ......
Transcript of Rural Youth Financial Inclusion: A Bridge too Far? · PDF fileEmpowerment Project ......
Rural Youth Financial Inclusion: A Bridge too Far?
Sponsors
Making Cents International’s Youth Economic Opportunities Network (YEO Network) implements activities designed to facilitate knowledge exchange, collaboration, and action among the full range of stakeholders working to expand youth economic opportunities.
The Global Center for Youth Employment, launched by RTI in 2015, is a virtual learning and action center that brings together a broad, diverse coalition of allies to identify and nurture innovative youth employment solutions. The Center’s partners include workforce development experts from universities, NGOs, foundations, and the private sector.
Speakers
Paul Nelson Digital Finance Advisor
U.S. Global Development Lab, USAID
1/10/2017 4
Promising Methods For
Overcoming Financial
Exclusion
Paul Nelson
Digital Finance, USAID
USA
ID, vi
a A
FP
1/10/2017 5
USAID’s Digital Finance team looks for three primary
market-facing opportunities in any given country
2 encouraging institutions (including gov’ts, donors, and USAID implementing
partners) to digitize institutional payment flows and thus build demand for
digital financial services
1 fostering enabling
environments (policy, laws, regulatory frameworks,
supervision), private sector investment, and demand
for inclusive financial services
3 harnessing digital financial
services as tools for achieving development outcomes in agriculture,
energy, governance, health, and humanitarian
assistance
these three opportunities are often integrated with our capacity-building efforts for both USAID staff and implementing partners through the Community of Practice for Digital Finance: in-person training, webinars, toolkits, knowledge-sharing, etc.
1/10/2017 6
USA
ID
Setting the
scene first…
≠ Gender, Age, and Geography Access Gaps
Across low and middle-income countries: 49% of women have account (58% men);
48% of rural adults; 39% of young adults (15-24);
54% of adults (and 45% of young adults) save, but only 23% in financial institution
World Bank Global Findex 2014 | 7
The
imperative
for
financial
inclusion
☂ Limited Access to Emergency
Funds
43% of adults in low-income countries would have a difficult
or impossible time accessing funds in an emergency
♖ Dependence on cash for gov’t
payments
48% of recipients of government transfers in low- and middle-income countries received transfer in cash
World Bank Global Findex 2014, GSMA | 8
45% of adults in Sub-Saharan Africa with a mobile money
account do not have any other formal account
Growing Diversity of Financial Access Points
2.5 million
2 million
1.5 million
1 million
500,000
Post Offices
Commercial Bank
Branches
ATMs Mobile Money Agents
and the opportunity
posed by digital
technology
and new business
models for financial
services
70% of the population in developing markets expected to have a mobile by 2020, and many markets are already near 100% penetration
• Enabled by a sound policy and regulatory environment - in which policymakers (a) develop
and implement plans for harnessing digital technology within government and (b) regulate and
supervise the market to enable both robust innovation and consumer protection
• Achieved through this type of digital finance market system - an array of providers (banks,
non-bank financial institutions, technology providers, telecoms, agents, etc.) compete or partner to
offer inclusive financial services on a commercially sustainable basis
• Offering these types of financial services - consumer and MSME financial services (basic
wallets/accounts, payments, savings, credit, insurance, other value-added services) accessed by or
delivered via electronic channels (e.g., mobiles, point-of-sale devices, cards, computers)
• Riding on a modern digital payments infrastructure - designed to enable easy, secure, minimal-
cost, and near real-time payments to any person or institution for populations overlooked or poorly
served by legacy systems
1/10/2017 9
But these opportunities require some nudging. They
depend on a vibrant digital finance ecosystem.
Just to highlight two…
• Market facilitation – working with a range of actors, focused
specifically on overcoming systemic barriers
– See MM4P program at UNCDF, FSD Africa, Catalyst initiative of
USAID in India
• Graduation model – multifaceted way to stabilize consumption, build
assets, and enable growth opportunities
– See CGAP/IPA studies on impact of this approach, supported by
Ford Foundation
1/10/2017 10
How can we help growing that ecosystem? And
overcome other barriers to financial inclusion?
1/10/2017 11
USA
ID
Thanks
Speakers
Timothy Nourse President
Making Cents International
Financially Excluded
Rural Youth Economic Empowerment Project
• 3 Year Learning Project funded by IFAD and Silatech • By project end – 5 pilots served 20,000 youth with
financial services and almost 15,000 with non-financial services
• 1 global Learning product and 5 Case Studies produced
The Path to Rural Youth is through Adults
Build Capacity as you Build Assets
• Youth Savings Groups in Egypt sponsored by Plan International included asset building with educational activities
Adapt for Youth and Rural Contexts
Al Barid Bank launched a slick nation-wide campaign for a youth savings account
Adapt for Youth and Rural Contexts
While Youth specific, they did not adapt the product for rural areas and only “creamed” the most educated youth in those areas
Adapt for Youth and Rural Contexts
Their second version of the product was beginning to be more successful at reaching rural areas
Partnerships are critical to success
(but difficult)
Exploit new technologies
Speakers
Sarah Mattingly Senior Workforce and Youth Economic Opportunity
Development Specialist RTI International
1/10/2017 24
Kenya Youth Employment and Skills (K-YES)
Project
January 11, 2017
Sarah Mattingly, RTI International
USAID funding $21.9 Million
5-years through September 2020
Implemented by RTI, IRC, SSG Partners, McKinsey
& Co., Geopoll and Land O’ Lakes International
K-YES aims to enhance employment opportunities and
the overall labor supply in focused geographic areas
and sectors through both wage employment and self-
employment for unemployed and underemployed
youth (aged 18–35) who have not completed
secondary education
1/10/2017 25
Kenya Youth Employment and Skills (K-YES) Project
1/10/2017 26
K-YES Objectives
Objective 1 (strategic): Improved technical and vocational skills of youth participants;
Objective 2 (strategic): Increased business skills;
Objective 3 (strategic): Improved effectiveness of market and employment information,
career counseling, mentoring, and job placement for youth participants in target
areas/sectors;
Objective 4 (strategic): Youth awareness and utilization of financial services;
Objective 5 (crosscutting): Gender equity; and
Objective 6 (crosscutting): Sustainability through partnership
1/10/2017 27
K-YES Achievements in Year 1
Competency Based Education and
Training (CBET) Vocational Programs
– Vocational Training Centres (VTCs)
– Integrated Employment Training
Programs
– Direct Placement
Market-based Business and Agribusiness
Program through local implementing partners
and village level Community Resource Persons
Access to Finance through VSLAs, SACCOs,
MFIs, and FIs
Private sector partnerships with employers
and market actors
1/10/2017 28
K-YES: Integrated Approach to Implementation
1/10/2017 29
The K-YES Context
Challenges
• Target Youth cohort aged 18-35 who have not completed secondary school
• Low literacy and numeracy
• Rural population
• Large geographic coverage
• Low mobile and internet usage
• Implementing partners lack resources and infrastructure
Opportunities
• Build on USAID investments through Yes Youth Can (2010-2015)
• Leverage extensive network of youth connected by county youth bunge groups and
NYBA strengthened by USAID investments through Yes Youth Can (2010-2015)
• Existing network of youth SACCOs
Mobilize and assess youth where they are…. at the village level
• Youth Bunge members are Community Resource Persons who conduct basic trainings and awareness events at village level
– Financial Awareness (VSLA, SACCOs, MFIs, affirmative government funds)
– Work Readiness Workshops at village level
– Learn to Earn Basic Business Skill Training at village level
• “My ID, My Life” Campaign to engage target youth cohort and as a platform for learning and raising awareness about financial, market and employment opportunities
1/10/2017 30
Youth Mobilization
1/10/2017 31
Skills Building for Financial Access
Literacy and Numeracy: K-YES working with and building capacity of the Kenya Department
of Adult Education in each county to deliver trainings and/or refer youth to available trainings.
Financial Literacy: Curriculum developed and adapted by IRC to meet needs of low literacy,
less-educated youth
• Learn to Earn Curriculum
- Low to Moderate Literacy levels
- Part of 8 module / 4- day business skills training that is adaptable to different skills level and business
maturity delivered by Community Resource Persons, business training institutions or in partnership
with MFIs,
- Linked to sector/value chain business opportunities and integrated into CBET curriculum
• Economic and Social Empowerment (EA$E) Curriculum
- Illiterate to low literacy levels
- VSLA coupled with financial literacy education as an entry point for pulling marginalized youth into
the financial system.
Key Adaptations:
• Revise Facilitator Manual, Training Exercises and Participant Workbook
– Facilitator Manuals adapted to meet needs of youth village-level trainers
– Training Exercises and Participant Workbooks
• Simple language
• Visual learning
• Activity-based
• Timing and location in villages
• Multiple platforms for engagement, information dissemination and monitoring – SMS,
WhatsApp, Twitter, radio, face-to-face, via phone
1/10/2017 32
Skills Building for Financial Access
• VSLA
• SACCOs
• MFIs and FIs
• Digital Finance
1/10/2017 33
Financial Products
• K-YES train bunge youth as Community
Resource Persons through ToTs
• VSLAs groups of 15-25
• K-YES continue to monitor and provide
mentoring to Community Resource
Persons
• K-YES partner with umbrella NGOs to
capitalize at low interest rates; starting
conversations with MFIs but a harder
sell…
• In Year 1, 839 loans were issued via
VSLAs
1/10/2017 34
K-YES Village Savings and Loan Associations (VSLAs)
1/10/2017 35
Savings and Credit Cooperative Organizations
• Expand membership to K-YES youth cohort
– Financial Literacy
• Capacity Building
– SACCOs’ Central Management Committee (CMC) members are receiving capacity
building to improve risk management, leadership and governance, and cost-
effectiveness
– Development of new financial products Sustainability and Business Planning
• K-YES facilitate capitalization with sub-grants; long term strategy to develop linkages with
MFIs and FIs such as Equity Bank
1/10/2017 36
Linkages to FIs
MFIs
• K-YES broker relations for 200 youth to financing from MFIs
• YEHU Microfinance, Livelyhood, Kuku Faida, and Farm Drive
Commercial banks
• Kenya Commercial Bank (KCB) partner with K-YES to deliver integrated package of
agribusiness support
– K-YES: Agribusiness Field to Farm model in five selected value chains: (1) sweet potatoes, (2)
dairy, (3) beef, (4) chickens eggs, and (5) chickens meat.
– KCB: Patient capital, improved inputs and quality control, guaranteed market access
1/10/2017 37
Digital Finance ….The Way Forward?
The Dream…
– Millions of youth banked through M-Shwari and other DFS apps
The Current Reality….
– Rural youth have shared access to mobile phones; these youth do not own their
own phone
– K-YES provides information on DFS products; urban youth and those with phone
are accessing DFS products on their own
The Future…..
– Strategies to link group savings to DFS products to increase financial return,
consumer protection and reduce management cost;
– Increased effort to link youth to DFS products where appropriate
1/10/2017 38
Thank You!
Speakers
Alison Boess Former Deputy CEO, FINCA Microfinance Bank (Nigeria)
Current Senior New Business Development Officer FINCA International
Proprietary and Confidential
Opportunities & Challenges for Financial Service Providers
Inclusive Finance for Rural Youth
Proprietary and Confidential 41
MISSION
To alleviate poverty through lasting solutions that help
people build assets, create jobs and
raise their standard of living.
VISION
To be an unconventional community-based bank that
profitably and responsibly provides innovative and
impactful financial services to increasingly large
numbers of low-income clients.
FINCA’s Microfinance Mission & Vision
Proprietary and Confidential
Our Approach to Financial Inclusion
PUT THE CUSTOMER EXPERIENCE FIRST
We treat our customers as collaborators and every
employee delivers on our brand attributes.
MAKE INNOVATION OF PRODUCTS AND
SERVICES AND HOW WE DELIVER THEM
PART OF OUR DNA
We offer our clients financial products that are less
complicated and more flexible. We leverage
digitization, creating speed and efficiency.
DIVERSIFY OUR FUNDING
We are sourcing deposits, local currency and
capital to lower costs.
1
2
3
42
Proprietary and Confidential 43
• More than 50% of our borrowers are women
• Typically 20-50 years old (median age 31-45)
• Supporting an average of six family members
• Living and work in urban, peri-urban, and rural areas
• 37% are from Africa; 24% Eurasia; 21% MESA; 17% Latin American;
• More than half of borrowers use group lending, with an average loan size of $420
FINCA’s Clients
Proprietary and Confidential
Youth & Financial Services
40% of the world’s population is under age 24; 1.8 billion people
are between the ages of 10 and 24.
-->Not a homogenous group
• Appropriate products (savings for all, credit for some, and
addresses specific needs and barriers for youth)
• Proximity and frictionless processes for account opening
AND transactions
• Targeted marketing
• Youth-friendly service and protections specific to children
• Financial education and building financial confidence
44
Proprietary and Confidential
Creating Opportunities for Youth at FINCA
• Through Financial Services to Adults: FINCA’s work
touches the lives of nearly 4 million youth in client households
• Inclusive Design of All Products: 22% of our clients are
aged 30 or younger (over 400K) even with more generalized
approaches
• Specific Efforts: Youth Savings in DRC & Uganda
45
Proprietary and Confidential
Youth Savings in DRC & Uganda
• Primary market research conducted in advance in both countries to
inform product design around the needs of youth
• Products: Savings focused, with credit products left general. No fees,
low minimum balance ($1 for savings / $20 for term deposit), attractive
interest rates, relaxed ID requirements.
• ”Avenir” savings account
• “Avenir” term deposit account
• Junior account & school fees collections
• Star girl account and
• Super saver school club account
• Marketing: Through specific Youth Savings Officers and directly in
schools or with youth groups
• Financial Literacy Training: Provided through partnership in DRC and
directly by FINCA in Uganda
• Delivery Channels: Remote Account Opening and POS/Agency Banking
proved critical for uptake and “client conversion” after training
46
Proprietary and Confidential
Digitization, Technology and Rural Youth • Cover a greater scale and a wider
geography (including rural area) at a lower
cost per transaction for all segments
• POS / Agency Banking and remote account
opening dramatically increased youth
participation in financial services in urban
areas at FINCA
• Agency banking provides income generation
opportunities for youth
• Youth are adopting smart phone
technologies at a rapid rate, and FSPs
should look ahead to this new channel
• Philanthropic funding partners are critical both
for investment in new technology and to
provide resources for “additional” services like
financial education for youth
Proprietary and Confidential
Key Takeaways from FINCA’s Experience • ”Youth” are not a homogenous group, and sub-segments should be
understood
• There is considerable demand for financial services among youth, especially
those who have begun at least part time work
• Specialized products are not always needed, especially for young adults
• Financial services for younger children is largely a philanthropic endeavor
which is not self-sustaining, especially where financial education and specific
staffing is required
• Youth savings products can effectively increase youth financial inclusion
even without specific youth savings staff or financial education programs
• Investment in delivery channels and technology is the critical bridge to
financial inclusion of rural youth
Learn More: youtheconomicopportunities.org
makingcents.com
Learn More:
www.makingcents.com/financial-inclusion
www.youtheconomicopportunities.org
https://www.rti.org/impact/global-center-youth-employment
Thank you!