YouthStart Regional Pilot – Meeting the Demand for Youth Financial Services

  • January 26, 2016

When UNCDF and the MasterCard Foundation launched the YouthStart Programme in 2010, both saw the potential microfinance could have in helping youth build a strong asset base, create sustainable livelihoods, and be productive contributors for their families and communities.

The microfinance sector has made great strides in terms of outreach; financial service providers were developing more affordable products particularly for the poor – why not for youth? The number of FSPs targeting youth as a potential new market was minimal, despite the fact that Africa is home to almost 300 million youth between the ages of 12 – 24 and continually rising. In addition, over 60% of the continents unemployed were youth – another figure which grows yearly as there are not enough jobs to meet the number of new job entrants.

Serving this dynamic segment requires a nuanced understanding of youths’ needs which many FSPs did not have. As such, the YouthStart Program was designed to provide FSPs with both technical and financial assistance to develop, test, and pilot financial services and products to reach up to 200,000 youth.

At the start of the program, there were several questions as to whether there was a demand from youth for these services and what the savings capacity (if any) are of youth? More importantly, if youth were provided with loans to help start or scale up a business, how capable are they to repay loans? Would it be possible to reach 200,000 youth by the end of 2014? In order to answer these questions, UNCDF conducted an independent final evaluation of the program which was conducted by Microfinanza Srl and Microfinanza Rating Srl. The Evaluation, assessed the relevance, efficiency, effectiveness, and sustainability of the programme, particularly in regards to reaching its intended objectives and drawing out recommended practices and lessons learned to help inform its expansion.

It was never fathomed how strong the demand for financial services were from youth. As of December 2014, YouthStart’s ten partners had granted access to savings accounts to 515,000 young people (of which 46 percent are young women); trained over 500,000 youth (54 percent young women) in financial education across eight countries in sub-Saharan Africa; and provided loans to 72,000 young entrepreneurs. These young clients have accumulated US$14.8 million in savings, while the young entrepreneurs accessed US$7.3 million in loans to either start up or expand their own business.

Key findings from the evaluation also found that YouthStart has performed effectively by increasing both the institutional capacity of its partner Financial Service Providers (FSPs) and youth’s access to appropriate financial and non‐financial services. In addition, YouthStart was successful in institutionalizing youth products in 9 out of 10 partner institutions. The full evaluation can be found by clicking here. A summarized version of the evaluation is also available in a Prezi format. Please click here to access the presentation.

One of the key factors which led YouthStart partners to exceed the objectives are the partnerships created by FSPs with youth serving organizations. YouthStart encouraged FSPs to partner with YSOs to deliver nonfinancial services such as financial education. FSPs that partners with YSOs had measurable increases in their outreach to youth, particularly in reaching vulnerable groups such as young women and out-of-school youth and reported positively on the collaborations

With the success of the regional pilot, UNCDF is now focusing on expanding the program to other countries across Africa and Asia. UNCDF has designed the next phase of the programme, YouthStart Global, to employ a consortium approach in which FSPs will be partnering with youth serving organizations including local and international NGOs, technical and vocational education and training support etc. to provide financial and nonfinancial services to youth including entrepreneurship training. This new approach will not only allow youth to access complimentary services, but it will also place FSPs in a better position to scale up credit products for youth.