Stories of Inspiration from YouthStart partners

  • September 10, 2014

  • Dakar, Senegal

There is no one-size-fits-all approach when it comes to delivering financial and non-financial services to youth in sub-Saharan Africa. YouthStart partners have worked hard to advance the financial inclusion movement through unique delivery models that fit each of their contexts, leverage their institutional capacity and infrastructure, and target a particular segment of youth.

Today, several YouthStart partners shared insights on their best practices in delivering services to young people in their respective countries.

YouthStart partners have shown that the most sustainable and effective model in delivering youth services is a unified model. In this model, youth mobilizers not only promote and sell financial services to youth but also deliver financial education. Umutanguha Finance Ltd. in Rwanda took this model one step further by empowering young people within groups to deliver the financial education to their peers. This peer-to-peer approach has been so successful that the Government of Rwanda cited it as a best practice for financial education in Rwanda's National Financial Education Strategy.

Initially, YouthStart partners adopted a saving-led approach, as it seemed less risky to only offer savings to youth. Over time, they became more comfortable serving youth and expanded their product offerings to include credit. As a result, many youth started to save before turning 18 and can now either use their savings to start a business or as collateral to access a loan.

This approach enabled these institutions to learn more about the youth market they were serving and realize the potential of youth as clients. In 2012, Umutanguha granted 152 loans to young adults. Francine Mukama is one of those clients. When I met her, she had built her savings and consequently received a loan to start a canteen. She used the loan to rent a small house, buy goods and even buy some land to start growing crops for her business. Before opening her savings account at Umutanguha, she never dreamed she could afford to buy land.

YouthStart partners have also shown that the use of technology can lead to an increase in uptake and usage of youth savings accounts. FINCA in the Democratic Republic of the Congo, for example, places point-of-service (POS) agents at schools and distributes savings boxes to students. FINCA staff visit schools every two weeks to collect the savings.

Transactions on youth accounts in 2013 increased from 921 to 5,377, which represents an increase of over 480 percent and is mainly due to the use of POS agents. In addition, all of the youth accounts are active (i.e., clients conducted at least one transaction during the year) and savings volume increased from US$129,750 to US$224,388.

In the absence of technology, door-to-door collectors are a useful model in rural areas for increasing uptake and usage of savings accounts. FUCEC (Faîtière des Unités Coopératives d'Epargne et de Crédit) in Togo hired young women as youth mobilizers to go door to door every day and collect money in places where youth congregate.

This delivery model is particularly convenient for youth because they can open an account with only CFAF500 (US$1.00) and deposit as little as CFAF25 (US$0.05) on a daily basis. Offering a service that is provided to youth by youth and that is affordable and accessible has enabled FUCEC to open 34,000 youth savings accounts and collect US$650,000 in youth savings in less than two years.

Linking village savings and loan associations to external sources of credit holds great potential for scaling up savings, credit, and financial education, especially in rural areas. PAMECAS (Partenariat pour la Mobilisation de l'Epargne et le Crédit au Sénégal) in Senegal partnered with Plan International to open savings accounts for groups of youth formed and trained by Plan International. Upon joining PAMECAS, the youth had already accumulated assets within their group and some had already started their own business either through savings or loans, but now they could obtain larger loans.

Microleasing offers an innovative, win-win alternative for youth, as well. It provides capital to young people to start a business when they don't have collateral to guarantee a loan, while at the same time it minimizes risks for the institutions lending to youth. Hundreds of Rwandans have benefited from the leasing product offered by Umutanguha.

With only a small amount of savings to pay the costs of a driver's license and a helmet, clients have acquired leasing terms for a motorcycle to start their own moto-taxi business. Microleasing also offers great possibilities for linking youth to other economic opportunities. For example, youth can acquire a start-up kit to begin working in a sector that holds significant potential in Africa, such as agriculture, technology or construction.

Tomorrow, YouthStart will discuss how we can take all of these best practices to the next level by deepening our agenda, moving beyond financial inclusion and continuing to promote youth economic opportunities.