Groups fighting for financial inclusion and youth employment united in Morocco. Will their findings promote progress?
Youth face economic concerns across the globe, but statistics are particularly disturbing in the Middle East and North Africa. In the MENA region, according to the Global Findex, youth have both the lowest rates of access to financial services, as well as the highest rates of unemployment in the world.
According to the World Bank, only 13 percent of people age 15-24 in the MENA region have accounts at a formal financial institution. That's one-third of the worldwide average of 37 percent, and behind 17 percent in the next closest region, sub-Saharan Africa. Access to finance is crucial to build assets, protect against risks, and to finance enterprise development, all of which greatly increase an individual's employability. Financial inclusion is a significant first step in employing underprivileged youth.
That's why The Consultative Group to Assist the Poor and Silatech joined forces. CGAP is a consulting company that engages with financial service providers, policy makers and funders to provide banking services for the poor. Silatech, Arabic for "your connection," acts as a career service for youth in the MENA region by offering job-finding, microenterprise and entrepreneurial support. Last month their respective missions became one in a workshop aiming to increase young people's access to financial resources, as well as make financial institutions aware of the huge, and largely untapped, youth market that is available to them.
The workshop, "Youth Financial Inclusion in the MENA Region," took place March 12-13 in Rabat, Morocco.To cover the different angles of this topic, participants attended six sessions.
1) Scale of inclusion: Youth financial inclusion pertains to overall economic development of the region as well as to individual empowerment.
2) Examples of youth financial services: Enda’s start-up product (Tunisia), ABA’s experience in both financial and non-financial service offering (Egypt), Al Barid Bank’s mission to improve financial inclusion (Morocco), and Al Amal Bank’s youth-targeted lending and deposit services (Yemen) lead the market in including youth financially.
3) Role of technology: Technology plays an increasingly key role in financial services globally. Kiva’s Arab Youth products, Tunisiana’s MobiFlouss pre-paid service and its mobile platform for financial literacy and labor market opportunities, Visa’s financial inclusion strategy for the MENA region (pre-paid rechargeable cards), and Kaah Express money transfer services in Somalia are just a few examples of new financial inclusion technologies.
4) Donor strategies: Youth related initiatives such as USAID's youth policy, and UNCDF’s YouthStart program, which opened 150,000 youth accounts are often more successful in gaining support than initiatives with other broader agendas.
5) Challenges:There are inherent challenges to including all youth financially in the formal financial sector, such as the regulation of youth savings and mobile money.
6) Moving ahead: The three most important steps towards youth financial inclusion progress are data collection and standardization; gaining a better understanding of financial inclusion and its relation to employment, start-ups, and asset building; and policy advocacy.
To read more about each session, check out the full story on the Youth Economic Opportunities blog.
In particular, as Tim Nourse, president of Making Cents International pointed out in the Center for Financial Inclusion blog, the discussion revolved around whether to make specific efforts to expand youth access to financial services instead of enhancing inclusion more broadly, to use an economics metaphor –" let the tide lift all boats."
Ultimately, however, he says,
this is a false choice...:regulatory changes designed to improve access for youth will have similar effects for other excluded populations, and developing improved market research tools and specialized product delivery approaches will help financial institutions serve rural and other hard-to-serve populations. This result will be especially significant in MENA, where demographic windows will soon begin to close.
What's more, these efforts that focus on youth will benefit nations as a whole.
In most countries of the MENA region, the so-called ‘youth bulge’ presents an exciting opportunity for financial institutions to engage an entire generation,” said Mayada El-Zoghbi, senior microfinance specialist with CGAP. Recent CGAP research shows that “through savings, banks may be able to achieve deeper, longer lasting relationships with the next generation of people needing access to safe, secure, and convenient savings, alongside other financial services.
And that next generation could grow up better equipped to use a variety of tools to plan for the future, achieve savings discipline, and manage their financial lives – interfacing with the financial sector in a safe, savvy way that is productive for clients, banks, and society.
