Emerging guidelines for linking youth to financial services

Abstract

Access to appropriate financial services can play a critical role in enabling young people to navigate the challenges and opportunities they face, regardless of their employment or educational status. This paper discusses: 1) the results of a global survey conducted in 2009 by Making Cents International; and 2) findings of leading NGOs and financial institutions which are pioneering youth-inclusive and youth-specific financial products. The outcomes of the survey findings and lessons learned have been synthesized into six 'Emerging Guidelines' for linking young people to financial services. Existing concerns are explained regarding defining and achieving impact, sustainability, scale and a favourable regulatory environment as it relates to youth-inclusive financial services. The paper concludes with practitioners' visions for this nascent field by 2020.The currenT global youTh populaTion is the largest in history. Of the world's 3 billion people estimated to be under the age of 25, approximately 1.3 billion are between the ages of 15 and 24. Just under half of these young people live on less than two dollars a day, as estimated by the UN (YouthSave, 2010).Financial services -whether a safe place to save or an appropriately structured loan for investment in an enterprise or education -play an integral role in building the lives of young people. Providing young clients with financial services at the right times in their lives and with the right support network can help them improve their livelihoods in the short term, and position themselves for more sustainably productive lives in the long term. Moreover, the provision of financial services to young people can help ensure that the vulnerability faced by so many young people today does not turn into a crisis (Making Cents International, 2009). Three specific indicators that children and youth need improved financial services are:

Economic empowerment or cash‐dependency for orphans and vulnerable children in Kenya: Evidence from an alternative to cash‐only models

“…These associations were decomposed by program inputs. As is consistent with literature elsewhere and with common practice, material inputs of cash (Adato & Bassett, ), and a start‐up kit to begin a small business (DaJaeghere & Baxter, 2014; Storm, Porter, & Macaulay, ) predicted increased monthly income. Cash transferred, reported monthly income, and food consumption completely mediated the association between program participation and savings in the past year.…”

Context matters: A model of the factors associated with the effectiveness of youth entrepreneurship training

“…This is especially true for low-income youth who may lack the knowledge or social networks to access these services, or even the legal right to do so. Storm, Porter, and Macaulay (2010), in a global survey of financial service providers and youth-service organizations, found that regulatory systems inhibited youth from accessing financial services (p. 321). Because the vast majority of regulatory systems only allow those of legal age to open a bank account, minors usually lack independent access to bank financing.…”

Effect of Economic Factors on Access to Youth Enterprise Development Fund by Youth Groups in Migori County, Kenya

“…Such areas are usually difficult to access. The level of access is also impacted by limited competition within concentrated market areas, which lowers incentives for lending institutions to explore such market areas (Storm, Porter & Macaulay, 2010). Low-income people and small firms are usually limited of information or credit histories regarding their financial operations.…”