MEDA YouthInvest: From Market Research to Product Design
As posted on YFS link - Youth-Inclusive Financial Services Portal
Financial and Non-Financial Innovations for Youth in Morocco & Egypt
Youth unemployment in Morocco makes up approximately 37 percent of the country’s total unemployment, while in Egypt youth constitute 59.5 percent of the country’s total unemployed. MEDA’s YouthInvest program partners with well-established MFIs and NGOs in Egypt and Morocco to increase financial and business support services for youth ages 15 to 24. Within five years, YouthInvest will connect at least 50,000 young people to innovative financial and non-financial products and services that will help them develop skills to increase their possibility of finding meaningful work.
In order to better understand the youth market and their specific needs, in 2009 YouthInvest carried out a market research study with 500 young people between the ages of 15 and 29. Findings indicated that youth require a wider range of products than YouthInvest staff had expected. In addition to loans, youth also prioritized savings, training and internships, a method of gaining practical work experience. In response, MEDA partnered with a wide range of institutions, including MFIs, banks, training centers and government bodies, to create sustainable youth-specific financial and non-financial products.
One year after launching these youth products, YouthInvest’s financial services partners are beginning to scale up youth savings and loans products as part of their core business.
Responsive Shift in Programming
MEDA’s original concept for YouthInvest was based on the hypothesis that youth required immediate access to credit and training. However, market research indicated a need for more immediate savings options and intentional oversight around credit. By offering financial and non-financial services in a sequenced fashion, YouthInvest is best able to meet the needs of its youth clientele. The table below provides an overview of MEDA’s research findings as well as their current products and services.
Table 1: From Market Research to Product Design
| |
Youth Demand | Products and Services Currently Offered |
|---|---|---|
| Training |
-Flexible training hours in accessible locations -Courses to help with job search or project creation -Free/small fee for courses -Training certificates |
-Training tailored to youth availability -Training widely accessible via YSO, MFIs, extension officers, youth to youth -Free training -Training certificates |
| Loans |
-More money -Longer loan period -Lower interest rate -Follow up and training |
-Loans smaller or equal to regular loans -Same loan period and interest rate -Morocco: allow start-up loan -Required training and access to supplemental support services from MFIs |
| Savings |
-Very small initial deposit -Very small minimum deposit -Easy to access -Matching fund to help business start-up |
-Initial deposit 10X < regular amt. -Minimum deposit 10X < regular amt. -Partnerships with commercial bank and La Poste expands services -Based on saving, can access credit |
| Internships |
-Internship in field of expertise or education -Paid internship -1 to 3 months -Internship immediately after training or education |
-Partnerships with businesses and government agencies -MEDA internship stipend of $50 -1 month minimum |
YouthInvest found that access to formal savings allows youth clients to become acquainted with their local financial services providers and to begin to make conscious decisions about their spending habits. Meanwhile, young people’s demand for credit was often related to specific needs for activities such as business start-up capital, school fees, or building a home. In order to mitigate the risk of over-indebtedness underscored by the microfinance crisis in Morocco in 2008, YouthInvest also requires every youth loan to be accompanied by training to help encourage youth to make informed decisions. The sequenced manner of YouthInvest's product offerings acts as a measure of protection for youth, partner financial institutions, and the sector as a whole.
Figure 1: YouthInvest Product and Service Sequencing Model
