Praxis Series - Entry 1: Financial Capability at Work in Morocco
Youth unemployment in countries like Morocco rank as one of the largest development obstacles. Demographic challenges, gender barriers, and education/skill mismatch are among some of the problems that youth face searching for economic opportunities. To exacerbate these challenges, Moroccan youth have limited access to financial services that can help address their unique needs. According to the World Bank, only 12.3% of youth aged 15-24 in the MENA (Middle East and North Africa) region have a formal bank account, the lowest rate in the world. In this context, access to appropriate financial services has the potential to lead to many positive outcomes for youth, including a heightened capacity to manage money and build assets, as well as increased opportunities for entrepreneurship, employment and future education.
YouthInvest (2008-2014) a six-year, five million dollar initiative in which MEDA partnered with leading microfinance institutions (MFIs) and Non-governmental Organizations (NGOs) with the generous support of The MasterCard Foundation; to develop innovative financial and non-financial products and services tailored to the needs of economically active youth in Morocco and Egypt.
In Morocco, young people constitute 30% of Morocco's population and one tenth of the region's total youth population. This youth segment serves as a platform for opportunity and has proven through the Arab Spring that they are ripe for growth and are an important source of entrepreneurship, development and innovation. Yet in many MENA (Middle East and North Africa) countries including Morocco, these energies are not harnessed or cultivated to create active contributors to a dynamic economy. According to the New America Foundation's research on the Effectiveness of Youth Financial Education, results have emerged on the necessity of effective training programs:
"...training and professional development opportunities are a necessary corollary to successful program implementation. Beyond teaching students to handle their cash, it must be designed to forge understandings of the relationships among money, work, investments, credit, bill payment, retirement planning, taxes, and so forth."
It is here that MEDA's YouthInvest project has found their approach to building financial capabilities for youth through "100 hours to success," a blended approach to training youth on business skills (for example: developing a business plan, conducting competitive analysis), life skills (for example: practical customer service techniques and conflict management) and financial education (savings, budgeting, financial negotiations, available financial services and debt management).
So what is financial capability? Some say that it is a shift away from financial education focusing on building long-term capabilities, emphasizing behavior change in addition to knowledge gains. While there is on-going discussion on the definition, the Center for Financial Services Innovation has attempted to build some criteria:
1. Being able to cover monthly expenses with income long-term
2. Tracking spending long-term
3. Planning ahead and saving for the future
4. Selecting and managing financial products and services
5. Gaining and exercising financial knowledge
These criteria put more focus on measuring long-term change in behavior. MEDA is currently conducting an Impact Evaluation (utilizing a Randomized Control Trial methodology) to evaluate "100 Hours to Success." The baseline study was completed in November 2012 and the follow-up study will take place in March 2014 (funded by 3ie) with a final report by summer 2014. While the report is forthcoming, MEDA did conduct a Loan Study (study launched in 2011 to identify gaps in services available to youth clients at MFIs) which found that, "coupling mandatory financial education training with the provision of a loan is appealing to both youth and MFIs as it helps youth cultivate the skills needed to manage their loans and grow their businesses." (For the complete SEEP webinar on MEDA's Loan Study click here)
Over the past four years of work in Morocco, MEDA has supported financial service providers (FSPs) to supply appropriate services for youth; while also building financial capabilities through targeted trainings that cultivate skills and provide youth with the knowledge of utilizing these services appropriately. Programs like "100 hours to Success" have provided the foundation for youth to make informed financial decisions and learn practical skills. Our annual surveys have uncovered compelling evidence that this combination of services contributes to a wide range of positive changes for young people, including increased assets, improved self-confidence and a more entrepreneurial spirit. Moving forward programs must focus on a blended approach to training not just financial education but offering a suite of trainings to aid in long-term responsible utilization of banking services, business skills and adoption of financial knowledge.
How is your organization building in financial capability programming to clients and beneficiaries?
 World Bank, http://www.worldbank.org/en/news/feature/2012/05/14/challenge-of-youth-inclusion-in-morocco
 New America Foundation, newamerica.net/publications/policy/effectiveness_youth_financial_education_0