How can financial services be effectively integrated into economic opportunities programming for youth?
The SEEP Network’s Youth and Financial Services Working Group, facilitated by MEDA, recently completed a series of learning documents which highlight promising practices in youth financial services, illustrated by examples from multiple projects and stakeholders. In a series of member consultations, four topics were identified as areas of particular interest:
Integrating youth financial services into economic opportunities programming
Understanding usage and dormancy of youth savings accounts
Using incentives, subsidies and complementary services to promote youth financial inclusion
Understanding the role of parents and families in youth financial inclusion
A learning document was created to explore each topic, with full publications available here: http://www.meda.org/publications/seep-youth-and-financial-services-working-group
We will profile each in a blog entry over the coming weeks, starting with today’s topic: integrating financial services for youth into economic opportunities programming.
An evolution in youth financial services programming
Thinking around youth financial inclusion has evolved in the past decade. Until recently, numerous large-scale programs focused specifically on improving youth access to financial services, using a variety of strategies.
Formal financial inclusion was promoted by projects that engaged with banks, cooperatives, and microfinance institutions, such as:
- Save the Children’s YouthSave project,
- UNCDF’s YouthStart,
- BRAC’s Employment and Livelihoods for Adolescents program, and
- MEDA’s YouthInvest .
Wide-scale participation in youth-oriented savings groups was supported by:
- Plan International Canada's Youth Microfinance project (YMF),
- Freedom from Hunger’s Advancing Integrated Microfinance for Youth initiative (AIM Youth),
- The Population Council’s work in Africa and Asia, and
- The Banking on Change consortium of Barclays Bank, Plan UK, and CARE International UK.
A specific focus on youth financial inclusion was seen as necessary to raise awareness of the importance and utility of appropriate financial services among financial institutions, young people, and their families.
What has changed in Y&FS?
Though significant gaps still remain in financial inclusion, donors and implementers are moving toward a more inclusive approach, incorporating financial services for youth into programs as part of broader objectives, such as economic development or even youth development. Financial services are increasingly being considered within an ecosystem of interventions contributing to youth economic opportunities.
Driving Financial Inclusion through Integrated Programming
Increased financial inclusion for youth may be one of many goals in an integrated program promoting youth economic opportunities. Implementers have successfully used a range of strategies to drive financial inclusion, including increased youth engagement and participation, comprehensive capacity building for both youth clients and financial service providers (FSPs), and provision of safe spaces, particularly for adolescent girls.
Leveraging Financial Inclusion to Achieve Broader Youth Development Goals
Increased financial inclusion for youth can be a powerful tool to achieve broader development goals. Implementers have successfully leveraged financial services as platforms for creating and expanding young people’s social capital, driving increased civic engagement, providing opportunities for learning about enterprise development, and increasing resilience of vulnerable groups.
What next for youth financial services?
Youth financial services have matured significantly in the past two decades. Once largely the domain of NGOs, such services are now widely provided by commercial FSPs. Community-based organizations reach significant numbers of young people with savings groups and other informal financial services.
There are many questions that require further exploration as financial services continue to reach more young people:
Youth decisions about finance are strongly influenced by their families and peer groups. Practitioners are delving into behavioral influences on youth decision making, but more remains to be learned about how to positively leverage family and peer involvement in financial practices.
For FSPs to continue offering services to young people, there must be sufficient motivation in terms of profitability, corporate social responsibility, or donor support. The business case for serving youth clients, particularly small savers such as the poor and rural youth, continues to be investigated.
Many youth first encounter financial services through informal mechanisms, such as savings groups. Even if they access formal services, many continue to participate in savings groups in parallel. Further study of how both formal and informal services can benefit youth, as well as optimum combinations of services, would be beneficial for future programming.
For an in-depth discussion of effective integration of youth financial services into broader programming, please see our publication here.
A version of this blog can be found on the Seep Network Youth and Financial Service Working Group site.