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Designing and Delivering Youth Inclusive Financial

Serviceswith a special focus on rural youth

Timothy H. Nourse: Making Cents International

Sponsored by the International Fund for Agricultural Development

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Social Enterprise that increases economic opportunity and financial inclusion worldwide

Provides training and capacity building technical assistance to international and local institutions

Focuses on youth, women, farmers, and growing enterprises

Builds Youth Economic Opportunity field through conferences, research, and hosting of on-line learning platform.

Making Cents

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International Fund forAgricultural Development

IFAD is dedicated to eradicating rural poverty in developing countries

IFAD provides loans and grants to governments, and is involved in project design and direct implementation support

Key areas of IFAD’s investments are rural financial services, agricultural development, irrigation, livestock, markets and infrastructure

Since its inception, the Fund has:Mobilized around USD 21.9 billion in co-financing from domestic sources,

in addition to IFAD’s contribution of about USD 14.7 billion in loans and grants, with the current total investment reaching USD 13 billion

Supported 924 programmes and projects in 119 countries, including 267 projects in 98 countries in the current portfolio

Empowered over 400 million people to break out of povertyIFAD funded the RYEE program – whose case studies you’ll be

learning about today

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SilatechSilatech is a regional social initiative that works to create jobs

and expand economic opportunities for young Arabs. Silatech promotes large-scale job creation, entrepreneurship,

access to capital and markets, and the participation and engagement of young people in economic and social development.

Since being founded in 2008, Silatech has financed over 100,000 youth-owned businesses, and created or sustained over 180,000 jobs.

Silatech currently has programs in 15 Arab countries, including Algeria, Egypt, Iraq, Jordan, Lebanon, Libya, Morocco, Palestine, Qatar, Saudi Arabia, Somalia, Sudan, Syria, Tunisia and Yemen.

For more information, please visit www.silatech.com.IFAD co-funded the RYEE program – whose case studies you’ll

be learning about today

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AgendaTiming Session

9:00-9:30

Introduction to objectives of course and RYEEP

9:30-10:00

Youth – their financial and non-financial needs, differentiated by segment and geography (urban/rural)

10:00-10:30

General Principles for serving Youth

10:30-11:00

Product Design Process

11:00-11:30

Break

11:30-12:30

Financial Services Product Development

12:30-1:30

Lunch

1:30-2:30

Non-Financial Services Product Development

2:30-3:00

Special Case – Value Chain Financing

3:00-3:30

Break

3:30-4:15

Case Study

4:15-4:30

The Future of YFS

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Bringing out the Youth in You

First jobHow old were you?What was the job?How much money did you

earn?

First time you visited a financial institution

How old were you?What were you there to do?What was your impression of

the FI?

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Financial Services and Youth:Financial services help youth to:

Build assetsContribute to the

household Develop positive habits

and skillsFacilitate education and

employmentMaintain employment

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Youth Segments and Demand for FS

 

Youth Segment

Demand for Financial ServicesSavings Credit Insurance

Early adolescence(Ages 12-18)

   

Late adolescence(Ages 18-24)Young Adulthood(Ages 25-30…)

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Youth Segments and Demand for FS

 

Youth Segment

Demand for Financial ServicesSavings Credit Insurance

Early adolescence(Ages 12-18)

 

Moderate

 

Low

 

NA

Late adolescence(Ages 18-24)

 

High

 

Moderate

 

Low

Young Adulthood(Ages 25-30…)

 

High

 

High

 

Moderate* Age range is contextual** Parenthood accelerates transition to Young Adulthood*** Gender also impacts segments

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Rural YouthMore a question of

underemployment, then unemployment

Little access to landMore traditional rolesLower educational levelsStronger community

structures

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Current State of FS Access for youth

• Youth are 33% less likely to have an account at a formal financial institution

• Youth are 40% less likely to have saved at a formal financial institution

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Activity:What’s holding us back?

Discuss in small groups the opportunities and challenges of providing financial services to youth at the:

Client LevelInstitutional LevelEnabling Environment and Policy level

How are these opportunities and challenges affected by trying to serve rural youth?

Ask one person to take notes and be prepared to report out. 

LevelQuestions

Opportunity? Challenge? Rural implications?

Client      Institutional      Enabling Environment

     

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Key Issues – Client LevelOpportunitiesYouth demand FS to manage risks, plan for the future, and transition through life phases

Technologically savvy.

Parental/community support

Challenges• Perception that FIs are not

for them• Accessing FIs • Financial Illiteracy• Lower volumes demanded

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Key Issues – Financial Institutions

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Key Issues – Enabling Environment

ChallengesAge of MajorityIdentification and

documentation requirements

Inadequate consumer protection regimes

OpportunitiesGrowing interest in

serving youth among central banks

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Rural Finance IssuesClient:Seasonality of income and

cash flowsSeasonal migrationLack of trust in outside

institutions

Institutional:Agricultural activities

dependent on weather and markets

Geographic dispersion of populations

Poor infrastructure

Enabling Environment:• Government

subsidies/agricultural policies may help or hinder ag.

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1. Involve youth In market research and product development

2. Develop products and services that reflect diversity of youth

3. Ensure that youth have safe and supportive spaces

4. Provide or link youth to complementary non-financial services

5. Focus on core competencies through partnerships

6. Involve community7. Establish Institutional

Readiness

Principles Developed in concert with:

Emerging Guidelines for Youth-Inclusive FS

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The Product Development Cycle*

*Source WWB*Source: WWB

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*Source CGAP

Developing the Business Case

Source: CGAP

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Market ResearchRecruit a diverse team,

including Youth expertsUse process oriented

activities that help youth process and depersonalize data

Mix of data gathering techniques

For customers, conduct research at household level to determine youth and parent views

Use research to segment market

Young People’s Capacity to Co-Invest

The use of “money flow” or “asset mapping” focus group tools are an effective way of gaining insight into the kinds of financial and non-financial assets young people manage. A microfinance institution in Morocco that was interested in developing livelihood programming for youth was amazed to see the multiple sources of funds that passed through “poor” young people’s hands.

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Roll Out and EvaluationRoll Out:Adjust product based on

pilotSimilar process to pilot

plan, but on scale of full FI

Preparation, training and marketing critical to success

Evaluation:On-going analysis of

business caseDirect profit/lossCross-sellingLoyaltyDemonstrate CSR

Impact on clientsFinancial knowledgeFinancial BehaviorFinancial Status

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Some Successful ProductsHatton National Bank• School banking program• 503,000 youth savers

Equity Bank – Kenya• Business loan and youth savings

product• 74,000 loan clients, 140,000 savers

Xac Bank – Mongolia• Adolescent girl savings account• 8,000 clients

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Rural Youth Economic Empowerment Project

3 Year Learning Project Funding by IFAD and Silatech5 pilot projects in 4 countries

By project end – over 20,000 youth served with financial services and almost 15,000 with non-financial services

Country

Local Partner (Institutional Type)

Financial Instrument Non-Financial Instrument

Egypt Plan Egypt (NGO)

Savings and Credit Groups

Entrepreneurship and life skills training offered through Savings Groups

YemenAl Amal Bank (Microfinance Bank)

Enterprise Lending (for existing businesses)

Financial literacy, entrepreneurship and technical training offered by NGO partners

Morocco Al Barid Bank

(Postal Bank)Individual Savings Product

Financial literacy training offered through mass media and face-to-face training

Tunisia Microcred (Microfinance Company)

Enterprise Lending (for start-up businesses)

Entrepreneurship and business management training offered by NGO partners

TunisiaPro-Invest (Private Company)

Value Chain Finance (Trade Credit)

Value Chain Development, Entrepreneurship and financial literacy training offered through SMS

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The 9 “P”s of Product Design1. Product: The terms and conditions of the loan or savings product. (the loan tenor, repayment frequency, application documentation, collateral requirements etc.)2. Price: The cost of the product to the end user, set at a level to cover FSP costs (includes interest rate, fees, penalties, transaction costs, etc.)3. People: The management and training of the full range of people involved in delivering the product (human resources; hiring, training, performance monitoring, etc.)4. Promotion: How the product is presented to the client (marketing, advertising, public relations, including formats and delivery channels)5. Positioning: Competitive advantage or niche in relation to other products/institutions as perceived by the target customer6. Place: The product distribution and delivery channels (branches, outreach workers or field agents, ATMs, mobile units, phones)7. Physical evidence: The paper or digital requirements for usage (passbook, promissory note, etc.)8. Process: How the product is delivered (systems, manuals, operating procedures, forms, queues, turnaround time)9. Preparation: Design of non-financial service package to enable the client to use the product most effectively (e.g. financial literacy, business training; links to other resources)

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RYEEP 9”P”s Case Studies

Each RYEEP representative will:Provide an overview of

their institutionDescribe their business

caseDescribe the market

research and product development process they followed

Present their product as per the 9P model

Take questions

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Linking ActivityEach pair receives 4 tilesConnect your 4 tiles to make a

squareOnce connected; find another

pair that has made a square and combine them into a square or rectangle (you may need to rearrange your pieces);

Once connected, find another pair that has made a square and connect them and combine them into a square or rectangle (you may need to rearrange your pieces)

If your stuck – you can trade pieces with the facilitator

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The 11 “S”s of Curriculum and Training Delivery System Design

1. Student: Profile of learners, literacy levels, and learning preferences2. Setting: Conditions, timing, and pacing of delivery3. Scale: Content and time to deliver4. Sequence: Other curricular content before or after this training5. Scope: Knowledge, Skills, and Attitudes contained in curriculum6. Style: Learning/teaching methodology7. Skill-set: Skills needed to deliver, supervise, and coordinate the rollout of training program 8. Sale: How much of the organization, marketing, funding, and delivering can be cost recovered9. Supplies: Supporting materials (training guides, TOT guides, participant takeaways, facilitation materials, equipment/ technology, M&E tools)10. Systems: Delivery system, monitoring, and capacity building 11. Success: Assessment of the reach, depth, and quality of outcomes and impacts

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RYEEP 11”S” Case StudiesIn each group, the RYEEP representative will:Describe the findings

from their market research that related to knowledge, skills or attitudes

Describe the NFS product development and piloting process

Present the NFS as per the 11S model

Take Questions

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RYEEP Lessons LearnedServing rural youth effectively will require both youth and rural adaptations.

Integrate YFS into rural strategies..Use different approaches for different age groups.

Target NFS carefully and engage partners to meet remaining needs.

Subsidize start-ups. Engage new partners and innovative technologies.

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Sample content pageBulleted list on left Bulleted list on right

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YFS – Remaining Challenges and Potential Solutions

Challenges The Business Case Financing Programs that

Build Financial Capability Developing regulations

that balance access with protection

Developing a suite of products that “grow” as youth do

Scaling up products

SolutionsBehavioral economic

models providing promising approaches

Technology may be enabler, though how to use it effectively for youth remains a question

Mainstreaming youth into financial service provision strategies for households provides promising strategy

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Additional Resources

Youtheconomicopportunities.org

Global Youth Economic Opportunity Conference

(www.youthEOsummit.org)September 28-30, 2016

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Thank You!Timothy H. Nourse

PresidentMaking Cents International