SPECIAL REPORT: Youth Financial Inclusion Group Tackles Business Training, Scaling-up, Dormant Accounts, Program Indicators, Self-sufficiency at European Microfinance Week

As part of the opening day of European Microfinance Week, a series of events hosted by the Luxembourg-based European Microfinance Platform (e-MFP), the Youth Financial Inclusion Action Group of e-MFP met today to carry on its work relating to savings and other financial services for young people, particularly those aged 15 to 24.

Among the key takeaways from the work of the action group to date has been that increasing the scale of operations and maintaining the income to run programs is very challenging even once a product has been successfully tested on a small scale. For example, a given traditional financial service may prove to be more successful when paired with business training funded by a donor. However, donors generally prefer to fund only the startup phase of such a service. The financial services provided do not generally create enough profit to pay for the training on an ongoing basis. However, Fatma Triki of Tunisian microbank Enda Inter-Arabe suggested that the value of non-financial services – such as business training – might be better appreciated if thought of as a sort of loan guarantee, in that it increases the likelihood of repayment.

Among the markers of successful programs that were covered during the session was flexibility in areas such as minimum client age limits and what documents are required of clients in order to participate.

Ian Radcliffe of Belgium’s 108-member World Savings Bank Institute brought up the issue that the number of savings accounts opened can be misleading due to the “elephant in room” of accounts that go dormant after as few as one transaction is performed. In one case, 7 percent of an organization’s youth clients were found to be saving over 90 percent of amount saved by all youth served by the institution. The same has been true of mobile money accounts in several instances.

Much of the discussion centered on the indicators that the group should use in its case studies. More traditional suggestions included staff costs, marketing costs, loan size, operational self-sufficiency, fees charged to clients and interest paid to clients as well as client demographics. Some proposals that were a bit more unusual included the percentage of financial education paid from internal funds, loan approval rate, number of jobs created, duration of coaching or education and attendance rate at these sessions. It was determined that tracking client outcomes is beyond scope of the group at this time.

An upcoming volume, to be issued in 2014, is planned to serve as a follow-up to the action group’s 2012 book, “Youth Financial Inclusion: Promising Examples for Achieving Youth Economic Empowerment.” Those interested in offering their institution as a potential case study or otherwise participating in the action group may contact Jared Penner of Dutch NGO Child and Youth Finance International or Ben MacKay of Luxembourgish NGO Appui au Developpement Autonome (ADA).

This content is sponsored by e-MFP, the organizers of European Microfinance Week. It is one in a series of articles covering the proceedings of the event, which is taking place in Luxembourg from November 12 to November 14. MicroCapital is reporting on the sessions onsite throughout this time.

Additional Sources and Resources:

Microfinance Event; September 24, 2013; European Microfinance Platform (e-MFP) to Host European Microfinance Week 2013, Luxembourg, November 12-14, 2013, With On-site Coverage Provided by MicroCapital

MicroCapital Special Report; November 19, 2012; Panel: Seeking Diversification, Microfinance Investors Often Reap Annual Returns of 4%

MicroCapital Universe Profile: Appui au Développement Autonome (ADA)

MicroCapital Universe Profile: Child and Youth Finance International (CYFI)

MicroCapital Universe Profile: European Microfinance Platform (e-MFP)

MicroCapital Universe Profile: World Savings Bank Institute (WSBI)

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