Learning event on financial and non-financial services to rural youth: Egypt and Yemen case studiesBy Anja Lund Lesa, David Suttie and Omar Hammoud
As part of the NEN Close Up series, the Near East, North Africa, Europe and Central Asia Division hosted a knowledge sharing event on rural youth and economic empowerment in the Near East and North Africa. Through a regional grant, IFAD is partnering with Making Cents International, a social enterprise based in Washington DC, and Silatech, a social initiative working to create opportunities for young people throughout the Arab world, to help increase the employment and self-employment opportunities of more than 18,000 young people of ages 15-35. Covering four countries, Egypt, Morocco, Tunisia and Yemen, the 3-year joint programme, Rural Youth Economic Empowerment Programme, is seeking to test innovative financial and non-financial engagement tools for young rural people. The event provided an opportunity to learn from the programme and to discuss how the findings can inform IFAD's future engagement with young people in rural areas.
|Young farmers in Tunisia|
The situation for young people in the Near East and North AfricaThe Near East and North Africa region has a population of approximately 350 million people. This number is expected to reach 700 million by 2050. More than 60 per cent of the population is under the age of 30 and the region is faced with a significant gap in the youth and adult unemployment rates. The youth unemployment rate across the region is almost 30 per cent, and in some countries like Egypt and Tunisia, the rate is over 40 per cent. The declining number of jobs in the public sector underlines the need for the private sector to innovate and support pro-youth entrepreneurship and self-employment.
But access to financial services is one of the biggest constraints that young people face in the region. The Arab world has the lowest rate of financial inclusion worldwide and there is a general misconception that young people are riskier clients than adults. As a result, financial services are often not reaching young people and the size of loans for young people is 50-70 per cent of the average loan size. The size of loans for young women is even smaller, only 25-50 per cent of an average loan size. For young people living in rural areas, difficulties in accessing finance are even greater and lack of rural economic opportunities forces many young people to migrate.
Addressing the challengesTo address these challenges, five pilot projects under the programme have been designed to test different financial and non-financial services and tools for young rural women and men and to bring experiences from urban to rural areas. The pilot projects are implemented by local partners, including commercial banks, micro-finance institutions and local community development organizations, with technical support from Making Cents International and Silatech.
The five projects are testing a number of products, such as youth savings groups, enterprise lending, start-up loans for small businesses and mobile phone applications. Product also include non-financial services such as financial literacy training, coaching of young entrepreneurs, vocational and life skills training. In Morocco, mobile branches have been introduced with vans that can go into rural areas and reach young people.
What we know … and what we want to learnAn important aspect of the programme is to generate knowledge and disseminate this through different learning events and publications. What is already clear is the importance of involving young people in market research and in the development of products, listening to what they are saying about the specific services they need. Another crucial point is to have differentiated products based on gender and age groups. Young women and men have different needs and priorities and products should reflect the diversity of the target group. The gender perspective is also relevant in terms of designing approaches to reach young women and men. Across the Arab World, many young women face restrictions related to mobility and in some countries, keeping a bank account or entering into contracts requires the consent of a husband or male relative. The involvement of the community is therefore key to ensure that services reach young people, including parents, teachers and community leaders, who can support young people. And for financial services to be effective, they need to be linked to non-financial services, such as training and capacity building.
But we still need to learn more about how experiences from urban areas can be translated into a rural setting. Another aspect is the level of non-financial services needed to complement the financial services, particularly in light of the lower education levels in rural areas. And what type of technology is needed to reach rural areas at lower costs. Social media is one important pathway to communicate and reach young people in a cost effective way.
Egypt and Yemen case studiesTwo of the pilot projects in Egypt and Yemen have already provided a number of lessons learned. The project in Egypt is promoting youth savings groups and more than 7000 young people are now members of these groups, with 10-20 members in each group. Members typically save around 40 to 50 USD per year, and can borrow three times the accumulated savings. Young members are encouraged to invest in businesses and they receive training to become better entrepreneurs. An interesting aspect is that more than 70 per cent of the members are young women. The project is therefore making adjustments to increase outreach to young men.
The project in Yemen is providing services to over 6000 young rural people. Penetration of financial services to youth in Yemen is very low and only 3-4 per cent of clients are young people. Under the project, rural people have been recruited and trained to work in financial institutions and the project is partnering with rural cooperatives to deliver non-financial services to young people. Experiences from Yemen show that young people are particularly interested in bee-keeping. This is related to the fact that bee-keeping does not require land tenure, a particular challenge for many young people, and the work is less demanding in terms of physical labour.
What lies aheadMoving forward, a number of considerations needs to be addressed. First of all, how can IFAD scale up the pilot projects and link the knowledge generated from these projects to what IFAD is already doing in rural areas on creating opportunities for young people, not only in the Near East and North Africa region, but across IFAD's fields of operation? Secondly, there is a need to consider the policy environment. Can the knowledge from the projects be used for evidence-based advocacy to support the development of pro-youth policies? And finally, keeping in mind that many young people lack interest in agriculture and leave rural areas, how can these financial and non-financial products be used to inspire young rural people to invest in agro-businesses and support them in making agriculture a viable and sustainable livelihood option?
What is becoming increasingly clear is that initiatives which effectively target young rural people consistently show excellent results – in terms of sustainability, poverty reduction and community building. Clearly, investing in young people will be one of the pillars upon which the thriving rural communities of tomorrow are built.