Policy Opportunities and Constraints to Access Youth Financial Services

The current global youth population of 1.2 billion is the largest in history and represents approximately 18 per cent of the world’s population. More than 80 per cent of the world’s youth live in Africa, Asia and Oceania, where employment in agriculture comprises at least 35 per cent of total employment. Seventeen percent of the global youth population lives in Africa. One in five youth lives on less than US$1 a day. Approximately 64 per cent of African youth live in countries where at least one third of the population lives on less than $2 a day.3 The quality of education for youth in many developing countries is very poor with high teacher-student ratios and high drop-out rates, particularly for girls in the rural areas. Very few youth are able to complete their education due to poverty and insufficient public institutions for tertiary education. As a result, many enter into the work force at a young age. In developing countries roughly 20 to 50 per cent of youth aged 15-19 and 50 to 80 per cent of youth aged 20-24 are working. Higher rates such as those in Africa (e.g. roughly 30 to 80 per cent for youth aged 15-19 and 50 to 90 per cent for youth aged 20-24)4 may indicate limited education opportunities and the need for young people in these countries to contribute to family income. Girls in many developing countries are typically more vulnerable than boys due mainly to social norms perpetuated by ‘gatekeepers’ (e.g., fathers, mothers-in-laws, boyfriends, etc.) that diminish their value in the family and community and lead to fewer educational and employment options than boys. In addition many girls enter into unwanted marriages or relationships at a young age. To cope with the poor economic conditions and lack of educational opportunities, many youth turn to the informal market for work and financial services, however imperfect. A better solution would be to provide more formal financial service opportunities for youth by including them in inclusive finance strategies. Appropriate and inclusive financial services for youth can equip them with the resources and support they need to become productive and economically active members of their households and communities as they make the transition from childhood to adulthood. Providingyouthwithfinancialservicescanhelpthemimprovetheirlivelihoodsand build their assets in the long term. Youth represent the next wave of new clients for Financial Services Providers (FSPs) with the expected population growth by 1 billion over the next decade, particularly in sub-Saharan Africa.