Financial inclusion can address youth employment crisis in Africa

Project name:
Review of a financial inclusion funding initiative

Service:
Monitoring and evaluation

Sector:
Financial Services

Area of Expertise:
Evaluation & impact assessment

Client:
Private foundation

Date:
2015 - 2016

Country:
Ghana
Kenya
Rwanda
Senegal
Tanzania
Uganda


Africa’s youth bulge - once considered a demographic dividend - is turning into a crisis as young people lack the skills or opportunities to find good quality work. 

Large amounts of donor funding have been channelled to the supply side of this problem: improving youth skills and encouraging them to become entrepreneurs. But this failed where there was insufficient demand for young people in the job market. Financial inclusion can play a key role in addressing this by helping small and medium enterprises to become more productive and grow, thereby employing more young people. 

Genesis partnered with a prominent private foundation in the financial inclusion community to identify what the foundation had learned from its work in expanding access to formal financial services across the continent. This review took place against a broader strategic shift towards youth employment creation as a primary objective for many donors. Our analysis was geared towards identifying how financial inclusion could support the employability of young people in Africa as well as create work for them in the marketplace. 

We used foundation staff interviews, an extensive review of partner FSP documentation, and our own experience of working with banks and MFIs across the continent to conduct the review. We were able to isolate the organisational assets the foundation had built, which could be leveraged to support youth employment creation. 

We identified two channels through which this could take place: at the household level, creating resilience against extreme poverty, and at the enterprise level, helping micro, small and medium enterprises MSMEs to grow and employ more young people. The review highlighted that most of the FSPs that received foundation support provided services to individuals and survivalist micro enterprises. There was also little evidence that this created concrete economic opportunities for the poor, particularly the youth, on a significant scale. 

Our analysis attributed this finding partly to the limitation of supporting FSPs to expand to unserved market segments alone, without considering the many other constraints associated with poverty. 

Achieving youth employment requires addressing constraints in financial inclusion as well as in the education system and labour market and also ecosystem-level constraints such as regulation, market infrastructure, information, and informal norms and attitudes. We helped our client think through how to adapt programming models for this new multidimensional reality in a way which maximises impact by addressing multiple constraints across multiple systems and levels within a single context.        

Review shows way to increase financial access

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