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CYFI Celebrates Child and Youth Finance Week and the Ringing of the NASDAQ Opening Bell

Jared Penner — Thu, 29 Mar 2012 14:45:00 +0000

Child and Youth Finance International (CYFI) is a global network of financial service providers, government representatives, youth serving organizations, and academics working together to improve financial access and financial, social and livelihoods education for children and youth throughout the world. Based in Amsterdam, the Netherlands, the CYFI Secretariat coordinates efforts to advance the Child and Youth Finance Movement worldwide.

Child and Youth Finance Week

Our first Child and Youth Finance week was a resounding success, and we could not be happier! Youth from all over the world were given the opportunity to connect and share about the financial issues that matter most to them. Young people from 26 countries participated in events ranging from central bank tours, visits from financial luminaries, Skype calls with youth in different countries, and talks from financial planners and experts. Kids spoke about savings, starting their own business, earning interest, working, and sharing with their friends and family members.

Young people Namibia showed us their Ant Banks (click for video), which are used to encourage savings at home and at the bank; Junior Achievers in Argentina told us about making and selling auto safety kits and brownies to put money towards their future; and young people in Turkey shared their experiences saving for motorcycles to get them to and from work. It is exciting to see kids from all over the world enthusiastic about saving and enterprise. You can watch a short video on the hi-lights from Child and Youth Finance Week here.

Photos and videos from all of our partners, collaborators and new friends are being posted at www.WOFCHA.org. The site, set up by CYFI, allows young people from all over the world to connect virtually on issues related to money, enterprise, and relations with financial institutions. We encourage you to visit the site and share it with young people who you think would be interested in joining our online community and helping to change the future of finance for youth around the world.

Ringing of the NASDAQ Opening Bell

CYFI also had the honour of ringing in the opening bell at the NASDAQ on Wednesday, March 21, alongside Making Cents International and other industry partners. This was an excellent way to bring a close to Child and Youth Finance Week, and we were thrilled to be able to share our core beliefs with the financial community. You can watch the video of the opening bell ceremony below.

CYFI Summit, April 2-4, 2012

We hope that the success of our first annual Child and Youth Finance Week and our upcoming CYFI Summit in Amsterdam (April 2-4, 2012) will bring us that much closer to our goal of financial inclusion for 100 million youth in 100 countries by 2015.

Five Reasons MFIs Don’t Lend to Students & 1,600 Reasons Why They Should

Nick Cain — Thu, 26 Jan 2012 19:55:00 +0000

Growing up in Himalayan City, Philippines, Stephen Lumanog helped his mother sell food around their neighborhood to earn extra money. At 22, Stephen was earning about US$160 per month as a junior welder at a local sugar company. A promotion to certified welder would help him earn a raise and provide a more comfortable life for his family, but the required training was too expensive. Fortunately, Stephen’s mother is a client of the Negros Women for Tomorrow Foundation (NWTF). After NWTF partnered with Vittana to develop a student loan product for post-secondary education, Stephen borrowed US$160 to attend a three-month welding course. He is now employed as a certified welder, earning US$210 per month, a 130% income change just six months after graduating from his training program.

Stephen is not unique. Millions of young people around the world cannot complete post-secondary education, leaving valuable, income-generating skills unlearned, and years of higher wages permanently out of reach. As financial service providers to hundreds of millions of poor and low-income[1] families, microfinance institutions (MFIs) are uniquely positioned to reach the 100 million youth worldwide who lack the resources to complete higher education. But until recently, MFIs had done little to tap into this market, discouraged by a set of common misunderstandings: we like to call them the Five Myths of Student Lending.

Check out Vittana's presentation to see how the organization has debunked those myths by creating high-performing student loan products at 20 MFIs in 12 countries.

Now that Vittana and its partner MFIs have shown that student loan products are viable, we believe that as the products evolve to reach more and more students, a hyper-data-driven approach will allow MFIs to simultaneously reduce risk and amplify impact. Vittana is already noticing some interesting trends: for example, women studying accounting in Nicaragua repay at a better rate than their counterparts in Mongolia. The average projected change in income for Filipina women between the ages of 20 and 24 is 900%, more than three times the Vittana average. The sample sizes are far too small to draw conclusions, but we’re excited to continue to explore these trends as our portfolio grows.

As the next generation of borrowers comes of age, they will look for more than an opportunity to run a small business. Education will give them the skills they need to compete, to create jobs, and to find work that will support their families. But without financial assistance, even low-cost vocational training will remain out of reach for many poor students and their families. In most markets, very few financial service providers, if any, have stepped in to fill this need; the institutions that make up the microfinance industry can and should be the ones to do it.

If you’d like more information on Vittana, please visit their website at http://www.vittana.org.

[1] CGAP Occasional Paper No. 8 (2004)

What Does the Future Look Like for the Youth and Financial Services Industry?

Jennifer Gurbin Harley — Wed, 28 Sep 2011 19:50:00 +0000

In May 2011, the SEEP Network, in partnership with The MasterCard Foundation, officially launched the Youth and Financial Services (YaFS) working group. The vision of the working group is to contribute to the YaFS industry by bringing stakeholders together to produce and disseminate documentation that further contributes to the learning of industry practitioners. We hope to move beyond case studies to develop trend analyses that provide a comprehensive and overarching view of where the industry currently stands as well as where it is headed.

We are currently in the first phases of our two-year work plan and we’re working to reach out to industry stakeholders to ensure the relevance and quality of the group’s objectives and deliverables. We’re looking for input from stakeholders like you:

What is your vision for the future of the YaFS industry? What tools could the working group develop to help you work more effectively? Click here to have your say by filling out a short survey before October 7^th.

We expect the working group objectives to complement work being done in the area of youth and financial services, but also provide additional knowledge in the form of learning tools and trend studies that practitioners can call upon when contemplating the design and implementation of youth financial service programming. The group’s focus will be on formal youth financial services but will necessarily include discussion of non-financial services and savings groups insofar as they are directly related to increasing access to, and effectiveness of, financial services offered to youth.

In June and September 2011 the working group held its first sets of meetings in Washington, DC with approximately 30 practitioners from organizations including Save the Children, Making Cents, Freedom from Hunger, MEDA, Plan International, StreetKids International, World Vision, ChildFinance, the Aga Khan Foundation, Alatoun, World Relief, WOCCU, FINCA International and CRS.

If you have any questions or comments on the working group or if you are interested in joining us in November 2011 at the SEEP annual conference, please contact Rossana Ramirez (rramirez@freedomfromhunger.org) or Jennifer Gurbin Harley (jharley@meda.org). If you’d like more information on the SEEP Network, please visit their website at www.seepnetwork.org.

It's all in the Mind: How Behavioral Science Presents a Golden Opportunity for Financial Inclusion

Payal Pathak — Fri, 15 Jul 2011 18:40:00 +0000

With the “golden age of behavioral research,” as New York Times columnist David Brooks recently described, comes a golden opportunity for the asset building and financial inclusion fields. Indeed, the latest breakthroughs in social science and behavioral research beg – or perhaps even force – us to think differently about poverty reduction and the policies and mechanisms that can enable it. Already, a deeper understanding of human behaviors born out of this research has inspired small tweaks in initiatives across various fields to create big changes – in health policy to increase HIV/AIDs testing, education policy to promote school attendance, and financial policies to increase savings behaviors. At the Global Assets Project, considerations of the complexities of human behaviors and their impact on social and economic lives of the poor are woven through the various threads of our work – on the psychology of poverty, conditional cash transfers, and youth savings – increasingly informing the global asset-building strategies we advocate around the globe.

Most recently, on June 27^th we co-hosted an event with Innovations for Poverty Action (IPA) to release a new Global Assets Project paper, ”Accelerating Financial Capability among Youth: Nudging New Thinking” and to discuss Dean Karlan and Jacob Appel’s new book, More than Good Intentions. One of the major themes of the book is behavioral economics, which is beginning to shed light on how development initiatives that consider human irrationality or psychological barriers to positive financial behavior can improve the lives of the poor. Our paper extends this exploration of the human irrationality-financial behavior relationship, largely by emphasizing that psychological variables in the standard financial capability equation – financial education + access to financial services = sound financial decision-making — is grossly lacking. In actuality, temptations to consume, lack of self-control, and other psychological biases can prevent positive financial behaviors, such as saving regularly, even when a person has the ability (through financial education), opportunity (through access to financial services), and desire to do so, which should not be underestimated.

In fact, the financial choices that the poor have to make can be both emotionally and mentally draining. Click here to read more...

National Strategies for Successful Youth Financial Inclusion

David Morrison — Wed, 13 Apr 2011 15:40:00 +0000

Sub-Saharan Africa is home to 200 million youth between the ages of 12 and 24. This number is expected to grow to 300 million over the next 20 years. Increasing young people’s access to financial services will equip them with tools to protect the money they save now, and enable them to diversify and increase their income, and access other financial services, as they transition into adulthood. Better access to financial services and a greater ability to use them appropriately can mean greater opportunities and improved livelihoods for young people.

Successful youth financial inclusion requires that we focus on three priority areas: legal and regulatory frameworks, financial literacy and client protection.

1) Legal and Regulatory Frameworks

Research findings from YouthStart -a new initiative of the UN Capital Development Fund (UNCDF) that seeks to increase financial inclusion of youth in Sub-Saharan Africa - show that legal and regulatory constraints often inhibit Financial Service Providers (FSPs) from innovating and offering demand-driven financial products for youth.

For instance, in Uganda, the minimum legal age for signing contracts is 18, and research from Finance Trust - a YouthStart partner - suggests that this constraint forces FSPs to target youth through their parents, preventing them from designing specific products tailored to the needs of the growing youth population in their country. Research and experience support the idea that youth who hold their own accounts may have a more positive future orientation towards savings than those who hold an account with their parents. In addition, to be effective, savings, credit and services like financial education, require careful tailoring, not only for youth versus adults, but even for younger versus older girls and boys. Legislation that appropriately addresses age issues, particularly regarding holding savings accounts, could expand access of youth to financial services and help them prepare for a more economically secure future.

2) Financial Literacy

Another key finding of the YouthStart research shows a critical lack of financial literacy among youth. Click here to read more...

Is There a Business Case for Youth Savers?

Glenn Westley — Mon, 24 Jan 2011 18:07:54 +0000

Many MFIs may well ask themselves why they should make any special effort to serve youth savers. Youth savers may have smaller savings balances, take fewer loans, and use other financial products to a lesser extent than the average MFI client. In such cases, the business case for youth savers hinges critically on the future evolution of the youth savers. While one can never be sure of the future, it may be illuminating to examine immediately preceding past trends for clues about what the future might hold for today’s youth savers.

Consider, for example, youth who are 12-18 today. In 8 years, they will be 20-26 and many may be salaried employees or have their own businesses. They may be aggressively saving to start a family or business. Or they may already have a family or business and a greatly increased need for a personal or business loan. If the MFI served their financial needs well when they were young and still offers competitive financial services today, many former youth savers may well stick with the same MFI to address their now expanded financial services needs.

Moreover, young people with a greater ability to plan for the future may save more to start and expand a business, plan for a family, and meet other needs. And they may become more responsible credit clients.

To see how young microfinance savers have evolved in the recent past, we might undertake a data gathering exercise for youth savers along the lines of a similar exercise that Xavier Martín and I developed for small savers.

Click here to read more....

Advocating for Youth-Inclusive Financial Services and Redemption

Sam Daley-Harris — Wed, 17 Nov 2010 17:20:00 +0000

Lisa Laegreid, my Microcredit Summit Campaign colleague, recently spoke at the Global Youth Enterprise & Livelihoods Development Conference on 1) advocacy as a means to making the issue of youth-inclusive financial services well known and respected, and 2) engagement of institutions that are truly reaching the most vulnerable youth, such as gang members. I discuss both of these issues in my TEDx NJ Libraries talk titled: "Purposes, Poverty, Pitfalls, and Redemption."

In the talk I outline my founding of RESULTS, the international citizens' lobby on ending global poverty. Our vision is of a world where all people have a fair chance at success. We first lobbied on behalf of microfinance in 1986, generating 100 newspaper editorials in 1987 alone, and we have continued to advocate for the field. I truly believe that Making Cents and its allies can play a similar advocacy role for youth-inclusive financial services.

In the talk I also refer to "microfinance for redemption," microfinance that "restores one's honor and worth." I tell the story of a young gang-leader in Kenya whose life turned around after his gang rebuilt a market that they had destroyed in the post-election violence. He then started a small business with a micro-loan from Jamii Bora, a MFI working throughout Kenya. He told Jamii Bora's founder, Ingrid Munro, that after staying away from his home village for 13 years because of his mother's shame about his way of life, when he finally returned home as a microentrepreneur she cried for three days because she was so happy with how he'd changed.

That's redemption, restoring one's honor and worth. That kind of redemption can happen when we give youth and other vulnerable populations the opportunity to access financial services and when we act as their powerful advocates.

Sam Daley-Harris is founder of RESULTS, www.results.org, and founder of the Microcredit Summit Campaign, www.microcreditsummit.org.

Do We Already Serve Youth?

Lara Storm — Tue, 31 Aug 2010 17:15:00 +0000

What do we mean by youth?

Unfortunately there is no one specific answer. Youth can be segmented into very unique categories including those in school, those who work, those who are married with children and those who are single. While seemingly on very different paths, what unites these diverse segments is the simple element of age. Research on the brain shows that starting at around age 11 and ending at age 24, the brain, if “exercised” properly, develops the vital ability to plan and set goals. This fact has inspired Making Cents to investigate how to serve youth with financial services at a time when their brains are ripe for development and show the greatest potential to plan for a better future.

Serving youth may not be as foreign as you might think. In fact, most financial institutions already serve people in this age bracket. Most MFIs don’t segment their clients by age. Rather, they offer one or two standard working capital loan products to all who qualify regardless of age. Those who do segment their clients by age often find that anywhere from 5 to 25 percent of their clients fall below the age of 25.

What they don’t know however, is how these young clients fare under the standard loan terms compared to adults. Does their inexperience increase arrears? Do they drop out more frequently? What types of businesses do they operate?

I would like to challenge you to study these differences and to share your findings on the YFS portal.

Why Financial Services? Why Youth?

Rathi Mani — Tue, 03 Aug 2010 14:11:45 +0000

How old were you when you first opened a savings account or got your first credit card? What motivated you to do so? How did that first experience shape your perception of financial services and the role they play in your life?

It has become apparent to youth-serving organizations, financial services providers, and Making Cents International, that financial services – whether a safe place to save or an appropriately structured education loan – can be an integral part of youth livelihood strategies. Providing youth with the right financial services at the right times in their lives and with the right support network can help them improve their livelihoods in the short term, and position themselves for more sustainably productive lives in the long term.

A few specifics:

Youth are economically active: Most young people in developing countries are economically active, contributing to household income through formal or informal means. It is our responsibility to provide them with a way to manage their finances.

Youth need savings: Youth already save, often through insecure informal mechanisms, in order to help manage consumption, emergencies, and the costs of important life events such as weddings and funerals. So, what are they looking for in a savings product? Relative security, convenient access, liquidity in case of emergencies, and a secure place to accumulate larger sums.

Youth borrow money: Youth may need access to credit to start a business, build a home, or pay for school fees as they make critical transitions in their life. However, in order to mitigate unintentional exploitation of young people’s vulnerabilities, credit products should be tailored to fulfill the diverse needs of these transitions.

We invite you to share your organization’s latest results and experiences regarding the importance of providing young people around the world with access to appropriate financial services. Post responses here or email us at yfslink@makingcents.org.

Welcome

Fiona Macaulay — Wed, 30 Jun 2010 14:45:30 +0000

Welcome to YFS-Link—the first space for practitioners to gather, learn and share about youth-inclusive financial services! At YFS-Link, financial services providers (FSPs) and youth-serving organizations (YSOs) can bring their knowledge and experiences together in innovative ways to discover how to best offer youth a range of appropriate and demand-driven financial services on a sustainable basis.

Making Cents International has launched this collaborative platform with the intention of making it a community-driven “go-to” place for youth-inclusive financial services. YFS-Link is a safe place to post tools, share events, and develop ideas collaboratively. Here, pioneers in the nascent sector of youth-inclusive financial services can come together to create a community of practice that, with time, may grow to spur a movement—a movement to serve the hundreds of millions of youth that are currently excluded from financial services. We encourage you to send specific information, tools, and resources for the sector to yfslink@makingcents.com.

We invite you to engage with us and your fellow practitioners: explore the site; check out the features; populate the pages with your latest resources and events. Most importantly, please let us know what you like, what you think could be improved, and what is missing; tell us what you want to see taken up in this fortnightly blog and suggest how else we can engage the sector.

We are providing YFS-Link as a resource for all of us to use. Help us shape it in a way that serves you—and enables you to better serve youth who want and need appropriate financial services. Thank you!