Friday, 17 May 2013

Youth, employment and micro-credit

Chakriya Yoeur from Cambodia
Hana Yousef, recent university graduate and CARE International UK Volunteer, discusses what microfinance could mean to the rising number of unemployed young people in developing countries ...

Historically, micro-finance has never been something typically associated with youth. It seems as though the general pre-conception of young people moving around and being less likely to ‘stay put’ make them less desirable recipients of a micro-credit loan. 

However, things are forever changing in the micro-finance sector, and maybe it has become time for young people to become micro-finance institutions' new generation of clients!

In the same way that the younger generation may not be at the top of the micro-finance Institutions’ loan distribution list, micro-finance is not the generic ‘go-to’ for the entrepreneurial youth of today.

Having recently graduated myself, I blame my previous ignorance to micro-finance not only on a lack of awareness, but also on an irrational fear of the word itself; Micro-finance immediately conjured up notions of complex mathematical equations in my mind.  I learned recently that some micro-finance institutions provide financial services for low income clients.  So,  I strongly believe that having access to micro-credits is something that could be of huge benefit to both the youth and MFIs.

Youths suffer considerably with unemployment in many countries around the world. I imagine there are several young people today with exciting and innovative business ideas and even business plans in areas from agriculture to tailoring facing the daunting question of: “how will I kick-start this business plan?” This question is even more poignant for youths in developing countries, and the difficulty in having access to banks in rural areas can be enough to deter them from fulfilling their dream or at least giving it a go. 

 But this shouldn’t be the end to these entrepreneurial endeavours. I understand that raised awareness about micro-finance alone will not immediately result in thousands of young, fresh and innovative new businesses – but it is a start. By highlighting micro-credits as an option to youths around the world, be it through lectures or informal meetings, we are already one step in the right direction, and young people will have more opportunities to follow their dreams!

1 comment:

  1. Generally, the demographics of developing countries show high numbers of young people and few employment opportunities. Many young people do want to start a business and some of them might even have a business case. However, as the article states, young people are not the average customer for microcredit. Why? Many will highlight their lack of experience. Very often they will not be considered for microcredit because of the kind of business they want to develop. Young people across the world want to develop different, cool and innovative businesses; very often in the creative and IT sectors. Again, investing in new sectors represent a higher risk for the microfinance institutions. However, when one of these innovative ideas finds support and develops into a business, often this is successful, because it has novelty. One way to support new businesses set up by young people would involve MFIs targetting this demographic and allowing young entrepreneurs to become more business savvy and financially literate through training and mentoring. At the same time, it would help if more MFIs are ready to consider different business ideas alongside the traditional businesses and fund them.