In recent weeks, unprecedented acts of cruelty and violence have dominated world headlines in the Middle East and North Africa (MENA) countries where we work, including Tunisia (i) and Yemen. (ii) While politics and religion are dissected as drivers of terrorism, the underlying economic cause and effect seems to receive far less attention and debate. (iii) For MENA’s youth, the reality is that economics is a cause and also an effect. And for rural youth, it is even more visceral; economics connects to dignity or shame; surviving or thriving; despair or hope. (vi v)
For rural youth who are budding entrepreneurs; there is little support, financially or otherwise, to build on what glimmer of hope there is. Financial service providers close the door on rural youth entrepreneurs because they are seen as too “risky,” too “transient,” too “rural.” As development workers and agents of change, how do we handle this? How can we maintain hope when new and unexpected obstacles emerge every time we start to build momentum, and how do we project hope toward the youth we serve and the local partners who serve them?vi
In spite of all the odds, incredibly, the work continues; and what we are seeing first-hand in Egypt, Yemen, Morocco, and Tunisia gives us reason to hope. Through the tireless and innovative work of local partners in the Rural Youth Economic Empowerment Program (RYEEP), we see hope in that 54,000 rural youth now have access to financial and nonfinancial services, business training, and coaching. Over 4,000 of them have received a collective total of $1,555,000 loans disbursed. And what we are confirming is:
There is pent-up demand for financial services in the rural youth market,
Rural youth can in fact be an economically viable market for financial service providers, and
Access to financial products and services is not on its own the solution for rural youth to build viable businesses and lift themselves out of poverty.
With a focus on those in their late teens to early 30s, RYEEP is piloting research-driven financial and nonfinancial service business models for rural youth and the enterprises that employ them. Each of the five pilots follows a systematic approach from research and design, to product launch and evaluation. The learning generated from each pilot is being analyzed and documented. Below is a glimpse of what we are learning.
Let’s get real about ‘Rural Youth’. The youth market contains sub-segments related to geography, age (legal age, experience), life stage (marital, parental status), gender, education, employment status, and vulnerability. The rural youth market can be even more nuanced than that. These factors, combined, affect product design, marketing, and business/livelihood type. In Yemen, we discovered that beekeeping was an area of interest for youth startups. You want your product and message to be relevant to rural youth; what works for an existing product (adult or urban youth product) may not work for a rural youth market.
There is a business case for ‘soft skills’ in financial service success. Beyond support services like financial literacy and business development training, don’t underestimate the value of 'soft skills' support, for idea generation, leadership, and negotiation skills. They help make financial services ‘stick’ and put youth on the path to self-determination. In some cases, soft skills are ingrained in childhood, but for many rural youth, we must consider those skills as traits that should be taught. To deliver these services, leverage existing groups and channels. In Egypt, we found savings groups a cost-effective way to deliver nonfinancial services. In Yemen, partnering with NGOs and rural cooperatives gets services to remote and hard to reach areas.
Multi-sector linkages help youth ‘graduate’ from informal to formal financial services. Financial service delivery can be viewed as a continuum from informal to formal, with rural youth becoming stronger and more diversified in their financial transactions. For informal financial services, such as savings groups, building financial capability prepares youth for formal financial services. Educate microfinance institutions on the value of informal groups as an incubator and launch pad for developing viable and loyal clients. And promote the value of formal financial services to rural youth, and have local champions or bridge builders who can help youth navigate the language and requirements of formal financial institutions.
Clearly, there's no one formula for serving rural youth. While there are some scaleable and replicable similarities, programs designed to improve the quality of life for young people in rural Egypt should be differentiated for rural Tunisia, or Yemen, or any other MENA country. Nevertheless, rural youth across the region suffer under some of the same basic circumstances -- stagnant or contracting economies in already fragile societies torn apart by religious or political divisions. Greater awareness of the role economic desperation plays, and understanding what that looks like specifically, may help programmers design projects and innovations that can support economic growth, dignity and hope for today’s MENA youth and future generations.
The Rural Youth Economic Empowerment Program (RYEEP):
RYEEP is a three-year grant funded by the International Fund for Agricultural Development (IFAD), (vii) a UN agency addressing rural poverty, with support from Silatech (viii), a Qatar-based initiative for youth entrepreneurship and employment. Making Cents International leads the program, working closely with partners in Egypt, Yemen, Morocco and Tunisia to design and deploy five innovative financial service models that will yield a body of knowledge and case studies on serving rural youth specifically. Pilots include village savings and loan groups (Plan-Egypt); formal youth savings and loans at banks (Al Amal Bank – Yemen; Al Barid Bank – Morocco); enterprise lending (Microcred – Tunisia); and value chain finance and trade credit (Pro-Invest – Tunisia).
For more on financial inclusion models for MENA’s rural youth, consider participating in the October 6-8 Global Youth Economic Opportunities Summit in Washington D.C. formed around the theme of “Scale in Practice”.
i In Tunisia, terror attack undercuts Arab Spring's best prospect, CNN, http://www.cnn.com/2015/03/18/world/tunisia-terror-attacks/ Accessed March 20, 2015
ii No end in sight to the fight in Yemen, Middle East Eye, April 23, 2015 http://www.middleeasteye.net/columns/no-end-sight-fight-yemen-2038370210
iii The Wrong Kind of Aid for Tunisia, Washington Post, April 26, 2015 http://www.washingtonpost.com/opinions/the-wrong-kind-of-aid-for-tunisia/2015/04/26/47c9adae-eaa8-11e4-8581-633c536add4b_story.html
iv The Tragedy of Tunisia, Wall Street Journal Think Tank http://blogs.wsj.com/washwire/2015/03/19/the-tragedy-of-tunisia/ , Accessed March 30, 2015
v Revealed: Arab Youth Survey Report, April 21, 2015, http://www.arabiangazette.com/revealed-arab-youth-survey-report-20150421/
vi Confidence in Arab Spring dwindling among Arab youth ,Gulf News, April 27, 2015 http://gulfnews.com/news/uae/society/confidence-in-arab-spring-dwindling-among-arab-youth-1.1496860