4.1.1 Gathering multiple stakeholders for YFS policy discussion can help identify bottlenecks and outline next steps for policy change
As UNCDF-YouthStart partners in Uganda, Ethiopia, DR Congo, Burkina Faso, Togo, Senegal, and Malawi researched the market, they identified policy and regulatory constraints that limited their ability to serve youth directly with financial services. Consolidated findings from these investigations are provided in its report entitled “Policy Opportunities and Constraints to Access Youth Financial Services” (http://www.youtheconomicopportunities.org/resource/738/policy-opportunities-and-constraints-access-youth-financial-services). In response to the findings, UNCDF began to convene multiple public and private sector stakeholders to discuss these limitations and how to address them. To date, UNCDF-YouthStart has held national-level meetings in all seven countries.
Maria Perdomo, Programme Manager of YouthStart, reports that meeting participants have voiced a general openness to change. They respond well to the youth demographic statistics and acknowledge that current laws often exclude the neediest young people, including for example, girls who are legally able to marry at 16 but unable to open a bank account until they are 18.
Change, however, may not be that easy. One particular challenge is identifying which law to change. For example, do you change the banking act or the constitution? Each of these changes implies a different level of authority. In Uganda, for example, changing a banking act only requires dealing with the central bank or Ministry of Finance, while changing the constitution requires passage through parliament. Decision-makers have still not reached a consensus. Another significant challenge is the lack of supply in these countries. Current products are inaccessible to youth due to high fees and long travel distances to financial institutions.
Meeting participants have begun considering technology investments as a means to provide low-cost and accessible financial services for youth via mobile phones, agent banking and Point of Sale (PoS) technology. Using technology has an added benefit in that youth are able to manage their accounts directly and avoid the legal age and identification requirements required at the bank branch. Delivering financial services via technology, however, requires appropriate policies, as well. Many countries, including Uganda, have yet to develop such policies, which can limit FSPs from adopting technology as a means to increase access to YFS. Finally, stakeholders must address low financial capability in their countries. Some countries, such as Peru and the Philippines, have launched a national financial education program through the public schools. While promising, this does not address the financial capabilities of out-of-school youth, an issue of particular interest in Sub-Saharan Africa.
Advancing these policy discussions requires significant cooperation and a designated high-level youth champion to move the process forward. Namibia, for example, has been successful at convening the Financial Literacy Initiative (FLI), bringing a number of relevant actors in the country together under the leadership of the Ministry of Finance and the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH 1. These actors include the Central Bank, the National Institute of Education Development, leading commercial banks such as FNB-Nambia, microfinance institutions, NGOs such as Junior Achievement and Aflatoun, and the Polytechnic Institute of Namibia. The FLI is tasked with coming up with a national strategy that aims to bring quality financial education to the Namibian population using a range of delivery channels from schools to national media outlets. They are focusing specifically on serving the rural poor as well as children and youth.
Policy discussions on lowering age restrictions for youth to access financial services have raised the important issue of client protection. How do we make sure that we do not harm young people as we increase their access to financial services? UNCDF- YouthStart decided to adapt ACCION International’s Smart Campaign 2client protection tool (http://www.smartcampaign.org/tools-a-resources) using CYFI’s principles for child-friendly banking (http://www.childfinanceinternational.org/index.php?option=com_mtree&task=att_download&link_id=753&cf_id=200). The new tool, “Getting Started Questionnaire: Youth Client Protection Self Assessment for FSPs providing Youth Financial Services” is now used by all of UNCDF-YouthStart’s nine partners. The main areas for youth consideration in the tool include: 1) allowing maximum control to youth, 2) ensuring that co-signers for minors are informed about the products and services offered by the bank, 3) adapting communication tools so that youth clearly understand the bank’s financial products and terms, 4) product pricing that ensures affordability for younger customers, and 5) appropriate financial education for younger customers. The resulting tool can be found at http://www.youtheconomicopportunities.org/resource/504/getting-started-questionnaire-youth-client-protection-self-assessment-fsps-providing.
- 1. GIZ offers broad-based expertise for sustainable development that draws on a wealth of regional and technical expertise and tried and tested management know-how. As a federal enterprise, they support the German Government in achieving its objectives in the field of international cooperation for sustainable development. They are also engaged in international education work around the globe.
- 2. The Smart Campaign is a global campaign to embed client protection into the DNA of the microfinance industry. The Smart Campaign works with microfinance leaders from around the world on a common goal: to keep clients as the driving force of the industry by providing microfinance institutions with the tools and resources they need to deliver transparent, respectful, and prudent financial services to all clients. The Smart Campaign believes that protecting clients is not only the right thing to do, it’s the smart thing to do.