8.2 Taking a National Approach to Youth-Inclusive Financial Services Requires Coordination between Key Public and Private Actors

Changes in national policy alone will not increase young people’s access to financial services. FSPs, government agencies, and non-governmental organizations must also come together to design appropriate policy and programs to provide youth with financial products and services. The first phase of the USAID-financed Expanded and Sustained Access to Financial Services (ESAF) project in Palestine, implemented from 2008 to 2011, took an integrated approach to addressing financial inclusion for youth by employing macro-, meso-, micro-, and client-level approaches. While not exclusively a youth project, ESAF’s comprehensive approach to financial inclusion is relevant to those looking at country-level models for increasing youth financial inclusion. FHI 360,1 in coordination with its partners Save the Children,2. microfinance institution CHF Ryada (Ryada), the Palestine Monetary Association (PMA), and Making Cents International, experimented with different approaches as part of a holistic, country-wide model for increasing financial services for Palestinian households and enterprises in the West Bank and Gaza.

Timothy Nourse, President of Making Cents International and the former Chief of Party for ESAF, explains that “Having a regulator that wants to deepen the financial sector and that focuses on youth makes it significantly easier to move these types of initiatives forward.” However, it also requires practitioners to actually implement these programs. Taking a comprehensive approach helps ensure greater cooperation between state, private funders, and NGOs, all of which have different strengths to build upon, ultimately creating the strongest intervention possible. This move beyond tactical activities allows for more strategic, large-scale, and higherimpact activities.

The following text box describes the ESAF program in detail.

8.2.1 Bright Ideas: A Country-Level Model for Youth Financial Inclusion

The USAID-funded Expanded and Sustained Access to Financial Services (ESAF) Program in the West Bank and Gaza, implemented by an FHI 360-led consortium, applied a holistic, country-level approach to increasing access to financial services, with a particular focus on youth. The three-year, $36 million financial sector development program was designed to develop an efficient, inter-linked, and competitive financial system that would improve and expand sustainable access to financial services to Palestinian households and enterprises, especially the excluded or underserved. The program partnered with a variety of international agencies, government ministries, industry associations, and financial institutions to achieve its goals.

West Bank/Gaza is known as a difficult context for operations. Youth between the ages of 15 and 29 comprise over 30 percent of the population and, in spite of extremely high literacy (97 percent adult literacy) and education (over 50 percent of the population is pursuing a college degree), youth unemployment rates are around 37 percent. In short, Palestinian youth are highly educated, but often trained for jobs that do not exist. Moreover, the current-day conflict erodes trust in institutions, shortens planning timelines, and heightens isolation.

In response, ESAF designed a comprehensive youth financial services program to better integrate youth into the overall economy. After carrying out an indepth analysis of Palestine’s macro- and micro-level environment, ESAF chose to intervene at all levels of the financial system in order to maximize impact. The intervention included the following program components:

  • Palestine Monetary Authority (PMA) (Central Bank): ESAF’s research showed a lack of trust in financial institutions and awareness around financial services, particularly by youth and poor populations. In response, ESAF reached out to the country’s regulator to improve consumer protection and broadbased consumer awareness.
  • Ministry of Education and Higher Education (MoEHE): ESAF’s research also shed light on the fact that West Bank/Gaza’s public school curriculum had very few learning outcomes related to finance and banking. Through its partnership with PMA, ESAF/ Making Cents International engaged the MoEHE to develop a companion curriculum to introduce financial education to in-school youth.
  • CHF Ryada (MFI): Market research on Palestine’s existing financial services sector showed that most MFIs and banks in the region focused their products and services on adults, with few services targeting youth specifically. In response, ESAF partnered with CHF Ryada, a leading microfinance institution, to develop youth-focused credit and savings products.3
  • ESAF (INGOs): In Gaza’s unstable political and economic context, providing sustainable financial services is particularly difficult. As a result, ESAF took more of a livelihoods approach to the program in Gaza in order to encourage successful business startup. FHI 360 piloted savings mobilization through an individual development account (IDA) mechanism, while Save the Children issued start-up business grants to youth combined with entrepreneurship and life skills training. Both activities incorporated training on financial literacy with lessons on savings, credit and decision making and information about financial services available in Gaza.

To date, ESAF partners have directly served at least 10,000 youth with financial services and through its consumer awareness and financial literacy programming influenced an additional 250,000 young people. Program monitoring and nation-wide Knowledge, Attitudes and Practices (KAP) surveys indicate both individual increases in assets as well as improvements in financial literacy knowledge, attitudes and practices.4




The following section outlines the key lessons learned in designing an effective country-level approach to youth financial inclusion.

  • Understand the impacts of different interventions and choose appropriately.

In order to successfully lead a nation-wide approach to any intervention, including youth-inclusive financial services, the intervention should encompass activities from the client- to macro-level. In designing the ESAF project, creators found that individual organizations tend to design programs based on their own individual expertise. A youth-serving organization may, for example, default to youth programming at the client-level. Other interventions, however, may have a broader impact at a lower cost. A comprehensive approach to youth financial inclusion requires an institution to think outside the parameters of its own expertise and to consider different types of macro to micro-level interventions that may require different levels of approaches. To better understand the country-level perspective, ESAF recommends cataloguing the different financial sector interventions and their potential impacts using tools similar to the one below.

8.2.2 New Tool: Structuring a Nation-Wide Approach to YFS

This tool is a generalization of the one that ESAF used to analyze the full range of activities possible for its country level approach as well as the budget, timing, level of expertise and impact corresponding to each activity. Through this type of analysis, a project designer can weigh different options depending on the program’s funding, time, and complexity.

In selecting an intervention, it is important to keep in mind a program’s budget, as the amount of funding needed to implement a program’s activity may vary considerably. Macro-level interventions, such as PMA’s approach to changing the regulatory environment around youth financial services, often cost relatively little and can reach hundreds of thousands of young people indirectly. Another example of a low-cost macro-level intervention is the development of a public school curriculum focused on teaching practical financial skills to 11th grade students. Text Box 8.2.3 describes this approach. To be successful and sustainable, macro-level interventions require a strong local partner with both the capacity and willingness to collaborate on and sustain the effort at a national scale. In the examples above, ESAF identified two such partners in the Palestinian Monetary Authority (PMA) and Ministry of Education and Higher Education (MoEHE).

By contrast, client-level interventions deliver high impact per beneficiary but also carry higher costs, and results may be less sustainable. For example, ESAF’s Individual Development Account (IDA)5 program in Gaza reached 2,000 youth with a matching grants budget of US$850,000. The program’s investment of around US$425/beneficiary, combined with beneficiaries’ own savings deposits, yielded asset accumulation of more than double that amount on average, in one year. The IDA model is by design dependent on continuous donor or government funding in order to be sustained over the longer term. High touch interventions are generally bestsuited for environments in which there are clear market failures at the micro- or client level, such as in many conflict areas.

  • Consider adequate time and expertise needed for any given intervention.

The amount of time allocated for program implementation also plays an important role in determining whether an intervention is feasible. Often macro- and meso-level approaches require at least three to five years to implement, support, and monitor. Even micro-level interventions, such as the YFS product development at Ryada, can take between one and two years to fully implement. Organizations with less time, particularly those with less than one year, may have to rely on realizing grants and training programs, which are easier to execute in less time.

When Ryada set out to develop a new start-up business loan for young people in the West Bank they expected the new product development process to last one year. However, after taking the time to complete each step in the product development cycle (i.e., youth-inclusive market research, product design, pilot, and evaluation), Ryada and its ESAF partners learned that product development, and particularly the product evaluation and refinement process, are much more time consuming than originally anticipated. Rather than one year, Ryada learned it should have realistically budgeted three to four years to adequately react to a product and adjust it accordingly.

Project design should also allow for enough flexibility to identify and develop partnerships that may emerge organically as the project matures. Text box 8.2.3 below describes one such example of a partnership that emerged between the PMA and MoEHE. This unanticipated partnership allowed ESAF to develop a relatively inexpensive program with a high-breadth and potentially long-term impact.

Finally, the level of expertise required to implement a project and the complexity of the intervention itself need to be considered. To effect macro-level change, a program generally needs to have at least three years of funding, access to decision makers, and high-level technical experts on hand.

8.2.3 Bright Ideas: Inserting Bite-Size Pieces of Financial Education into Public School Curriculum

In 2010, the PMA launched a broad-based consumer awareness campaign to build trust in the financial system by educating consumers, particularly youth, about the products available to them; their rights as consumers; and complaint processes. The PMA developed youth-friendly content for billboards, TV spots, radio shows, internet advertising, and newspaper cartoons to improve knowledge of products and services and regulations.

Upon its inception, ESAF had not considered the need for curriculum development around financial education. As the PMA undertook the consumer protection piece of the project, however, it saw an opportunity to take a more formal approach to teaching financial education principles to all Palestinian youth. In response, it partnered with the MoEHE and hired Making Cents International to develop a relevant course. Rather than design a separate curriculum, Making Cents found that it could have the greatest impact by embedding bite-sized

financial education concepts into the existing 11th grade Management and Economics course. Making Cents developed a companion curriculum that builds upon the existing theoretical management and economics concepts in the original course to include practical skills and knowledge including planning, decision-making, asking for help, savings, and credit.

After a successful pilot, the MoEHE is in the process of rolling out the curriculum in all public schools. With a strong partnership, and pointed expertise, the Ministry of Education reached 48,000 young people with the curriculum in the first year alone and expects to reach an additional 48,000 each year for at least the next five years.6




ESAF also attempted one less successful linkage in Gaza. Managers hoped to link Save the Children’s start-up entrepreneur beneficiaries (each receiving grants of US$950) to Ryada’s newly developed start-up business loan. ESAF offered the youth the opportunity to use their grant funds as a guarantee on a larger loan, providing an opportunity to increase their initial investment, but found that there was little take-up. ESAF believes that the guarantee was introduced too late in the process. By the time Ryada launched its start-up loan product, the youth were about to receive their first grant payments and had already designed business plans on the assumption of a smaller amount of start-up capital, which they had immediate plans for investing. They were not interested in delaying their projects further and fully assess the opportunities and risks associated with the larger funding and repayment responsibility. Had the guarantee been introduced early on and fully discussed and analyzed as part of the entrepreneurship training and business plan preparation, managers believe that many entrepreneurs would have come up with larger, more ambitious business ideas and would have been willing to take on a loan.

Summary of Key Lessons Learned on National Level Approaches for YFS

The ESAF program provides an in-depth glimpse into the complexities of country-level programming. By breaking down the different interventions into macro-, meso-, micro-, and client-level approaches, it is easier to identify which types of programming will have the largest impact within the constraints of an institution’s technical and financial capacity. This example also highlights the importance of taking a macro-level approach to assessing financial inclusion for youth and to identifying potential linkages and partnerships that can guarantee effective project design and large scale implementation. The ESAF project serves as an example to governments and donors that may be interested in funding more country-level YFS programming in the future.