Effective Integration of Financial Services into Economic Opportunities Programming for Youth

SEEP Network, MasterCard Foundation
Resource Type: 
Publication Date: 
Sep, 2015

The United Nations Population Fund reports that there are 1.8 billion young people between the ages of 10 and 24, with 89 percent of them residing in less-developed countries (2014). In Sub-Saharan Africa, minors often account for more than 50 percent of a country’s population.

Moreover, by 2050, the world’s population will increase by 2 billion, an increase of 28 percent, all of whom will require access to health and education services, and eventually to jobs and self-employment opportunities.

With appropriate knowledge and tools, youth can be financially empowered to access economic opportunities in a sustainable manner. Although they represent a large potential market, the integration of youth into the formal financial system is still a relatively new concept in many countries. Access is limited by a lack of financial education, restrictive government policies, inadequate financial products, and limited awareness among Financial Service Providers (FSPs) of how to include youth in their portfolios.

Progress has been made in increasing financial inclusion for youth. The World Bank’s Global Findex database reports that, globally, 46 percent of youth aged 15–24 have accounts at formal financial institutions, up from 37.9 percent in 2011. Increasing youth access to financial services is vital, but it is only a first step; usage of these services is also critically important. Despite almost half of the world’s youth owning a savings account, only 18 percent actually saved in this account in 2014. As an example, in Sub-Saharan Africa one in five young people owns a savings account, yet only 11 percent of youth actively used this account in 2014.

Research shows that young people in developing countries do earn money, mainly from stipends, gifts for special occasions, and informal jobs. Most of this money ends up being spent on household expenses and leisure activities, while the remainder is saved through informal mechanisms because of a lack of basic financial management skills and also due to the inaccessibility of financial services.

Financial Inclusion
Sub-Saharan Africa
Financial Capability
Financial Literacy/Education