Youth economic inclusion: where do we stand?

  • Jérémie CHAPET, ADA
  • Speakers
  • Walid JEBILI, Enda Tamweel, Tunisia
  • Tania HAIDARA, Swisscontact Uganda

    Professional integration of youth is a challenge. ADA and others are rising to this challenge by supporting MFIs to develop products suitable to the needs of this target group. In this session, three presenters explained how MFIs can take up the challenge of vocational integration to reach impact: 1) Working towards development and youth empowerment (Enda Tamweel); 2) Youth employment projects - Ulearn UG / Local Skills Development for Youth (SwissContact); 3) Young entrepreneurs and financial inclusion - ADA’s experience (ADA).


    Walid JEBILI introduced Enda Tamweel as an NGO which is a pioneer for economic and social inclusion. They specifically target youth and women. In 1995 they started an MFI which grew into a leading MFI in Tunisia that served 310,000 young people since start-up and disbursed 730,000 loans with a total value of EUR 295 million.

    In 2011, the NGO and MFI started to offer business creation services through financial (microfinance) and non-financial (NGO) services: credit-plus-business support. The business creation programme targets unemployed youth throughout Tunisia, including vulnerable areas, who wish to start a business but lack capital, business skills and knowledge. Many of these youth went to university, but remained unemployed, partly due to the political revolution in Tunisia.

    The programme assists these young people with entrepreneurial skills from idea to implementation. Until now, the programme has resulted in 16,500 loans and created 14,000 businesses. Out of these businesses 50% are run by women. The survival rate of the newly created businesses was high at 75% after three years.

    The major challenge for the programme was to encourage young people to become entrepreneurs. Many of them were initially people in need, who were first looking for a wage earning job, but could not find a secure job because of the economic situation in the country.

    The youth that came to participate in the Entrepreneurship Village incubator programme did not necessarily have innovative ideas. Starting their own business was not something they were thinking about when they were studying. Many of them were hesitant and took a long time before deciding to become an entrepreneur. The programme experimented with processes and products to adapt to the needs of the target group. It had to allow for reflection by the youth to discover that they can be entrepreneurs, to become innovative and foster personal development.

    The Village Entrepreneurship programme supported 1,700 youth, created 700 businesses and 2,800 additional jobs. The programme gives hope to young people and transforms them from people looking for opportunity to people who create opportunity. 

    Tania HAIDARA continued that in Uganda, Swisscontact provides local skills development for youth in three sectors prioritised by the government: agribusiness, hospitality and catering and construction. Agriculture is the dominant sector in the country employing over 60% of youth. 

    Swisscontact’s model has a learning focus: it works with groups to allow the youth to learn from each other and provide peer leadership. Moreover, they apply a holistic approach and focus not only on technical skills development or financial services, but offer a complete learning cycle: 1) Workforce development; 2) Leadership skills; 3) Work readiness and healthy living (e.g. social skills); 4) Access to markets; 5) Business support services (e.g. entrepreneurship and access to information); 6) Financing mechanisms.

    Swisscontact is not a professional vocational training organisation. Instead, the NGO uses a market-driven model to facilitate solutions by connecting private sector businesses facing constraints (e.g. lack of high quality products) with youth that can address these constraints. Haidara argued that it is important to stress that youth must not be introduced to the private sector as people in need, but as people that can provide valuable solutions (e.g. high quality products). The youth receives support with identification of business partners, business model development and business case development to address the constraints. 

    Haidara continued by arguing that skills development and additional support must be tailored to the needs of individuals. In the case of a young chili farmer, facilitation of skills development by the farmer could be complemented by providing access to land, by connecting land owners (including government) to young people.

    The private sector and youth can do business together based on the contract farming model. Despite widespread prejudice about this model, often related to fixed prices in contracts, this model can lead to good results. Inclusion of a minimum price is one of the possibilities to prevent defaulting on the contract. In addition, the youth needs to be informed about market dynamics and price fluctuations, and convinced that contract farming provides income over long time. The contracting is an aspect of doing business which requires communication and negotiation skills and a certain level of self-esteem. Development of such soft skills and fostering market linkages are all part of the holistic approach of Swisscontact.

    Next, youth receive support with accessing finance for investment or to hire other people for harvesting. The youth does not necessarily have to go to a bank for a loan. They can use savings instead. This knowledge is part of financial literacy on how to save money. Financial literacy allows young people to take charge of their own lives.

    Despite a poor history of performance of SACCOs in Uganda and a lack of trust by young people, community savings groups can offer financial capabilities to the youth. When the youth has established a link with the private sector and negotiated a contract, the contract provides a guarantee to the commercial bank or MFI, which can then provide credit. Besides the banks, the private sector is often willing to provide products (e.g. seeds) to the youth when they have a contract with the company. Every time the youth sell their products, they receive money on their bank account. They become bankable young persons.

    ADA then explained how they support MFIs to address youth in four steps: 1) Train youth on financial literacy and entrepreneurship (paid by MFI). This training gives MFIs the opportunity to meet youth, potential future clients, and explain about their products; 2) Provide a start-up loan. Through the training MFIs can address the problem of a lack of collateral and financial history by youth. In ADA’s experience, MFIs using this model can offer interest rates as low as 10-15%; 3) Cooperate with other organisations that offer relevant non-financial services to the entrepreneurs, such as Chambers of Commerce and vocational training centres; 4) Set up guarantee funds which can allow the MFIs to take more risk.

    One of the main lessons learned by ADA was that the MFI must have a strategic orientation on youth to become successful. They must be able to manage risks related to the absence of a strong financial history.

    Youth products are most attractive to new MFIs which are more willing to make high follow-up expenses for these loans and take more risk than most larger MFIs. By targeting this underserved segment, the new MFI can compete with the existing MFIs and grow their portfolio in the long-run.

    Partners providing non-financial services must ask participants to make a financial contribution instead of offering free services, as this will improve the quality of services. Moreover, partnerships are difficult to manage when the partners providing non-financial services need support themselves. 


    An audience member argued that youth can be broad group and asked the panellists to define youth. Haidara defined youth as people aged 18-24. She continued that this age group in Uganda included many youth who have left school and 30% of these youth are mothers. This is a stigmatised group that needs specific skills, such as life and leadership skills. Moreover, the young mothers must be allowed to combine farming with social responsibilities at home. Chapet explained that ADA applies a wider age range (18-35) than Swisscontact to define youth. The age range to define youth is primarily dependent on the country.

    Another audience member raised the issue of credit history. How can financial institutions deal with the lack of a credit history by youth? Haidara provided an example from the Swisscontact programme. Young farmers who do not have collateral need access to land and Swisscontact facilitates access to land from the state by convincing the government that the youth in their programme will be capable of making the land productive and earning an income by producing products that the market needs. Chapet explained that financial institutions can partly manage the risk of a lack of credit history by keeping credits to a strict minimum to prevent over indebtedness. Additionally, financial institutions can apply guarantee fund mechanisms to reduce risks. Jebili continued that the MFIs can reduce risks by diversifying their portfolio in terms of types of youth and types of activities. To illustrate, some businesses focus on high quality and others on high yields. Finally, an audience member commented that NGOs can enable youth to obtain advice and support business plan development to present to MFIs.