Rural Youth Financial Inclusion: A Bridge Too Far?

January 2017

Our President Tim Nourse participated in the webinar on January 11th that discussed whether rural youth financial inclusion was possible or simply still “a bridge too far”. He was joined by experts from USAID, RTI, and FINCA, who engaged in a lively discussion with 136 webinar participants.

Rural youth tend to be the least financially included: their financial inexperience and limited assets exacerbate the basic rural finance challenges of low population density and poor infrastructure.  Nonetheless, rural youth demand financial services to manage their resources, build assets, and invest in livelihoods or education. How should the financial sector react to this situation — try to serve rural youth directly with new products and services, focus on the “near adults” in a rural finance strategy and deepen services over time, or ignore this population until the challenges of rural finance can be overcome?

Paul Nelson, USAID Digital Finance Advisor, said that the Agency sees digital finance as the key strategy for financial inclusion in general, and especially for hard-to-reach rural areas. He emphasized that the potential cost savings of digital finance — reducing transaction costs by as much as 30% — could bring an array of financial services within reach of tech-savvy rural youth populations.

Tim Nourse drew from Making Cents’ experience to confirm the importance of this approach but pointed out other key lessons as well, such as product adaptations for both rural and youth contexts; partnerships with other actors; and capacity building of youth. Most importantly, the best strategy for rural youth financial inclusion could be through adults — as the infrastructure and products that successfully served rural adults could be adapted to target rural youth.

Sarah Mattingly, RTI’s Senior Workforce and Youth Economic Opportunity Specialist, spoke about RTI’s USAID-funded K-YES project in Kenya that builds the skills of rural youth as a pre-requisite for access to even simple financial platforms such as Village Savings and Loan Associations (VSLA). While recognizing the potential of technology to reduce costs, she noted the still weak digital infrastructure in rural areas as a particular challenge for expanding digital finance.

Alison Boess, the former Deputy CEO for FINCA Microfinance Bank Nigeria and now Senior New Business Development Officer, described how FINCA had tried to target children and younger youth cohorts (up to age 24) but found it too expensive to sustain. Instead, they opt to use digital platforms to lower costs and serve rural adults and the most economically active (and oldest) youth cohorts.

Panelists agreed that it matters what youth you were serving. Financial inclusion for older and economically active youth is definitely feasible, especially when facilitated by digital platforms.  VSLAs also offer a promising means for helping younger youth cohorts build assets and skills.  Nonetheless, for most rural youth, formal financial services still remain out of reach.

Watch the full webinar recording and view the slides.