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Access to youth finance


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Creating Access to Financial services for the youth through Village Savings and Loans (VSLs)

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Access to youth finance

  1. 1. Creating Access to Financial services for the youth through VSLAs Prepared and presented by: Asum-Kwarteng Ahensah Program Support Manager Plan Ghana
  2. 2. Presentation outline o Background to Financial access (Exclusion) o Plan Ghana Response (Phase I) o (VSL Methodology) o Multi-level partnership to scale up o Reach: Across Africa and Ghana o (Phase II) : youth-driven o Challenges o Recommendations
  3. 3. Background• Access to financial services by the poor is constrained by inadequate institutions that provide appropriate services (chiefly savings, but also small, flexible loans); • Some populations (rural settlers, women, youth, migrant tribes etc) are more excluded --- due to distance, social and other barriers. • Lack of access to viable financial services deprives communities of the opportunities to build cash assets through savings and to raise financial capital to initiate and expand their businesses. • Populations remain in poverty !! 07/18/13
  4. 4. Plan Ghana’s Response (Phase I) • Design and implement programs that promote financial inclusion via Village Savings & Loans (VSL) methodology: Projects:  Barclays-funded Banking on Change (BOC)– 3-year duration targeting Adults (2009 to 2102)  CIDA-funded Promoting African Grassroots Economic Security (PAGES) project. 5-year duration targeting youth 07/18/13
  5. 5. Basic features of the VSL model  VSL methodology is designed for the very poor (financially excluded) . Enables them to manage their household cash flow more efficiently and flexibly and to invest in income generating activities that secure and stabilize cash income:  self-selected group of people living in the same community, who pool their cash into a fund from which members can borrow  Group membership could be: pure stand (e.g youth; women; men); or mixed  Group-dynamics regulated by agreed constitution  Borrowed money is paid back with interest, causing the fund to grow !  After about a year, the fund is shared among the members in proportion to each one's savings (shares). This process produces pay-outs for members.  Members may receive a return on their savings investments 30%-100+% per annum!!!.  The groups normally re-form immediately and start a new cycle of savings and lending. 07/18/13
  6. 6. Value additionValue addition • Ability to mobilize own savings on a regular basis which serve as loan fund from which members borrow at ease without any form of collateral/guarantor • Provide a social fund against emergencies. • inculcates habit of regular savings, provides relatively easy access to financial services by the excluded; • Relatively low cost • ensures social cohesion or unity even in communities difficult to mobilize (e.g: we have 3 Fulani groups!!) 07/18/13
  7. 7. Multi-level partnership to scale-up • . 07/18/13 UK:UK: •BarclaysBarclays- (Corporate/Private) •Plan InternationalPlan International (INGO) •CARECARE (INGO) AfricaAfrica:: •Barclays : Ghana, Egypt, Uganda, Kenya, Tanzania, Kenya •Plan Ghana, Egypt; Uganda, Kenya, Tanzania, Kenya •CARE Ghana, Egypt; Uganda, Kenya, Tanzania, Kenya Ghana:Ghana: •Barclays •Plan Ghana, •CARE Ghana •9 LNGO implementing partners •Community Volunteers (CVs) •Village Savings & Loans Groups (Adults + youth)
  8. 8. Reach Across AfricaReach Across Africa • Within 3 years, established over 21,000 village savings & loans associations (VSLAs) with over 500,000 membership in Ghana, Uganda, Tanzania and Kenya. • Accrued over $6.5m in savings • Loaned out over $5m. • Nearly 500 groups formally linked to group accounts in branches of Barclays 07/18/13
  9. 9. Reach in Ghana Indicator BOC (predominantly adult-based ) PAGES (youth-based project) Total % Youth Total # VSL groups formed 2,927 349 3,276 11 # groups graduated 1,596 26 1,622 1.6 Total membership 77,372 7,808 85,180 9.2 # members graduated 41,922 667 42,589 1.6 % women 77% 73% 75 Cum. savings mobilized GHC 4,093,296 (US$ 2m) GHC449,184 (US$225,000) $2.25m 10 Total Loans disbursed GHC 3,458,652 (US$ 1.7m) GHC349,118 (US$175,000) $1,875,000 9.3 Av. Cost/member GHC 20 (US$10) GHC 18.60 (US$9) na na Attendance Rate 93% 88.3% Retention Rate 99.3% 98.8% 07/18/13
  10. 10. Selected project outcomesSelected project outcomes  Improved access to loans by VSLA members in terms of # of beneficiaries, size of loan and # of times that loans are available (VSLAs account for almost all loans contracted by their members in the past 2 years).  % of VSLA members who contracted loan increased from 39.8% to 73.2% during 3-year project duration.  VSLAs are the major savings mechanism for members  % of VSLA members hiring labour increased from a baseline of 39.8% to endline of 50.8%  Average amount invested in IGAs increased from US$60 to US$110 ( positive economic impact although not enough to reduce susceptibility to poverty). 07/18/13
  11. 11. Selected ImpactsSelected Impacts • Nearly 70% of VSLA members who indicated improvement in quality and quantity of their meals attributed the change to VSLA. • Close to 80% of members reported improved access to children’s education attributed the change to VSLA. 07/18/13
  12. 12. Phase II (Youth-led): objectivesPhase II (Youth-led): objectives  Over 200,000 INDIRECT beneficiaries will be reached through households  Support youth (under 35 yrs) to set up 1,650 youth savings & Loans groups with at least 41,000 members  Integrate skills-building to achieve additional impact:  financial literacy, employability and entrepreneurship skills training to beneficiaries.  Expand geographically through training and use of community volunteers (CVs);  Support the establishment of around 41,000 sustainable IGAs and small businesses 07/18/13
  13. 13. Key Challenges • Youth migration tends to negatively impact on their mobilization, attention, and retention • High youth unemployment a huge barrier to savings • Potential “drain” on accumulated funds by commercial MFIs if careful linkage of VSL groups is not achieved 07/18/13
  14. 14. RecommendationsRecommendations  Employ “smarter partnerships”--- multi-level but with emphasis on strong community-based mechanisms  Move beyond access to savings & loans towards business/entreprenuerial capacity enhancement for greater impact and sustainability  Business start-up support must be “economically meaningful and viable” 07/18/13