Financing Africa’s Rural Youth
Much of Sub-Saharan Africa is on the verge of a crisis. By 2035, the International Monetary Fund estimates the number of Africans joining the working age population will exceed the rest of the world combined. To fill this surge, 11 million jobs will have to be created each year for youth for the next decade across Africa.
Over 600 million youth, under the age of 25, live in Africa, and 72 percent are currently unemployed. With over 60 percent of Africans living in rural areas, could the agricultural sector generate enough jobs to support the youth?
At the recent Young Africa Works Summit, organized by the MasterCard Foundation, attendees sought answers to this important question.
FINCA’s answer: investing in alternate delivery channels to help the unemployed in rural areas gain access to financial services, to build businesses and create jobs.
FINCA’s own Alejandro Jakubowicz, Deputy Regional Director of FINCA Africa, was a featured speaker on the Summit’s panel on financial services, “Youth Financial Services, Innovations in Youth Access to Finance and Agri-finance.” Speaking on FINCA’s experience in the Democratic Republic of Congo and how financial services can help youth entrepreneurs and farmers in the agricultural sector, Alejandro also discussed the large segments of DRC’s population that were unbanked, many who lived far from bank branches.
In 2012, FINCA launched agency banking in the DRC, to help reach more remote entrepreneurs, especially in rural areas. Banking agents provide financial services to FINCA’s clients at retail locations with the help of a POS machine.
“Agents and other low cost delivery channels are more effective than traditional branches to develop untapped markets where young people are the majority of potential clients,” Alejandro said at the event.
Since agency banking was launched, FINCA has utilized two methods to help youth to gain access to financial services: placing agents near schools and universities and conducting savings accounts drives geared at youth. Today, more than 20 percent of all agent transactions in the DRC comes from youth clients, thanks to these efforts.
As more and more youth in the DRC are able to access financial services through alternative delivery channels, such as agent banking and the POS machine, the potential for young farmers and entrepreneurs in rural areas to create their own jobs and employ others in their communities becomes more a reality and less a question.