Microfinance’s greatest opportunity cost: children and youth
Editor's Note: this article originally appeared in 100MillionIdeas.org
Schoolchildren in Colombia interviewed during Global Money Week
Children and youth suffer disproportionately the effects of extreme poverty, yet they are largely left out of the picture in microfinance. This is even more surprising given that they have the greatest potential to develop their financial capacity and become empowered and knowledgeable clients in only a few years time. They are today’s potential and will be tomorrow’s (micro-) entrepreneurs – or not.
In 2010, a staggering 400 million children and youth lived in extreme poverty, and a total 1 billion live in poverty. The effects of extreme poverty on children and youth are exponential: malnourishment and general poor health, in combination with further social and economic exclusion during their formative years, lead to high levels of illiteracy and school dropout rates which consequently cause poor physical and cognitive development. With no or extremely limited access to (formal) financial services, children and youth are not able to build assets or develop a savings/credit score that would increase their chances for later access to (micro)finance services. In later life, these factors severely affect their access to the job market, their ability to set up successful MSMEs, or their access to (micro) loans thereby compounding their chances of producing a successful livelihood. By failing to make relatively small investments in the younger generations, major opportunities are missed.
CYFI and the Campaign: a shared commitment and high-potential partnership
For these reasons, Child and Youth Finance International (CYFI) is very excited about its fresh partnership with the Microcredit Summit Campaign (the Campaign), which we believe reflects a common commitment to change this state of affairs. Formally announced during the October 2013 Partnerships against Poverty Summit in Manila, Philippines, this Commitment holds great potential to reshape the future of microfinance and make it more inclusive to children and youth.
CYFI’s two Commitments to the Microcredit Summit Campaign’s Goal of helping 100 million families lift themselves out of extreme poverty, thereby taking a major step towards the end of extreme poverty by 2030 are: :
- Supporting the measurement of movement out of poverty by including the collection of client poverty measurement data from partners in our 2014 data collection process, and
- Seeking to establish 25 action plans for youth inclusivity with national government partners by the end of 2014.
The Campaign has committed to the CYFI 2015 target of reaching 100 million children and youth in 100 countries through safe financial inclusion and financial education by:
- Incorporating child and youth-inclusive indicators in the annually-collected Institutional Action Plan collected by the Campaign and to record and make that data available to CYFI
- Collaborating with CYFI to develop partnerships linking both organizations’ overall goals
- Working with CYFI to collaboratively develop conference and event agendas which incorporate overlapping areas of each organization’s respective agendas
CYFI leads the world’s foremost multi-stakeholder movement on Child and Youth Finance, bringing together government, the private (financial) sector, the social sector, and academia. The Movement’s key goals for 2015 are to give 100 million children and youth access to safe financial services and high quality financial education. Launched in 2011, CYFI has begun collaboration with governments and stakeholders in over 100 countries, and has already reached over 18 million children and youth. Despite its age, CYFI is and has been supported by the European Central Bank, UNICEF and UNCDF, the MasterCard Foundation, MasterCard WorldWide and VISA.
How can you get involved?
CYFI and the Campaign invite, and aim to work closely with, MFIs that would like to move forward their child and youth agenda and develop or scale appropriate financial inclusion programs for this segment. CYFI can support MFIs in their program development through expert support, multi-stakeholder scaling strategy and partnerships, and related knowledge exchange of good practice and lessons learned.
CYFI and partners ring the NASDAQ opening bell in New York City. In the middle is CYFI Founder and Managing Director Ms. Jeroo Billimoria. To her left is Ms. Susan Davis (BRAC USA) and to her right Mr. Marc Bichler (UNCDF).
CYFI and the Campaign also invite all MFIs to participate in Global Money Week. Global Money Week is a money awareness event which will take place from 10-17 March 2014. During this week, worldwide activities will be held to engage children, youth and their communities to learn how money works, including saving, creating livelihoods, gaining employment, and becoming an entrepreneur. MFIs can get directly involved by organizing and participating in events in your local communities during #GMW2014. This can take numerous forms, for example:
- by directly organizing local GMW money-awareness and/or financial education activities at schools or in your communities;
- by initiating local fundraisers to support local schools, charities or financial education projects;
- by inviting school classes to company offices so that they can learn about money, careers, and business and entrepreneurship; and/or
- by organizing music or sports events with a financial education theme during GMW.
For more information about Global Money Week, please visit the project’s website at www.globalmoneyweek.org. GMW also has a social media presence on Facebook (@GlobalMoneyWeek) and Twitter (@GlobalMoneyWeek).
CYFI looks forward to collaborating with the Campaign and all of its members to drive the global child and youth finance agenda and to reshape the future of microfinance!
For more information, please contact:
Bram Stoffele, Financial Inclusion Manager
Child & Youth Finance International