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Promoting Inclusive Markets and Financial Systems

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Linking Ugandan youth with financial services presents a host of challenges, as FINCA Uganda illustrated to the PLP partners at the online learning event. FINCA presented on their launch of the StarGirl savings program in Uganda, and asked the partners for their suggestions on dealing with the issues they faced. A. Uganda´s challenging environment: Uganda is a landlocked, fertile country with many lakes and rivers, as well as an abundance of natural resources. Despite these assets, Uganda is also one of the poorest nations in the world, having suffered from years of economic and political instability. Ugandans themselves come from nearly 40 different ethnic groups and speak several different local languages. Youth make up a huge part of the population: 49% of Ugandans are below the age of 15, and 20% are between the ages of 15-24. Economic challenges In Uganda, 52% of the population lives slightly below the international poverty line of US $1.25 a day. Eighty-three percent of 15- to 24-year-olds are unemployed and generally have no money or steady source of income. Research has shown that youth ages 10-24 do have some savings, but lack a secure place to keep them. The financial needs of Ugandan youth vary greatly depending on whether they live in urban or rural regions, making it difficult to standardize financial service activities. Social and economic challenges According to the 2009 African Development Indicators Report, 47% of Ugandan females and 15% of males between ages 15-24 are parents. As almost half of the young girls are mothers has a significant impact not only on the economy and society, but also on what youth need in terms of financial products and services. From FINCA-Uganda’s experience, girls often are easily disrupted by social, political, and economic challenges that prevent them from accessing financial services. Uganda does not have a strong culture of saving. The country’s average income is not enough to cover day-to-day living expenses in many households, so there is often no money left for savings. Because many adults do not save, youth have few financial role models. Literacy levels are also low, despite the government’s attempts to support community education programs. Another challenge is the lack of government support for financial education training in schools and at the community level. Youth mobility FINCA Uganda faces a great challenge in ensuring that all participants in the StarGirls savings program can access the service and stay in contact with FINCA for the project’s follow-up activities. Maintaining these connections can be difficult, especially when clients move to different communities or localities in Uganda. Sometimes a young person’s relocation is entirely an influential adult’s decision. But higher standards of living in Kampala have attracted many people, especially youth, leading them to leave their homes in rural areas and try to start new lives in the city. Some youth keep moving from place to place in search for a better life. It is sometimes hard for them to stay in one place for more than a year. This mostly applies to out-of-school youth, and young people with parents who do not have permanent residences and could be caught in the rural-urban migration themselves. B. What is being done In the product development and design phase, FINCA Uganda used the results of their research from the urban slums of Kampala to modify and improve the StarGirls savings program in several ways:
  • The opening balance for StarGirl accounts was lowered to Sh.3000 (US $1.50), compared to other FINCA savings products with opening balances ranging between Sh.5000 to Sh.250,000, in light of young people’s often low and irregular income.
  • With the legal dimension of working with minors in mind, every StarGirl 10-17 years old is required to have a female mentor at least 18 years old. This rule addresses the vulnerability of the young girls, and possible risks of social and financial abuse to minors.
  • Field officers and mobilizers directly assigned to StarGirl field activities and mobilization must be female. Any person provided by the community-based organizations must be aware of the specific issues concerning the target group.
  • In addition to providing each StarGirl with a personal FINCA StarGirl savings account operated at the local FINCA branch, FINCA adopted a group methodology at the community level. Social groups serve to address the integrated population and issues with poor infrastructure that can hinder important programs, such as financial education and health/wellbeing training sessions. These programs are crucial to the community as well as to FINCA’s objective of sensitizing youth to health and finance issues in large numbers.
  • Social group meetings are conducted over the weekends within the local neighborhood, where parents can easily check on their kids. All meeting venues and activities to be conducted must be communicated to the local authorities to build trust within the community.
  • To mobilize and attract more youth, FINCA offered incentives such as piggy banks, T-shirts, pens, and keychains for opening StarGirl accounts.
  • Because youth groups tend to tire of routines, FINCA embarked on quarterly outdoor activities during school term holidays to keep the StarGirls active and lively in their groups.
  • The financial education training and sensitization is easily conducted in English, but with the low literacy level, particularly for out-of-school and rural youth, field officers and trainers deliver this service in the local language.
  • FINCA involved community opinion leaders in the financial education trainings to win their support for the FINCA financial products, particularly the FINCA youth products (FINCA Junior and FINCA StarGirl) and FINCA Target savings products.
C. PLP partners’ suggestions to FINCA Uganda
  • So much water, fertile land, and unused labor is an invitation for agriculture.
  • Focus less on professionalism and more on basic training.
  • Create delivery points with resources to communicate with youth and make them understand how important they are in the economic development activity of the country. Guide them to explore all opportunities.
  • Other suggested measures:
  1. Promoting education and training
  2. Avoiding early school drop-outs
  3. Job search support
  4. Activation programs and employment subsidies targeted at youth
  5. Tie-ins with corporations to facilitate education, employment, marketing, and various other direct and indirect benefits to pass onto youth
  6. Development of basic infrastructure to facilitate youth engagement with various income-generating activities
  7. Developing commercial agriculture activities that target youth, with the financial backing of corporate banks and corporate partnerships
  • Recognize the potential of both formal and informal leaders:
  1. They play a key role in educating target populations.
  2. Train them on the organization’s basic methodology and practices so they can align themselves with the organization’s mission, and help identify other groups working with youth.

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