Researcher Sabrina Axter conducted a research about Youth entrepreneurs‘ access problems to financial services in Nairobi, Kenya. Some first results:
First round of research
My research focused mainly on the financial needs of youth and the way they would design a financial service. Hence during the first round of research I spoke to 18 youth groups that currently work with Youth Initiatives Kenya (YIKE) and engage in various income generating or community outreach activites. The first part focused on finding out about these youths’ financial, training and entrepreneurial needs and the way they have addressed these needs in the past. Main findings include that one of the main problems most youth face is the access to market. Financial problems include the lack of access to adequate start-up capital or funding for further projects. Those youth groups that have hardly any financial problems have received plenty of outside funding whereas other groups still struggle. However only few groups have managed to keep their members sustainable.
Design
The main part of my research however was to have the youth design a youth inclusive financial service that addresses the needs of these specific youth groups that require group loans, rather than individual loans. There are opportunities for youth to receive loans but these usually focus on personal loans as group loans are less favored by banks due to the higher risk associated with them. In a group it is harder to hold anyone accountable in case of default and the responsibility of each individual might be reduced due to the existence of other members who are also responsible for it. Designing a financial service with the youth meant that they outlined certain key criteria that would have to be met in terms of membership requirements, savings, loan eligibility, loan amount and interest rate, grace and repayment period, organisational structure, training and other support and how to deal with default. After designing the youth inclusive financial service the ideas were re-evaluated with the youth and with experts and consultants in the field to give further suggestions and to consider the realisability of the service.
Conclusions
In total a service was designed that has a strong savings element and caters to groups that need loans for group projects. Such a service could be started by the youth themselves in collaboration with an impartial monitor who knows the groups and has worked with the groups.
