recommendations 1. 2. 4. 3. Global Stocktaking Case Studies 1. - - PowerPoint PPT Presentation

UNLEASHING YOUTH: IMPROVING

ACCESS TO FINANCE FOR YOUNG ENTREPRENEURS

Evidence from a Global Stocktaking

Patteera (Mae) Chaladmanakul, Susannah Horton, Ammar Khalid & Helena Molina

BACKGROUND

• 1. SAIS + SME Finance forum
• 2. Global stocktaking case studies
• 3. Good practices & policy

recommendations

1. 2.

3.

4.

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4.

Global Stocktaking Case Studies

NGO International Organization Government Commercial Bank MFI Accelerator FinTech Investment Company Consulting LEGEND:

Global Stocktaking Case Studies - geography

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Activity: providing access to finance for 2 young entrepreneurs

ALEX DANI

• Urban Philippines
• SMEs comprise 99.6% of all businesses in the

country but account for little GDP growth

• 105/189 in WB Doing Business report
• Securing licenses to start a business is large

financial and time burden

• 26 years old
• College-educated
• Textile social enterprise co-founder
• Won grant from business incubator
• Business has a storefront
• Failed to qualify for state-bank loan
• 29 years old
• History of unemployment

 wants to start a small salon

• Informal skills training

(worked at a salon for last 3 years)

• No source of collateral
• Per-urban Ethiopia
• High gender inequality

(107/112 Economist Women Econ. Opp. Index)

• Commercial banks: high
• min. loan sizes and

excessive collateral reqs.

• MFIs: group lending and

micro-firm loans, max loan sizes are too small

FINDINGS

• 1. Financial services
• 2. Non-financial services
• 3. Policy recommendations

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4.

FINANCIAL SERVICES

• 1. Early-stage market research
• 2. Flexible criteria for assessing youth
• 3. Tranched financing
• 4. Customized products
• 5. FinTech innovations

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Early-Stage Market Research

• Deeper understanding of needs and preferences
• Diverse methods and stakeholders
• Partnering with third parties can mitigate high cost

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Flexible Criteria

• Enterprising tendencies &

business acumen

• Personality, behavioral,

psychometric tests

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Tranched Financing

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Business performance achievements Building financial track record Skill acquisition

Customized Products

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Zero or alternative collateral Match payment schedule to cash flows Develop products to have flexible or reduced interest rates

Image Sources: (1) http://www.takepart.com/article/2015/08/05/hello-tractor/ (2) https://www.businessnews.com.ph/how-to-start-a-sari-sari-store-even-with-a-small-capital-20151022/ (3) http://ifad-un.blogspot.com/2015/02/close-up-on-young-rural-peoples.html

FinTech: Financial + Technology

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Cut costs Improve product quality Overcome geographical constraints Devise more accurate financial risk assessment

• 1. Mentoring
• 2. Entrepreneurship education and

training

• 3. Coordinating closely with

financial services

NON- FINANCIAL SERVICES

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Mentoring

• Provide sustained mentoring
• Leverage existing networks
• Use local champions or industry

experts

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Entrepreneurship Education

Financial Literacy & Business Training

Ensure context-specific training Adapt education to stage of fund disbursement

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Coordinating with financial services

• Partnerships help overcome institutional capacity constraints
• Linked partnerships

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Policy Recommendations

Amend financial regulations Finance young entrepreneurs directly or by incentivizing the private sector

Policy Recommendations

Foster an entrepreneurship ecosystem in the economy Ensure better data collection and dissemination of age- disaggregated data Improve digital infrastructure to facilitate young entrepreneurs access to finance

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ADAPT

Financial Products

INTEGRATE

Non-Financial Products

FACILITATE

At the Policy-Level

QUESTIONS