Members of the Kifaru Youth Group, a microfinance loan group based in the Nairobi suburb of Kawangware, meets in June to update their finances. The group is supported with microloans from Equity Bank’s Kawangware branch, which opened in 2007 and has since seen its customer base grow from 5000 members to 80,000. “Kawangware is a slum that is becoming a middle-class area,” says Equity branch manager Ben Kithuli.
Kifaru chairman Godfrey Chege, a chicken dealer, says that whereas youth in Kawangware typically lack title for loan collateral, “here we can meet to guarantee each other with our savings… The need for capital is the biggest challenge, but we found that Equity had the product we needed.” The group has established savings, loans and emergency accounts with Equity; a number of members have used loans both to support their businesses and for home improvements. OPIC supports Equity through the Helios Sub-Saharan Africa Fund I, which is providing $50.7 million to the bank.
According to a 2012 report by the UN Capital Development Fund, the current global youth population of 1.2 billion is the largest in history, and represents approximately 18 percent of the world’s population. Eighty-five percent of young people live in developing countries.
Given the high levels of youth unemployment in developing countries, governments are increasingly looking for proactive approaches to help young people realize their full economic potential. Increasingly, youth represent the next wave of new clients for financial services providers, with the population expected to grow by one billion over the next decade, particularly in sub-Saharan Africa.
With its great entrepreneurial energy and ubiquitous cell phone use, Kenya is an ideal crucible for innovation in youth development. The number of mobile phone subscribers below the age of 30 is predicted to increase in 2012 throughout the world; in sub-Saharan Africa, the number is projected to rise to 108 million. Youth who are often technologically savvy and most likely own or have access to a cell phone may be more comfortable using this medium to access their savings account.
That trend could very well dovetail with another: many microfinanciers are moving from access to finance to ‘access to life’ issues, which could see cell phones double down as conduits for services such as health insurance, renewable energy programs, education finance and the like.