ESAF Brief: Ryada Microfinance’s Experience Introducing Financial Services for Youth
For the past six years, numerous financial institutions around the world have undertaken intentional market research to better understand the demand of young people for financial services. However, there is little documentation that describes the challenges an institution faces in the design and delivery of these services. This brief presents the story of one MFI--CHF Ryada in the West Bank & Gaza, highlighting where it has confirmed emerging guidelines and presenting new insights for MFIs seeking to work with youth.
Ryada, which means “pioneer” in Arabic, is a leading MFI in Palestine. In 2010, it received a grant from the USAID-funded Expanded and Sustained Access to Financial Services Program (ESAF) to launch a pilot start-up business loan. An assessment of its portfolio revealed that, in 2010, 40 percent of Ryada’s clients were between the ages of 18 and 28. Those who have successfully accessed funding were either employed or self-employed. Ryada recognized, however, that the large, unemployed youth population represented an opportunity both in achieving its social mission, and in reaching a large, underserved market. Ryada is restricted by regulatory barriers to offering credit only, which limited the tools it could use to reach this market. Given this limitation, it understood how important it was to develop a product that both mitigates the chances of over-indebting young clients and restricts its own potential losses. To achieve this, the organization worked with Making Cents International to design its pilot, using its training on sound practices, youth-friendly market research tools, product design and product testing processes.
The 11-step process presented below and discussed further in the attached brief, took Ryada a full 18 months to move from decision to pilot.
- Introduction to youth-inclusive financial services training course
- Assessment of potential youth-serving partners
- Market research
- Product Design Workshop
- Identification of firms to provide basic business development services
- Visit to MFI implementing YFS
- Recruitment of Financial Analyst to provide basic BDS
- Product concept testing
- Staff training
- Recruitment and development of promotional materials
- Pilot launched