Many developing countries are marked by substantial unbanked populations with no access to a formal financial system. While some refuse to be banked on their own accord, others are simply excluded against their will. In this case, these individuals become part of the ‘non-bankable’ population, restricted by financial, geographical, or demographical barriers. This is an increasingly growing issue among young people in particular, many of whom are unable to afford fees and minimum deposit requirements or lack the necessary documentation.
Fundamentally, non-bankable youth are left with no access to appropriate, affordable, and timely financial products and services such as loans, savings, insurance, and equity. This, in turn, hinders entrepreneurship and innovation due to credit constraints and no access to finance. As a result, even if a non-banked individual has an entrepreneurial idea, they will usually forego that path in favour of safe, stable conventional income-generating jobs.
In order to mitigate these constraints and foster inclusive economic opportunities, LI facilitates access to finance for non-bankable youth in developing countries to help them pursue their entrepreneurial visions.
For instance, through our MEDst@rts project, we facilitate microfinance support to young entrepreneurs with credit constraints in the Mediterranean region. The project, funded by the EU’s ENI CBC MED Programme, mapped and established a network of 60 microfinance institutions, which we worked with to define a common strategy for the regional MFI industry. In parallel, 75 businesses were identified and supported with starting or scaling their enterprise.
To amplify impact, our current Rest@rts project capitalises on MEDst@rts’s findings and outputs to extend our efforts in fostering financial inclusion through sustainable access to finance. Specifically, it develops on MEDst@rts insights and studies and establishes channels for the MFI network to exchange knowledge and best-practices. Rest@rts also creates a digital platform that lists available microfinance schemes and acts as a marketplace for providers and seekers of financial and non-financial support. In doing so, the project will streamline the process for both ends and ensure sustainable impact going forward, beyond the project’s lifespan.
Overall, inclusive access to finance is not only important for social inclusion but also economic growth. This is especially the case in developing countries with highly non-banked populations, who, when given the means, could fuel entrepreneurship, innovation, job creation, and overall private sector development.