Executive summary: Lifting youth participation through financial inclusion

Worldwide, there are 1.2 billion young people aged 15 to 24 years, expected to grow to 1.3 billion by 2030. Lower-income economies have a larger share of young people, according to UNDESA.¹ Young people have big ambitions.
They aspire to have stable families and stable incomes, to invest in their own education and that of their children. For most, their reality is one defined by scarce resources and survival on a portfolio of activities. The decent work deficit in low-income economies means the aspirations of young people too often remain out of reach.Through our partners, we asked young people (aged 15 to 34) in 21 countries about their finances. This included questions about their aspirations and financial health. We also asked about young people’s banking, how confident and informed they feel in accessing financial products and services, and the barriers as they see them.There are many financial services and products on offer, and the young people surveyed have access to a number of these. More than half (51%) of young people in the survey have a bank account, 44% used mobile money, 43% used electronic payments, and 30% received transaction history and payment statistics—but they also say that they prefer not to use most financial services and products. Young people tell us it is because what is available does not meet their needs, mainly by being too costly and too far away. In many cases, young people perceive the mix of barriers to be too high to even contemplate accessing and using what is on offer.

Our survey, alongside insights from interviews with 38 stakeholders across 18 implementing partner institutions and multilateral organisations and backed by desk research, draws three key insights to help lift the participation of young people in financial systems in ways that help them work towards their full potential:

Young women and business owners lack financial information. While they are well-informed by family and friends, they lack detailed, useful information from the formal financial system. The formal financial system can fill a gap in the provision of reliable information on the costs and benefits, as well as how to make products and services work for them.

Products and services are often not fit for purpose. Young people should be put at the heart of designing products and services fit for them. Design needs to take place with specific segments of the youth population in mind—market segments include young women, entrepreneurs, urban dwellers, rural dwellers, and young people living on low incomes—and according to specific cultural and regulatory contexts.

There is a strong and needed focus on financial education for young people—particularly for those from disadvantaged groups. Our group of young people, though, had a good understanding of the products and services out there and of their own financial needs. The missing part of the financial literacy puzzle was information and advice from formal sources on how to manage their money, make decisions, and what financial services can do for them when they need to seek support.

We surveyed 1270 young people across 21 countries

Of which...

54% were 25-35 years old,

42% are 18-24 years old and the remainder under 18.

48% are entrepreneurs

32% are women entrepreneurs

39% have one to four dependents

81% live in towns and cities

84% are educated to at least high school level

The first section of the insights report presents why financial inclusion for young people matters. The section that follows lays out what young people told us financial service providers offer them and what they want. Overall, young people want help to manage their money and to keep it safe, but often products and services are not fit for purpose for them. The products on offer on the market are often out of reach for young people and micro-businesses on low-incomes and in precarious situations.In the following section, we look more closely at entrepreneurs and business users of bank accounts before honing in on women entrepreneurs. Business users need products that fit their wealth range and services that can protect them against supply constraints. Meanwhile, entrepreneurs need products that don’t come with such high costs. Similar to many others, we find these barriers are more pronounced for women and that women entrepreneurs may also self-select out of the market by perceiving the barriers to be too high. The findings also suggest that trust needs to be built with consumers and that providers need to focus on building consumer ability and their access to information. Digital solutions provide greater scope of access, build credibility, and provide information. However, reliable information and protection is crucially needed for young consumers of financial products and services.In the final sections, we explore young people’s financial health and access to financial literacy that can help them “learn, earn, and grow.” We argue that in the context of both educated young people and low-income groups, financial literacy needs to focus on ‘ability’ as well as ‘knowledge.’ Fresh tools can enable the practical application of what young people learn and engage young people in the system. The survey findings suggest a particular gap for financial service providers to fill: giving young people useful, practical information about the benefits and pitfalls of those products and services.