The Futuremakers 2022 survey, conducted in partnership with Business Fights Poverty and the Murray Edwards College, University of Cambridge, heard from 1,270 young people2 across 21 countries, many of whom are living in low-income communities. The Futuremakers 2022 survey explores key questions that can help us understand how to “empower the next generation to learn, earn, and grow” through employability, entrepreneurship, and education:
How can we lift the participation of young women and micro businesses within formal financial systems?
How do we better create routes for young people to safely access financial services, while minimising risk?
Worldwide, there are 1.2 billion young people aged 15 to 24 years, with this number expected to grow to 1.3 billion by 2030. Numerically, there are more young people in lower-income economies than higher-income economies.3 Lower-income countries also have a larger proportion of young people, which presents economic growth potential known as the demographic dividend.4
A mix of interwoven barriers can lead to lower-income countries missing out on the demographic dividend. This economic benefit is brought about as young people take part in the economy. Through jobs, they contribute by paying taxes and spending income—and for those who can, through savings and investment. Financial inclusion can help usher in these benefits if we provide young people with the opportunities, protection, and tools they need as they transition to adults.
At the same time, there is an enormous deficit of work for young people in lower-income communities. This deficit means that young people often cannot find opportunities to fit their skills, make a decent living, or meet their aspirations.5 In 2021, we heard from over 450 young people and business decision-makers worldwide on young people’s hopes and challenges in developing skills and accessing quality work. In the 2021 survey, we asked what skills they felt they already had that would help them in their future careers.6 Financial inclusion has a role to play in bridging the divide caused by a deficit of quality jobs,7 and when done well, this can empower young people to reach their goals and fulfill their potential.
Futuremakers' programmes are currently developing a new approach to financial inclusion informed by the latest research, detailed below, and what our young participants have told us. We are moving to bring a focus on Financial Health to better understand how inclusion, or lack thereof, impacts the financial security, freedom, and resilience of individuals and communities.
Futuremakers is developing a pilot initiative to support the financial health of workers within supply chains. It is partnering to test innovative early-stage access to credit for young entrepreneurs aimed at improving the financial health of MSMEs. Futuremakers will use expertise with Standard Chartered Bank to respond to the need for fresh and appropriate financial education —as well as the lack of access to reliable information—raised by the young people that have fed into the initiative.
The challenge has been set by the Futuremakers' participants, and we are ready to respond. We understand that young people are ambitious. Young people already contribute economically and socially and are ready to do much more, yet are held back due to a lack of quality jobs and opportunities. Our approach to financial inclusion aims to lift young people’s participation in economic markets to help them on the path to achieving their goals, which includes improving their own lives and those of their communities.
Our starting point is the acknowledgement that financial inclusion is not only about supply but also demand.8
To include young people it is not just to ask whether banks can reach them but whether young people want, are able to use, and understand what banks have to offer, and can see any benefits to themselves.
Our 2022 survey asked young people about their demand for products and services, as well as the barriers to access from their perspective. Various other surveys show the extent of—and barriers to—the financial inclusion of young people. The World Bank Global Financial Inclusion Database (Findex), updated regularly, provides data across 140 countries on young people’s financial inclusion.9 Making Cents is with the FMO (the Dutch Entrepreneurial Development Bank) completing a compendium of barriers to the financial inclusion of young people. The insights from our research aim to hear the voices of young people—and those who work closely with them—as a spotlight amidst other global findings and emerging understanding.
Through our partners, we asked young people in 21 countries about their finances. We asked about their aspirations and financial health. We asked young people about their banking, how confident and informed they feel in accessing financial products and services, and the barriers they experience. We draw three key insights from our research, which can be translated into tangible projects and actions which improve the financial inclusion of young people:
Young women and business owners lack financial information. While they are reasonably well informed by family and friends, they lack detailed, useful information from the formal financial system. Formal information is crucial for young people to make decisions about costs and benefits of products and services, to give them the protection they need in accessing these, and to make access work for them.
Products and services are often not fit for purpose. Appropriate versions must be designed with specific segments of the youth population in mind—including women, entrepreneurs, urban dwellers, rural dwellers, and people living on low incomes—and according to specific cultural and regulatory contexts. Segmented market research is needed to focus in depth on particular groups. Further, the financial risk of taking out high-interest loans often does not make sense for people with low incomes.
The survey responses point to products and services that may help solve these access and participation issues; i.e. savings and services products that provide financial information and lift participation. Other products and services identified in the survey include investments and insurance as well as long-term credit, digital services, and help managing money. That said, some respondents reflected that living hand-to-mouth on low incomes meant that they had little need for financial services to manage their money. This points to a need for new types of products and services which work for very-low-income groups.
The survey collected data that could be segmented by age, gender, employment, and rural and urban geographic breakdown. Because of this, we were able to look at specific market segments, seeing the barriers and solutions for young women, particularly those young women looking to start and scale a business; the products and services that young people would like to have (savings, insurance, investment, digital, long-term low-interest credit) and the products they do not want or need (traditional bank accounts, high-interest credit, and credit to meet day-to-day need); as well as the need for reliable information from providers.
It should be noted that it did not, however, capture the poorest or hardest-to-reach populations. The survey provides a detailed overview of young people’s experiences and perspectives, and open-ended questions were used to elicit respondents’ own words. We provide some country-level data below, but country-level analysis and comparisons between countries are beyond the scope of the survey.
The section that follows lays out what young people told us financial service providers offer them. They want help to keep their money safe and to manage their money, but often the products and services on offer are not fit for purpose. In the subsequent sections, we look more closely at the needs of young entrepreneurs and specifically those of young women entrepreneurs. We then go on to look at young people’s financial health and how financial literacy can help them learn, earn, and grow.
