WASHINGTON (6 April 2008) — As part of their strategic alliance, ImagineNations Group and Mercy Corps have teamed up to lead unprecedented scientific research efforts to investigate the qualities of effective microfinance programs for youth.
Mainstream sources of capital through microfinance institutions or commercial banks are particularly difficult for youth to access, largely because the under-30 demographic is typically categorized as high risk, despite the heightened and growing level of interest in youth entrepreneurship.
"Self-employment is a critical and, in many environments, the only means of economic survival for young people," said Alan Fleischmann, managing director of ImagineNations Group, focused on providing young adults in the developing world with opportunities to gain access to employment and livelihood. "Microfinance can offer financial services to young people, who are not served by traditional banks and lending institutions, but we need to understand how to most effectively reach and service young people."
Microfinance plays an important role in creating opportunities for youth employment, educational advancement and social empowerment. The key challenge that remains is measuring the true returns to investment from lending to youth enterprises for both the banks that lend to youth, and for youth enterprise welfare.
With their global, multi-partner network, Mercy Corps and ImagineNations Group are developing, testing and systematically building evidence of successful approaches to supporting youth employment and enterprise development, as well as the true returns on investment. The research will largely involve randomized evaluations, longitudinal surveys and case study investigations.
The research results will provide important information to help customize and strengthen the menu of financial products that microfinance institutions (MFIs) offer youth clients and will help improve the performance, presence and profitability of MFIs in the youth microfinance space. Banks and MFI clients will receive a more suitable product, and the banks and MFIs themselves will receive a more profitable return in terms of lower default and better-matched clientele.
In late February, ImagineNations and Mercy Corps co-hosted a microfinance innovation workshop focused on youth to help kick off the peer-learning partnership with several MFIs to define successful approaches to financial services for youth.
The proposed research agenda will involve MFIs within the Mercy Corps network located in Afghanistan, Bosnia and Herzegovina, Kazakhstan and Kyrgyzstan—conflict or post-conflict environments where youth are particularly vulnerable. Each of the MFI partners operates in increasingly competitive markets where youth represent a substantial portion of the current and near term local population. The research conducted will pay particular attention to capturing the needs and experiences of young female entrepreneurs, who represent the majority of clients for these institutions.
Microfinance is one way that we are working to fight one of the most daunting global challenges over the coming years, youth unemployment. Over the next decade alone, the International Labor Organization expects more than one billion young people will enter the global labor market. Nearly 85 percent of these job seekers will live in the developing world, where more than half of the population is already under age 25. In many developing countries young people are four times as likely to be unemployed compared with older workers.
About ImagineNations Group
ImagineNations® Group is a global alliance of entrepreneurs, thought leaders, investors, financial institutions, philanthropists and global brands —all working together to empower and inspire a new generation of successful young adults in the developing world with employment and livelihood opportunities. By designing and launching investment funds and financial institutions, ImagineNations and its partners are providing young entrepreneurs with financial resources and business/leadership coaching that young people need in order to start micro- and small businesses. Along with the World Bank Group, ImagineNations is the co-founder of the Global Partnership for Youth Investment.
About Mercy Corps
Mercy Corps is a leading international relief and development agency with programs in more than 35 countries. Mercy Corps works amid disasters, conflicts, chronic poverty and instability to unleash the potential of people who can win against nearly impossible odds. Since 1979, Mercy Corps has provided $1.5 billion in assistance to people in 106 nations. Supported by headquarters offices in North America and Europe, the agency's unified global programs employ 3,500 staff worldwide and reach nearly 16.4 million people in more than 35 countries.