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Objective of the project
To set up a range of financial and non-financial services for young entrepreneurs.
Areas of intervention
Burkina Faso, Togo, Niger
CIF, RCPB, FUCEC, ASUSU
1,802 young adults have received loans
84% of the microbusinesses financed in 2008/09 are still thriving today
2,300 jobs created
Despite the promise and potential they represent, young people find it particularly difficult to obtain funding since they are considered to be high risk clients. Indeed, this is why their lack of experience and of a guarantee is are often used by financial organisations as justification for their decision not to target young people as clients. In 2013, the unemployment rate amongst young Burkinabe, who account for 50% of the country’s population, was 25%.
ADA has established a support project within selected MFIs in order to facilitate the integration of young people in Africa into professional life. Accordingly, the “Young entrepreneurs” pilot project has been launched in the RCPB (Réseau des Caisses Populaires du Burkina Faso – Network of Credit Unions in Burkina Faso), a Burkinabe MFI.
Working in collaboration with this MFI, ADA has developed a project called “Créd’art”, which is comprised of three credit products and three savings products, as well as training, which has a particular focus on financial education and entrepreneurial spirt and which is provided to the young Burkinabe before they receive the funding.
These products are made available to young people who are able to fulfil the following specific criteria:
The young people in receipt of the funding are engaged, for the most part, in trades such as hairdressing, dress making, joinery, bricklaying, jewellery making, plumbing or electrical services.
The “Créd'art” pilot project has produced very positive results since its creation at the end of 2011. After five years of testing and evaluation, the RCPB has concluded that this is a good product which provides genuine added value to society, whilst generating financial returns. The figures speak for themselves: in 2015, a total of 760 new credits were accorded to young entrepreneurs in Burkina Faso, representing an overall volume of 425,683 EUR.
Since the Créd’art funding began to be distributed:
In 2014, following a rigorous identification and selection process, a decision was taken to establish a programme to integrate young people into professional life, along the lines of the Créd’art project, in two new MFIs from two different countries, namely ASUSU in Niger and FUCEC in Togo. The action consists in the provision of a technical support fund and a guarantee fund which will enable the MFIs to develop both financial and non-financial services which are tailored to meet with the needs of the young entrepreneurs who form the target group of this project.
The programme was formulated with the partners at the end of 2014 and began in 2015 within the agencies of these two MFIs; it is spread out across 10 ASUSU agencies in Niamey and two in the provinces, as well as in three FUCEC credit unions in Lomé and three in the provinces.
In 2016, the two MFIs wish to achieve the objective of providing funding to 550 young entrepreneurs. Moreover, non-financial services that are developed will educate more than 1,500 young Nigerians and Togolese to financial education through pre-training sessions given before any funding.
Credits are awarded on each MFI own resources, but the project provides the establishment of a guarantee fund to partially hedge the risks on the loan portfolio.
Each fund is fed thanks to Rotary Luxembourg amounting to € 26,000 for FUCEC and € 35,000 for ASUSU. The latter is also fed by LuxDev as part of the project to support the national program for vocational and technical training.
Yacouba works unstintingly. He loves his work and he is looking for a larger workshop – a place where he can hire a new apprentice and showcase more items. Young micro-entrepreneurs often hire staff or apprentices to help them in their businesses. Since 2008, around 1,200 jobs have been created by young artisans having set up their businesses thanks to Créd-art.
Yacouba is unobtrusive, and he doesn’t show off about his success with big smiles. Only the sparkle in his eyes confirms that, thanks to a helping hand, he has changed his future.
Distributing the new Créd’art financial product also contributes to expanding RCPB’s activities, by broadening its loan portfolio, extending its clientele and improving its social performance. A long-term policy was launched for the Créd’art product, in early 2014, enabling RCPB to take over all distribution and management of Créd’art. By late 2014, the MFI was preparing to disseminate Créd’art in its branches in two secondary towns, Bobo Dioulasso and Koudougou, to reach more young people. ADA is planning its withdrawal from the project in 2016.
“With ADA, we reflect together!”
When ADA launches a project in a new country, there is always an extended phase of consultation with the partner upstream. This was the case with the ‘Young entrepreneurs’ project which, after Burkina Faso, Niger and Togo, is now being rolled out in Rwanda.
Across from the largest bus station in Kigali, you will find the Nyabugogo UFC branch, one of the city’s two branches of the Umutanguha Finance Company (UFC), ADA’s inclusive finance partner in Rwanda. The branch opened in the capital in 2015 and now has 1,200 customers, 89% of whom are women, and provides finance for 138 entrepreneurs, 38% of whom are women and 46% young people aged under 30. The institution's vitality and its stated commitment to helping young people make it an ideal partner for the ‘Young entrepreneurs’ project in Rwanda.
“Our ambition is to be unique, competitive and to hold up our reputation on the market, while fulfilling our social vocation” says CEO Jules Ndahayo. Founded in 2003, UFC is first and foremost a savings and lending cooperative, whose vocation is to help widows and orphans. In Kinyarwanda, the local language, Umutanguha (the U in UFC) means ‘the friend who never deceives’, a fitting name for a cooperative that has now expanded its activity to cover the whole country (apart from the east). At the end of 2016, UFC had 10 branches, 60 employees (40% of who are women), savings deposits of €2.4 million and a loan portfolio of €4 million.
On the ‘Young entrepreneurs’ project, “We are working collaboratively with ADA,” indicates Jules Ndahayo. “We reflect together and we build together, working towards the same goals.” The CEO also naturally describes ADA’s international experience as a plus point. ADA is in fact developing a project inspired by Cred-Art, an initiative launched in Burkina Faso in 2009. The experience later garnered with ASUSU (Niger) and FUCEC (Togo) reinforced ADA’s expertise in the field of finance and support for young craftspeople.
Hence UFC contributes its local experience of the Rwandan context while ADA provides technical assistance based on its experience from past project - not only their successes but also their difficulties and indeed failures. “You would have to pay an international firm a considerable amount to benefit from this kind of experience,” says Jules Ndahayo The ‘Young entrepreneurs’ project is being tested in the Mahoko branch near the Congo border and aims to fund the businesses of young Rwandans in five craft sectors enjoying growth in the region (hair dressing, dress making, mechanics, joinery and welding). In the long term, the project will be gradually rolled out in all UGC branches.
This story has been made possible thanks to the microfinance institution RCPB, which believed in young people's capacity to set up and manage their own micro-enterprises. ADA has cooperated with CIF and RCPB since 2008 to put in place and develop Créd’art in Burkina Faso.
We want to thank also the two MFIs who have joined the project in 2015, FUCEC and ASUSU, and decided to develop these products for the youth of their country within their institutions.
The Young Entrepreneurs project has been supported by Rotary Luxembourg since the very beginning.