Ongoing initiatives for the financial inclusion of young entrepreneurs
Young entrepreneurs (18-35 years old) represent a significant employment pool. A large majority of them need funding up to €50,000 to develop their business, access the market and attract investors. However, since banks target large companies and microfinance institutions (MFIs) finance microentrepreneurs, these young entrepreneurs, who are somewhere in between, are often neglected, particularly because of the risk they represent. They are called the "missing middle". ADA has started a specific programme called the "Young Entrepreneurs Sustainable (YES) Funding Initiative" to fill this gap and facilitate market access for these young entrepreneurs that it has not supported elsewhere for many years now through microfinance.
In addition, since 2018, ADA continues to support the economic and financial inclusion of young entrepreneurs through a global "Market - Technical Support - Financing" approach based on the complementarity of specialised players such as incubators, catalysts or funders.
1. Support for young micro and small entrepreneurs in Rwanda with UFC
In 2016, ADA, Rotary Espoir 2005 and Umutanguha Finance Company (UFC), a microfinance institution based in Rwanda, implemented a pilot project "Support for young entrepreneurs in Rwanda", with the aim of testing an approach that can contribute to the professional integration of young people. This involves giving young entrepreneurs, mainly craftspeople, access to financial and non-financial services tailored to their needs to enable them to create or strengthen their own activities. A credit product called "Artisan Youth Loan" was created. In 2018, following the positive conclusions of the pilot phase and the request from other MFI agencies, preparations were made to expand the distribution of the product.
To ensure the sustainability of this initiative in Rwanda, ADA and Rotary had decided to renew their partnership in 2019 and 2020, through a co-financing agreement for an amount of 183,124 euros. Through this new project, entitled "Support for young micro and small Rwandan entrepreneurs", 4,500 young jobs should be created by 2020.
In 2019, dissemination was greatly intensified and the product was deployed in all 18 branches of the MFI. 2,000 young people were trained and opened their savings accounts with UFCs and 300 young people were financed.
2. Facilitating the financial inclusion of young Senegalese entrepreneurs with UIMCEC
In July 2020, ADA with the support of LUXDEV started its intervention aimed at facilitating the financial inclusion of young people from formal and informal training systems in the Central region of Senegal. This project, initiated within the framework of PIC IV (Indicative Cooperation Program), covers the regions of Kaolack, Fatick, Kaffrine and Diourbel. The microfinance institution UIMCEC (Union des Institutions Mutualistes Communautaires d'Epargne et de Crédit) based in Senegal, benefits from support to develop savings and loan products adapted to the needs of this specific clientele of young first-time entrepreneurs. In addition, access to local financial services in this particularly well-served area is made easier thanks to digitalization.
In order to improve risk management, the young people financed benefit from upstream and downstream support. Upstream, the young first-time entrepreneurs are put in contact with UIMCEC for access to credit and to acquire both technical and interpersonal skills to carry out their project. Downstream, a follow-up in the form of mentoring is also envisaged in order to accompany the young people in the implementation of their project to avoid misappropriation, to guide and advise them when they are confronted with difficulties, to constitute a moral support when they are subject to discouragement or demotivation, but also beyond that to enable them to optimize their financing by helping them to seize market opportunities. In addition, for young people wishing to get involved in agro-ecological production and food processing, the Jokkolabs incubator has been associated with the project.
By 2022, it is expected that 1,000 young people will have access to savings services and that 450 of them will be financed to launch their projects.
The YES Funding Initiative helps to close a funding gap
The YES initiative is based on :
The current partners are:
ADA, member of the ANDE network
In 2016, ADA became a member of the ANDE network (Aspen Network of Development Entrepreneurs), a global network of organizations working to promote entrepreneurship in emerging countries. By supporting the development of the inclusive finance sector, ADA is an integral part of the actors contributing to the emergence of a favourable environment for micro and small entrepreneurs. Since its accession, ADA has exchanged experiences and established partnerships with other affiliated institutions in Central America and Africa.
A plateform to tackle Covid-19
ANDE has joined forces with other institutions in the region to launch a platform with useful tools and information for the Latin American entrepreneur ecosystem in the context of Covid-19: https://www.emprendedoresfrentealcovid19.org
The platform connects entrepreneurs to resources such as financing/subsidy opportunities, webinar series, digital tools and more to cushion the blow of the pandemic on their businesses.
"ADA works to capitalise its experience with our microfinance partners in funding the youth (entrepreneurs). We wish to go further and are currently exploring innovative solutions for the funding of small enterprises experiencing strong growth driven by this youth in order to make them autonomous and viable."
Dominique Owekisa, ADA project manager and member of the Steering Committee of ANDE West Africa