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, Rwanda
Project managers
Partners
RCPB, FUCEC, ASUSU, UFC, Rotary Luxembourg
Some key figures:
4,010 young adults have received loans
6,695 jobs created
The aim of the "Young Entrepreneurs" initiative is to establish, with partner MFIs, a range of financial (credit and savings) and non-financial (training, financial education, business management consulting, monitoring and support) services adapted to the needs of young entrepreneurs wishing to start or strengthen their micro-enterprise.
Uptaded: December 2019
Young people: Leveraging economic growth
Sub-Saharan Africa has experienced relatively high growth rates in recent years, but the labour force participation rate has remained stable and below 70% since 1990[1].
One in two Africans aged 15 to 24 still has no professional activity in 2018, or nearly 100 million young people on the continent. For the 11 million young people entering the African labour market each year, there are few job opportunities in either formal or informal enterprises. Self-employment is therefore considered to be one of the main sources of job creation for the coming years.
[1]The participation rate is the proportion of the population aged 15 and over which is economically active: All those who provide labour for the production of goods and services during a given period. Source: International Labour Organisation, ILOSTAT database. Data retrieved March 2017.
The Young Entrepreneurs Initiative
To meet the challenge of job creation for young people in Sub-Saharan Africa, with the cooperation of 4 partner microfinance institutions (RCBP, ASUSU, FUCEC and most recently UFC) ADA has gradually developed a financial services offering (credit and savings) combined with non-financial services (training, financial education, business management advice, monitoring and support), to optimise the use of the financing obtained. This is what we are calling the Young Entrepreneurs initiative.
A dual objective: Economic and social
1. Combating youth unemployment, through entrepreneurship, by facilitating access to financial and non-financial products and services via:
- financial education training
- granting credit on preferential terms to start or strengthen a micro-enterprise
- personalised monitoring through to the end of the loan repayment
2. Contribute to the development of partner microfinance institutions by:
- an increase of their credit portfolio
- customer expansion
- improved social performance
Process for establishing services for young entrepreneurs
Services for young entrepreneurs are established in 2 phases:
- The pilot phase: across a sample of the institution’s branches and testing the product on a small scale in order to assess its relevance to the target population and its impact in terms of young people financed and jobs created.
- The outreach phase: if the pilot phase proves conclusive and the MFI has acquired the necessary expertise to implement services for young people, the process switches to the phase of expansion to other branches and possibly other sectors of activity.
A supportive pathway for a young entrepreneur by a partner MFI (animated image)
- The MFI contacts the targeted youth and invites them to pre-training
- The young person attends preliminary training on financial education, personal development, entrepreneurship, etc.
- The MFI organises an individual interview with the young micro-entrepreneur to validate the eligibility of his or her project
- A 2nd training session with the young person, this time focused on his or her business plan, cash management, etc.
- The young micro-entrepreneur creates a business plan and assembles the documents needed to prepare the loan application file
- The young person submits his or her application to the MFI
- A credit file is assembled and analysed by the MFI’s credit agent
- The MFI approves the application and makes funding available
- The credit agent visits the young person's business to ensure the financing is being used properly
- Monitoring of the repayment of the microcredit by a credit agent and support by a coach who is an expert in the relevant trade
- Young micro-entrepreneurs who have repaid their first loan can apply for a new loan for their business
RCPB in Burkina Faso, the first MFI partner of the “Young Entrepreneurs” project
To facilitate its integration into the working life of young people in Burkina Faso, at the end of 2011 ADA put in place a pilot project called “Créd’art”, which began as part of the MFI leader in the microfinance sector in Burkina Faso, the RCPB (Network of Credit Unions in Burkina Faso). Créd’art consists of savings and loans products designed specifically for the needs of young people. These products are aimed at young people:
- between 18 and 35 years old;
- having learned a trade or undertaken professional training;
- who are in need of funding to establish their project, or;
- have already started their business and require equipment or working capital.
These young Burkinabe entrepreneurs primarily work in the professions of hairdresser, dressmaker, carpenter, bricklayer, jeweller, plumber or electrician.
The product is supplemented by pre-financing training, particularly focused on financial education and entrepreneurship.
Pilot project results
The "Créd'art" pilot project has shown very positive results since its creation at the end of 2011. After several years of testing and evaluation, the RCPB concluded that it is an excellent product for young people, with a positive social impact.
Between 2011 and 2014:
- 1,687 young people were financed and supported in Burkina Faso with a total sum of €1 million;
- 84% of the micro-enterprises financed in 2008-2009 are still active 6 years later;
- Cred’art has enabled the creation of around 2,300 jobs between micro-entrepreneurs, apprentices and employees;
- In 2014, the RCPB decided to extend Cred’art to two new regions of Burkina Faso and to configure new so-called “transition” credit products, enabling young people first funded by Créd’art to gradually move towards the MFI's traditional conditions for financing.
Watch the vidoo on Créd'art
Replication of the “Young Entrepreneurs” initiative in Togo and Niger
Following a thorough identification and selection process, in 2014 2 new MFIs were selected in two West African countries: ASUSU in Niger and FUCEC in Togo, for a pilot phase to test financial and non-financial services for young entrepreneurs inspired by the Créd’art experience.
The first loans were granted by FUCEC in Togo at the end of 2015 in the city of Lomé as well as in the centre of the country, and in mid-2016 by ASUSU in Niger, primarily in the city of Niamey.
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FUCEC in Togo
Pilot project results
After 2 years of the pilot phase in the Lomé, Kpalimé, Anié and Sokodé areas, the results have been satisfactory and in line with the objectives set:
- 2,000 young people received training in financial education and entrepreneurship;
- 950 were funded to create or strengthen their business;
- a total volume disbursed of €640,000;
- 95 of the young people financed in 2016 renewed a 2nd line of credit in 2017 (40% renewal).
The mid-term evaluation carried out by ADA allowed us to demonstrate FUCEC’s good management of services and their positive impact on the target population, traditionally excluded by MFIs.
In January 2018, in order to enable FUCEC to increase the impact of this initiative and achieve the desired level of profitability for this product in order to maintain their offerings of services for young people in a sustainable manner, ADA agreed to renew its technical and financial support through a new project to bring services to young entrepreneurs.
READ THE STUDY "ACTING FOR THE PROFESSIONAL INTEGRATION OF
YOUNG PEOPLE IN TOGO THROUGH THE PROVISION OF APPROPRIATE
FINANCIAL AND NON-FINANCIAL SERVICES" ON YOUNG ARTISAN ENTREPRENEURS
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ASUSU in Niger
For reasons linked to the Nigerien social context and factors within the MFI, ASUSU found itself in a difficult financial position and was placed under the supervision of the Nigerien authorities at the beginning of 2018.
This situation had an impact on the pilot phase, the results of which remained modest, with around 200 young Nigerian entrepreneurs financed in two years. Under these conditions, it was decided to end the pilot phase, so that ASUSU could focus on priority projects and remedy its situation.
UFC in Rwanda: The 4th MFI partner of the “Young Entrepreneurs” initiative
In 2016, ADA and UFC (Umutanguha Finance Company), a microfinance institution in Rwanda, had implemented a pilot project to support young entrepreneurs to contribute to the professional integration of young people. The approach consisted in giving young artisans access to appropriate financial and non-financial services that would enable them to create or strengthen their own business. This concerned 5 promising craft trades in the region: hairdressing, sewing, mechanics, carpentry and welding.
After 6 months of design and implementation of the pilot product, called Artisan Youth Loan (AYL), followed by 12 months of implementation in the Mahoko branch in the north of the country, nearly 100 young people had been financed.
In December 2018, a new and more ambitious dissemination project was launched with the objective of financing 3,000 young people in 3 years. Following this, the staff of the first 5 broadcasting agencies were trained and the first disbursements were made at the end of 2018.
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.
To ensure the sustainability of this initiative in Rwanda, ADA and Rotary renewed 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: read the press release
Our partners
This story was made possible by the microfinance institution RCPB, which believed in the ability of young people to build and manage their own micro-enterprise. ADA has been working with CIF and RCPB since 2008 to build and develop Créd’art in Burkina Faso.
Thanks also to the two MFIs who joined the project in 2015, FUCEC and ASUSU, who also received support from LuxDev.
Finally, thanks to UFC in Rwanda, who joined us in 2016.
The Young Entrepreneurs has been supported by Rotary Luxembourg since 2015.
ADA and Rotary together for the project "Support for young micro and small Rwandan entrepreneurs"
Press release - February 14, 2019
According to the UN, Africa's population growth will continue to increase from 1.2 billion in 2015 to 2.4 billion in 2050 and then to 4.2 billion in 2100. Thus, one in four people will be African by 2050 and this proportion is expected to rise to four in ten by the end of the century. The issue of young people in Africa is therefore a topical issue that no one can ignore for a global future. The continent could benefit from the enormous potential economic advantages that other regions and countries have experienced as their age structure has changed, thanks to the reduction in dependency ratios and the increase in the active population. However, the fruits of the demographic dividend are highly dependent on investments in human capital today.
The ADA - Rotary Espoir 2005 collaboration
On the initiative of S.A.R the Grand Duchess and in the framework of the 100th anniversary of Rotary International in 2005, ADA and Rotary decided to join forces. The partnership between these two organizations has successfully financed four microfinance institutions in Asia and more than 7,500 micro-entrepreneurs.
With this in mind, ADA and Rotary Espoir 2005 have entered into a partnership with the objective of offering an innovative financing mechanism adapted to the needs of young African entrepreneurs and thus promoting their professional integration.
This initiative has been extended to other partner microfinance institutions in the field. This made it possible to finance 1,100 young entrepreneurs and create 1,500 jobs in Niger and Togo.
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. Today, 1,089 young people have been trained, nearly 400 have started doing business with the MFI and 98 have been granted a loan, of which 52% are start-ups.
To ensure the sustainability of this initiative in Rwanda, ADA and Rotary have 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.
About us
For more information about ADA, visit the "About us" section.
Rotary Espoir 2005
The purpose of Rotary is to cultivate the ideal of service to which all honourable professions aspire, including by applying this ideal in private, professional, and public life, and by advancing international understanding, altruism, and respect for peace. In this spirit, in 2005, the UN International Year of Microcredit, Rotarians in the Grand Duchy of Luxembourg founded "Espoir 2005": the Rotarian Microfinance Project.
Luxembourg cooperation
In its general strategy "on the way to 2030", the main objective of Luxembourg's support for development cooperation is to contribute to the reduction and, ultimately, the eradication of extreme poverty through support for sustainable economic, social and environmental development. Luxembourg relies in particular on its comparative advantage as a leading international financial centre, among other things, and to this end, cooperation promotes greater engagement with new partners, particularly those from the private sector, and will deploy innovative financing mechanisms for development.
