Youth Loan Fund Q&A – 2 May 2013 (PovCoP)

Missed our meeting this month?

Watch the video below, featuring Justin Sykes from Silatech speaking about their partnership with Al-Amal Microfinance Bank on the Youth Loan Fund in Yemen.  Anton Simanowitz, Social Performance specialist, interviews Silatech in the video below.  For more information on the Youth Loan Fund, take a look at this blog post.

Youth Loan Fund Q&A from Seal of Excellence on Vimeo.

Reflections from Al-Amal

Due to connectivity problems in Yemen, Al-Amal Microfinance Bank (AMB) CEO Mr. Mohammed Al-Lai was not able to join the conversation in the video.  See below for Al-Amal CEO Mr. Mohammed Al-Lai’s insights (received via email) on the partnership experience with Silatech for the Youth Loan Fund.

Can you explain a bit about who was not reached by the Youth Loan Fund and why?

Mr. Al-Lai
The youth Population who were not served in AMB are :
1. The unskilled Youth who lack the Skill Management, Basic Business and/or Accounting Training and how to managing financial and marketing aspect of their business
2. who has feasibility study but lack of a previous business experience.
3. Those who don’t have feasibility study at all.

How have the products and services been designed to address these needs – what is the theory of change? Is the key innovation overcoming exclusion or design for the target market or both?

Mr. Al-Lai
Actually both to overcome exclusion and to target a market in order to serve the marginalized youth segment pulse financial inclusion. When designing a product and services Al-Amal conducts a market study to examine the market and find out the demands of our clients through carrying out a survey or focusing group. Based on the survey, a preliminary design of the new product and a matrix of all required sources were prepared to design the product and launch the pilot phase. An assessment of the product in the pilot phase is carried out. Based on the assessment, there might be some adjustment to finally launch the product. In addition, AMB periodically conduct studies to follow up the performance of all its products.

What needs have you not met or what further opportunities do you see?

Mr. Al-Lai
AL-Amal Microfinance Bank couldn’t met the needs of the Youth segment especially rural area which consider 75% of Yemen.

Regarding the opportunities:
Microfinance and other financial inclusion initiatives can play an important role as catalysts for youth entrepreneurship and self-employment. Young people with entrepreneurial potential should be encouraged with adapted and adequate financial products to help develop their enterprises. They also need basic business and/or accounting training, and frequently require in kind of cash flows for emergencies. However, It is important that financial inclusion initiatives bear in mind that not all youth are adapted for entrepreneurship and shouldn’t seek to promote a one size fits all approach to youth financial inclusion. Finally, is required to develop product which serve the market appropriately.

What changes have you needed to make to your organisational systems to effectively deliver these services – staff training, performance management, spot checks, information systems etc. What were the challenges?

Mr. Al-Lai
The need is to add a non-financial service system. And for this reason Al-Amal Microfinance Bank is establishing Al-Amal Foundation for Training and Entrepreneurship “Reyadah”. This foundation seeks to complement the financial and non-financial services offered to small and micro enterprisers, sharpen the skills of entrepreneurs, and provide the labor market with qualified workforce meeting the international criteria. The Inauguration ” Reyadah” is on May 14, 2013.

What benefits/outcomes have you seen for clients and how do you assess these?

Mr. Al-Lai
For Clients:
1- Self-Independent
2- Starting-up their own enterprises which create more job opportunities for others
3- Disengagement from Civil service formal employment (Removing some of the load from the government)
4- Improving their families living conditions

In term of assessing these: Al-Amal is on the process of developing an impact evaluation.

What trade-offs, additional costs, or win-wins for the business have you seen in these products/services? Has it been good for the business as well as clients?

Mr. Al-Lai
In fact it is not for the bank, these products and services are very costly. But for the clients these products and services are very good.

What lessons have your learnt for the design, delivery and management of products and services for specific target clients or specific needs?

Mr. Al-Lai
The Lessons:
1- There is no one size of product or service will serve the needs of the different group of the same segment
2- There is a need to redesign the products and services developed to serve the urban area in order to serve the rural areas

Do you have experience providing loans to youth?
Share your thoughts in the comments section below