Making microfinance work for youth in Tanzania

The ILO, through the UN joint programme on Youth Employment, trained more than 25 top and mid-managers of financial institutions, banks and government institutions on making microfinance markets work for youth.

Press release | 08 February 2016
Dar es Salaam (ILO News) - The International Labour Organisation (ILO), through the UN joint programme on Youth Employment, organized from 8- 12 February 2016, in Dar es Salaam, training sessions for senior officials from microfinance institutions, banks and government institutions on ‘Making Microfinance Work for Youth’ in Tanzania.

“Through the training, I have increased knowledge and exposure on better means to keep serving the youth in Tanzania through my organization”, Sophia Sokoni, Credit Administrator of Equity Bank said.

The five-day training aimed at building the capacity of financial service providers in Tanzania in designing outreach strategies that will ultimately provide youth with financial and non-financial services.

“With this course, the ILO hopes to facilitate broader and more innovative use of financial services to help create decent work for all low-income people specifically the youth”, Mary Kawar, ILO Director for East Africa said.

The ILO invests in microfinance and in the capacity building of Microfinance Institutions (MFIs) because microfinance contributes to the realization of decent work for all, especially for young women and men, Mary Kawar underscored.

Funded by the Swedish International Development Cooperation Agency (SIDA), the Joint Programme is working towards increasing number of young women and men in productive self and/or wage employment; improving working conditions of young women and men in self and/or wage employment in the informal sector; increasing productivity of young women and men in agricultural sector; increasing employability of young women and men in both rural and urban areas; and developing a coordination mechanism as per the National Youth Employment Creation Programme.

Closing the skills gap

“The training has provided a new understanding of how MFIs can work better in the markets we serve” - Mr Rwebu Mutahaba, Country Head, Jumo Tanzania Limited underlined.

The training was also geared towards increasing the understanding of how best to serve young men and women by developing an application tool to guide future internal development of youth-targeted strategy within financial institutions.
“Before, we all had a perception that youth are not credit worthy or bankable”, observed Winnie Terry, Chief Executive Officer at Tanzania Association of Microfinance Institutions (TAMFI).

Through expanding the range of products offered, MFIs can serve more people, meet more of their clients’ financial service needs and, as a result, make greater progress towards the achievement of their commercial and social objectives.

Microfinance services provide microcredit and micro-leasing products to the poor without collateral agreements and by so doing provide opportunities for the establishment of businesses as well as creating jobs. Access to financial services provides starting capital to the youth and enables them to become economically active, start their own enterprises, finance education and manage risks. However, many microfinance programmes do not actively target youth, excluding them from this opportunity; considering that loans from banks usually require collateral and have hefty interest rates.

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