Although financial sectors tend to be large relative to GDP across the Middle East and North Africa (MENA), access to financial services remains relatively restricted, especially for young people. Yemen is one of the most economically challenged countries in the Arab world, with average annual incomes of USD 1,100 and unemployment levels over 20 percent. Just 10 percent of the population have access to bank deposits. Young people make up a third of the country’s population and over 40 per cent are currently unemployed. They are being particularly excluded from formal financing by market bias against them, where older, more established clients are typically preferred over newer, younger ones.
In response, Silatech established a strategic partnership with Al-Amal Microfinance Bank (AMB) in 2009 to launch a joint Youth Loan Fund to facilitate access to loan capital and non-financial support to young Yemenis aged between 18 and 30. The partnership has a specific objective to support young people through the transition from micro enterprise to small business, with a strong emphasis on long-term sustainability and job creation. For many of the young clients, these loans provide their first experience of formal finance. The terms of the partnership are based on Silatech’s microfinance team’s experience providing sustainable entrepreneurship support for young people in other parts of the world. For AMB, the combination of financial and non-financial support services is crucial to successfully providing credit to a youth client base. As a result, the bank has been able to waive its usual requirement of a six month minimum business operating experience to accept applicants with no prior experience or track record. Since December 2009, over 9,700 youth owned business have received formal financing for the first time, creating or sustaining an estimated 15,000 youth jobs. Youth loan products now constitute the bank’s fastest growing segment and over 40 percent of its business.