Commonwealth Asia Regional Meeting Endorses Need for Financial Inclusion of Youth

The Commonwealth Youth Programme Asia Centre, Commonwealth Secretariat in collaboration with the Ministry of Youth Affairs and Sports, Government of India organized a two-day Regional Consultation on Financial inclusion of Youth in New Delhi on February 8 – 9, with the objective to address the critical need for national financial inclusion policies having a ’youth’ focus along with other vulnerable sections of the society. The meeting deliberated on some of the most critical issues, concerns and challenges faced both by aspiring young entrepreneurs as well as financial institutions and came up with a slew of recommendations to facilitate the access of youth to appropriate financial services and products.

The Consultation was inaugurated by Mr. R. Gopalan, Secretary to the Government of India in the Department of Economic Affairs, Ministry of Finance.  While underpinning the need for a significant revamping of the existing structures  and delivery of financial services appropriate for young people, he  stressed the importance of innovative initiatives such as credit guarantee schemes and credit ratings which would help reduce the risk of lending institutions and at the same time meet the needs of aspiring young entrepreneurs.

In his welcome and introductory address, Mr. Raj K Mishra, Regional Director of the CYP Asia Centre, referred to the mandates of the Commonwealth Heads of Government in their meetings in 2009, and again in 2011, to member governments to put in place policies and mechanisms to foster youth enterprise development as a means to mitigate the problem of unemployment among young people in the Commonwealth. Financial inclusion of young people under the ambit of national policies, he added, would go a long way in fulfilling this mandate.

Underscoring the importance of the consultation, Mr. Sushil Munhot, Chairman& Managing Director of the Small Industries Development Bank of India who attended the consultation as a Guest of Honour, spoke about the need to create an enabling environment for young entrepreneurs by bridging the information gap, simplifying legal and regulatory frameworks and processes, and providing incentives to banks and financial institutions through credit guarantee schemes and priority sector lending mechanisms.

Mr. S Sridhar, former Chairman and Managing Director of the Central Bank of India, shared his views on the key building blocks in developing and sustaining a suitable youth friendly financial framework through appropriate risk mitigating mechanisms to enable lenders to move beyond ‘scratching the surface’ to meet the genuine needs of young entrepreneurs.

Dr. Rahul Mirchandani, President of the recently formed Commonwealth Alliance of Young Entrepreneurs (CAAYE) made a passionate appeal to policy makers and regulators to create a favourable eco-system for promoting youth enterprise development in the region.

Mr. Rajkumar Bidla, Programme Officer in the Youth Affairs Division of the Commonwealth Secretariat dwelt on the work initiated by the CYP in fulfillment of the CHOGM mandates and shared some good practices across the Commonwealth to promote greater financial inclusion of youth. He informed that the Asia Regional Consultation will be followed by similar ones in the other three CYP regions. Mr. Aminul Islam Khan, Programme Manager, CYP Asia Centre while proposing a vote of thanks expressed the hope that the consultation, the first of its kind, will be a path-breaking exercise in changing perceptions and mindsets about young people’s bankability

The consultation brought together over 40 representatives -a wide mix of experts and practitioners representing Ministries of Youth, Finance and SMEs;  the Central Banks/other financial institutions; the  Commonwealth Alliance of Young Entrepreneurs (CAAYE), besides  youth entrepreneurship  support organizations from eight Commonwealth  countries i.e Bangladesh, Brunei, India, Maldives, Malaysia, Sri Lanka, Singapore and Kenya. Recognizing that youth are a unique market segment that require additional support via financial inclusion in starting and growing businesses, participants brainstormed on what could be the strategies, mode of implementation and monitoring of youth friendly financial services and product  and inter alia agreed on the following:

• Create a database on youth unemployment, youth engagement in micro, small and medium enterprises and success rate thereof
• Provide youth with appropriate access to financial services i.e. financial literacy and education, credit and insurance, as well as, non financial services such as entrepreneurship training, mentorship and marketing linkages
• Introduce credit rating mechanisms to rate aspiring young entrepreneurs’ credit worthiness / reliability
• Replicate initiatives such as the Kenya Youth Enterprise Development Fund or similar such funds
• Develop schemes of reward / recognition to organizations promoting youth enterprise and also successful youth entrepreneurs. SHGs of youth may be tried out as an experiment.

The closing function of the event was graced by Mr. Rakesh Mohan, Joint Secretary in the Ministry of Youth Affairs & Sports who lauded the initiative of the CYP in organizing the event and stressed the critical role of young people in promoting inclusive growth in their respective countries. This is best achieved, if youth themselves are part of the financial inclusion policies, he added.