Microfinance, Youth & Conflict: Central Uganda Case Study

This case study explores the challenges and opportunities in serving youth with microfinance. It also attempts to pilot test and further develop qualitative tools, as research methods and tools that effectively address both youth and microfinance.The findings of the case study include:

• Demand for microfinance among the youth:
  • Youth value savings and other financial services more than credit;
  • Youth do not consider the lack of capital as one of the top constraints holding them back from starting and maintaining successful businesses;
  • When young people access loans from MFIs, it is generally to top-up not start-up activities, and/or to diversify into another type of business.
• Supply of microfinance:
  • Only few suppliers consider youth as a higher risk client compared to adults;
  • No specific adaptations to existing microfinance products are reported to serve youth since youth are not targeted by any supplier;
  • Youth are not seen as a distinct market that could, or should, be developed intentionally.

The case study concludes that:

• The challenge for USAID missions and other donors is to play the role of the healthy skeptics when reviewing proposals and/or designing programs for combining microfinance and youth interventions;
• Donors need to be careful of MFIs' own pathway - to financial sustainability - and should not impose conditions on MFIs that will impede this.