• Purpose

Giving the youth the credit they deserve

28 June 2023

Getting access to credit is a challenge for many people in the markets we serve, but especially for youth segments who are still trying to establish themselves financially while facing major economic pressures such as unemployment. Our Head of Strategic Delivery, Carmia Lureman-Norton shares research on the specific needs of young people and how access to financial services can help them become financially independent.

‘Africa has the youngest, fastest growing populations and the biggest development deficit, containing over 70% of the least developed countries in the world. Without empowering her youth, the inequalities between Africa and developed markets will deepen.

Key needs for youth empowerment lie in education and employment, both of which can be supported by access to financial services. There are, of course, many pillars of support required, such as social support, access to education, digital access and so on, but most of these can be eased by access to financial services.

Unfortunately, youth are disproportionately impacted by high unemployment. Rural youth especially have limited employment prospects.This leaves most young people reliant on either entrepreneurship or employment in the informal economy to secure a livelihood. Often, this means piecing together multiple income streams to make a living. Entrepreneurial activities are also often informal in nature as they pose low barriers to entry. 

The fragmented and variable flow of funds means young people are often perceived as low-value and high-risk. Young people are also unlikely to have collateral and they have a limited transactional record on which to build credit records. If credit is hard to come by for the average African adult, it’s even more so for the youth.

21% of JUMO’s customers fall within the youth segment (aged 18-24). 

Unlike many digital credit providers, JUMO’s broad and growing data pool provides a wider context to an individual’s financial behaviour, meaning young people are less likely to be brush-stroked as ‘low value and high risk’. In fact, data on the use of our easily accessible savings products, indicated that our younger customers are most likely to save. Around 33% of customers who use savings products on our platform are in the 18-24 age group.

A man getting credit through his mobile phone

Many of these young customers indicate the use of loans for either education or business. Here are some examples: 

‘I used a loan to supplement capital for starting my business. It saved my life. It’s always reliable.’
18-24 year-old male, Ghana

‘I was able to progress with my studies after getting a loan to pay for my school fees.
 18-24 year old male, Zambia

‘I can pay my school fees with the help of a loan.
18-24 year old woman, Ghana  

In low-income households, education stands to be one of the largest household expenses. We believe that more resilient households, empowered by access to credit, are better able to sustainably manage this large expense. Our research shows that 17% of loans issued on our platform are reportedly used for education. Research also indicates that once educated, there is a positive correlation between education and the use of financial services.

‘My life has improved because I can pay my rent, bills and school fees for my kids.
35 + year-old  man, Kenya

‘My business has grown and my kids can study at school.‘ 
25-34 year-old woman, Uganda

Three ladies standing for a photo in Africa

The products on our platform are well positioned to address some of the barriers regularly faced by young people when accessing credit. 

  • JUMO loans are accessible via a mobile money account. Mobile money account ownership has proven to be the most accessible and fastest-growing method of account ownership for youth, especially in Sub-Saharan Africa.
  • Unlike many digital credit products, JUMO does not require customers to provide collateral to secure a loan.
  • Pricing is reviewed regularly, and benchmarked annually as part of JUMO’s holistic in-market value proposition assessment, to ensure JUMO offers customers the best possible competitive value proposition.
  • Consumer protection is especially important when dealing with first-time customers, as so many of them are in the youth category. One of the barriers to usage of credit products among youth is the fear of repercussions, such as aggressive debt collection practices by other industry players, which  have made many young people aware of the sometimes disproportionate effect of credit delinquency. JUMO’s products address this through a powerful combination of behavioural learning, educational communication campaigns, touchpoint communication, and in-product guidance – as well as tailored repayment options as required.

When looking ahead in our mission to make finance accessible to everyone, and especially the context of this in our African homebase, considering how our products and services enable youth is an important part of our customer research and product development. ‘Youth’ is a vast segment, with many nuanced needs. As our products and services evolve, we will dive deeper into those use cases to ensure we’re catering for the different user needs and contexts of Africa’s young people.’

Connect with Carmia on Linkedin