Increasing access to capital for

Young entrepreneurs

2nd Sacco Leaders forum 21-23 rd March

2011 Kigali, Rwanda
 
 Introduction

 More African active population depend on primary

sector, generally on agriculture which is subsistence in
nature.

 In order to accerelate the African development we have

to Modernize our agriculture and to encourage
transformation in other economic sectors.

 Sustainable development require proper involvement of

Youth entrepreneurs in different sectors .

 The issue is how to involve the youth entrepreneurs in

the productive process given a number of barriers
 Barriers to Youths involvement

• Low culture of entrepreneurship

• Lack of skills and technology

• PROBLEM
Poor infrastructures ANALYSIS
• Lack market information

• Lack of Capital. Sometimes this is the symptom but not

the cause for youths failure especially those in SME
sector
Is lack of capital the real problem to youths.
Take a case of an SME run by a young person
Insufficient qualification Low material or
equipment quality

Bad location Cannot, don‘t want, Funds used

Rude competition Low product quality no incentive for for private
savings purpose
No marketing
(advertising) Market problems No own savings and
funds Sale on credit

Insufficient
buying power „Lack of
finance“
High costs Management No business
problems plan
High rent, water,
electricity costs High transportation costs High production No accounting
costs No stock listing

Inefficient use of working

materials Labour costs
Material costs
9
4
 Source of capital for young entrepreneurs

 They also get capital from their own savings

 Many Youths get capital from their relatives
and parents
 The big part of capital should come from
financial institutions.
How to access to external capital

Most of time it is difficult for youth to access financial

institutions lending because of:
 Lack bankable Business Plan
 lack of Collateral.
 Lack experience in conducting a business
 Fear of risks by financial institutions
Strategy to improve the above mentioned
Problems
 Macro level
 The government should initiate Policies and strategies to
facilitate youths to access financial services
 Financial and entrepreneurship education for Youth
 Initiate national credit and guarantee funds for Youth
entrepreneurs
 Encourage Youth People to create and Join Cooperative
society case of COOJAD in Rwanda
Strategy to improve the above mentioned
Problems
 Meso level
 To encourage Public, Private Partnership with Youth
entrepreneurs
 To provide non financial services to the Youth
entrepreneurs eg. (BDS) to help youth in development
of business plans and better management of their
business.
 Offer training for youth in access to capital
Strategy to improve the above mentioned
Problems
 Promotion of franchise(Promotion of partnership
between investors and Youth entrepreneurs

 Promote financial institution and financial products in

line with Youth needs (risk capital, etc.)

 Create specific
window fund for Youth entrepreneurs at
approximate level eg special window for youth
entrepreneurs in Umurenge SACCO
Strategy to improve the above mentioned
Problems

• Micro level
• Access to financial opportunities Information

• Facilitate Youth in elaboration of bankable Business plans

• Provide access to market information

• Improve SMEs accounting system and their management

• Introduce awards to financial institutions that champion

Youth lending
conclusion

 The youth constitute a big percentage of the Worlds

population more especially in the developing countries
and yet they constitute a bigger percentage of the poor.

 This, therefore, calls for attention of the governments,

civil society and financial institutions to focus on this
group to develop their entrepreneur skills and tailor
made lending products