Advancing The Digital Financial Inclusion of Youth In 2022
In the Southern and Eastern Mediterranean countries, where youth make up half of the population, youth are critical to long-term development. They will be able to play their full role as the engine of inclusive growth resulting from digital financial inclusion. To attain improved financial inclusion rates in the region, efforts must be reproduced and multiplied while learning from each other's experiences. This is required to improve the resilience of the youth population, which has been disproportionately affected by the COVID-19 problem.
Today, this article will highlight why youth digital financial inclusion is essential, its challenges, and how they can be eradicated. So let’s get started.
Why Digital Financial Inclusion Is Important
When it comes to young people, financial inclusion is critical in broadening the range of opportunities available to them to improve their current and future lives. Youth can invest in their education to boost their employability and future professional prospects by using formal financial services. It allows people to gain their autonomy in society (housing, future planning) and become active socioeconomic agents in their country. Furthermore, having access to financial services and goods allows young people to start their businesses and contribute to new jobs.
Young people (under 30 years old) represent approximately half of the population of Southern and Eastern Mediterranean nations. In terms of socioeconomics, this circumstance will result in 14 million new workers entering the labor market by 2030, a 27% rise. This is a considerable challenge for economies struggling to produce jobs. In light of this, it appears critical to make financing a foundation of these countries' development models to increase employment creation for and by young people.
Challenges Regarding Digital Financial Inclusion Of Youth
To effectively address the issue of youth financial exclusion, factors that obstruct young people's access to money must be identified to develop policies that have a genuine impact and produce tangible outcomes. Several constraints limit or deter young people from obtaining and using formal financial services and products based on their professional experiences, field feedback, and scientific research and studies.
According to studies, the first reason inhibiting young people from opening an account or using financial services is excessive expenses. This includes charges and high-interest rates, and penalties for not maintaining a minimum balance, all of which discourage young people with low incomes from using formal banking.
The legal and regulatory framework has also been cited as a barrier to youth financial inclusion, with age and identity restrictions colliding with the realities of large-scale informal employment among youth in the Mediterranean region's East and South. It was noted, for example, that even though young Moroccans save money, they rely heavily on informal financial services due to the stringent requirements around the creation of a bank account.
Negative preconceptions about youth link them to higher risks associated with irregular income flows, modest deposits, and savings, preventing them from accessing essential financial services. As a result, they are frequently overlooked as potential customers, and no sufficient or accessible financial products to meet their special needs are established.
Cultural norms, particularly those relating to gender, religion, and reliance on family members, have also been proposed to explain the low financial inclusion rates. Finally, most young people lack the required information and skills to make healthy financial decisions, necessitating the expansion of financial literacy efforts.
Advancing Digital Financial Inclusion Of Youth
The advancement of digital financial inclusion of youth revolves around four main policy areas. These are -
1. Providing a responsible, resilient, and enabling digital financial ecosystem and infrastructure
2. Promoting inclusive and responsible policymaking
3. Providing inclusive growth with a supportive regulatory framework for digital financial services
4. Provisioning financial and digital capability and literacy, supporting financial data and consumer protection against any risk.
All these policies revolve around the same factor - providing a supportive environment and enough literacy to the youth to promote digital financial inclusion. The youth needs to be encouraged and equipped with the right tools to ensure that they can participate in the digital financial world. Only then will the world embrace the youth's ideas and allow them to work effectively. There will be better job opportunities by including them, and some may even become entrepreneurs leading to an advanced global economy.
Thus, we can conclude that the digital financial inclusion of youth in the Southern and Eastern Mediterranean countries is significant for the country's advancement. While various barriers are to be crossed, this financial inclusion can be achieved with the correct mindset, education, and policies.