BANKING THE YOUTH IS A GOOD INVESTMENT FOR BANKS

Young members of Equity bank.
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For any country to attain meaningful socio-economic development, it should be able to mobilize high levels of savings both at the micro and macro-economic levels. High savings contribute to high investments which in turn accelerate the rate of economic growth. In Kenya, the youth (aged between 18 to 35 years) do not hold high savings in commercial banks and other financial institutions. This is mainly because their incomes are low.  Even in the few cases where some youths receive high incomes, they are unable to manage their finances prudently and often indulge in conspicuous consumption.  This is quite regrettable considering that the youth comprise 25% of Kenya’s total population and their high levels of unemployment and underemployment pose a grave danger to the country’s economic prosperity.

Solution

To address this challenge, Equity has developed a Group Lending product for young entrepreneurs, especially those who form groups and are able to save collectively and diligently on a daily, weekly or monthly basis.   In turn, Equity advances credit to the members of these groups since they are able to co-guarantee each other. This model has enabled many young entrepreneurs to grow their businesses as well as their savings levels.  You will find such groups at the ever busy Gikomba market in Nairobi where many are engaged in the sale of secondhand clothes and shoes, timber as well as hardware and paints among other businesses that are transacted heavily using liquid cash.

As they engage in their respective businesses, the young entrepreneurs with smart phones can also access various Equity services via the Eazzy Banking Apphttp://bit.ly/AndroidEquityEazzyBanking.  Key among these services is the saving of earnings from their businesses.   In the recent past, the penetration rate   of   internet services in Kenya has grown substantially   because many people (mainly the youth) have acquired smart phones.  Smart phones are miniature computers and when connected to the internet, they perform complex    functions as opposed to only making calls and   sending short messages. Their trendy features make them attractive to the youthful market segment who purchase them in big numbers.  The young entrepreneurs can also use their smart phones to apply for EazzyLoans of between Kshs 100 to Kshs 3 million, make payments, buy airtime/bundles, besides depositing and withdrawing money and this saves them time that they can then spend doing other productive activities.

As of 2019, over Ksh 35 Billion had been disbursed to youth to engage in income generating ventures.

Financial literacy

Often, the youth fail to manage their income wisely even after struggling a lot to earn it.  It is important to save money for speculative, precautionary and transaction motives.  Failure to do so may lead to indebtedness. Against this background, Equity – through its corporate social responsibility arm, Equity Group Foundation in collaboration with the Mastercard Foundation – has been offering financial literacy training  to women and youth countrywide.  Since its inception, the highly successful programme has benefited many young entrepreneurs who have been able to grow their businesses to the next level.  By the same token, they have also been able to save more with the bank.

So far, the bank has been able to train over 2 million women and youth in aspects of budgeting, savings, debt management and financial services.

Any commercial bank that fails to address the needs of the youth market segment does so at its own peril. Given their huge numbers, it is critical to win their loyalty while they are still young and retain them as they advance in age. Equity knows that.

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