{"id":27546,"date":"2023-06-21T12:22:10","date_gmt":"2023-06-21T10:22:10","guid":{"rendered":"https:\/\/neveragainrwanda.org\/?p=27546"},"modified":"2023-06-21T13:03:01","modified_gmt":"2023-06-21T11:03:01","slug":"youth-unemployment-and-perplexing-access-to-finance-in-rwanda","status":"publish","type":"post","link":"https:\/\/neveragainrwanda.org\/youth-unemployment-and-perplexing-access-to-finance-in-rwanda\/","title":{"rendered":"YOUTH UNEMPLOYMENT AND PERPLEXING ACCESS TO FINANCE IN RWANDA"},"content":{"rendered":"

The Sustainable Development Goal (SDG) 8 calls for delivering \u201cfull and productive employment and decent work\u201d to young people. This requires providing adequate education and training, enhancing access to formal employment, and opening business environments, including access to finance to young people.\u00a0<\/span><\/p>\n

In Rwanda, youth unemployment is relatively high at 25.6% among youth population aged 16-30 years as compared to the adults (aged 31 years and above) which is at 17.1%.\u00a0 <\/span>Nonetheless about 60%\u00a0of employed Rwandan youth work in nonproductive jobs such as subsistence agriculture, retail, and construction. Basically, Rwanda has a considerable number of unemployed and underemployed youth.\u00a0 <\/span>The youth unemployment patterns in Rwanda show that 12.2% of unemployed youth have no education, 39.4% have achieved secondary education while 32.4%. are university graduates.\u00a0 \u00a0<\/span><\/p>\n

What\u2019s is alarming?<\/b><\/p>\n

This number of unemployed youth cannot be ignored considering that above 70% of Rwanda\u2019s population are below 35 years of age. <\/span>If left unchecked it is likely to lead to serious social repercussions including intergenerational cycle of poverty, juvenile delinquency, forced migration, and social unrest. \u00a0<\/span><\/p>\n

Youth delinquencies in the country caused by drug abuse, prostitution, alcoholism, informal streets vending, begging and vagrancy is at large in local communities and townships. According to a study on rehabilitation centers conducted by Institute of Policy Analysis and Research-IPAR Rwanda (IPAR), 55% of Rwandan young men at the age of 21 and 43% between 15-18 are either taking or have been taking drugs, while 12.5% of the same age are either engaged or have been engaging in different criminal activities. 76.4% of those who go to rehabilitation centers are Rwandan youth between 18-37 years. So, the dominant age of delinquent behaviors are employable youth who are\u00a0 <\/span>unemployed.\u00a0<\/span><\/p>\n

Prevents youth participation in local governance<\/b><\/p>\n

\u00a0<\/span><\/b>Lack of access to employment directly or indirectly seems to disempower Rwandan youth to effectively engage and participate in local governance channels. The research conducted by Never Again Rwanda in 2022, shows that participation of Rwandan youth in local governance channels is still elusive. For example only 39.7% of youth attend national youth council meetings in their local areas, while only 6.5% attend planning and budgeting sessions and only 22.4% attend imihigo sessions in their areas. Moreover, the few who participate are not active enough. According to the same research, of those who attend planning and budgeting sessions, 61.6% have never asked any questions, and 71.7% have never sought feedback on program implementation. 82.3% have never sought feedback on utilization of finances and 87.9% have never questioned potential cases of corruption. The study shows the level of youth indifference in communities. \u00a0<\/span><\/p>\n

Limited Access to Finance For youth in Rwanda<\/b><\/span><\/p>\n

Youth unemployment is mostly explained by the slow economic growth and other existing macro-economic structures including financial markets in the country that are not able to generate sufficient job opportunities for youth. On the other hand, when y<\/span>oung people want to create their own jobs by starting businesses, they often struggle to get access to affordable loans, or loans in general. This is partially due to a lack of collateral. High interest rates also make it difficult for young people to repay their loans on time.<\/span><\/p>\n

Limited access to finance for unemployed Rwandan youth is baffling, youth startups cannot access finance due to lack of collateral, documentation requirements, unsuitable financial products, risk aversion from financial institutions and lengthy procedures.<\/span> According to FINSCOPE, 88% of Rwandan youth have access to finance but only 16% have access to credit market. It implies that even though 88% of Rwandan youth have access to finance 84% cannot access any type of credit from any financial institution.\u00a0<\/span><\/p>\n

The Business Development Fund\u00a0<\/span><\/b><\/p>\n

The Government of Rwanda created the Business Development Fund (BDF), a facility established in 2011 to mitigate the fall out between financial institutions and young people mostly the unemployed borrowers, to enable youth and vulnerable groups especially women to access loans from SACCOs, MFIs,\u00a0 <\/span>banks, and other institutions by covering between 50 to 75 percent of the required collateral. It was a very sounding alternative, however the situation remained corrosive.<\/p>\n

The management of BDF admits facing serious challenges to guarantee youth loans because these young entrepreneurs lack working capital and usually have low lender\u2019s trust.\u00a0 <\/span>Additionally, BDF support comes in after the loan applicant\u2019s project is approved by financial institutions based on their loan requirements which are considered by the youth to be stringent and unachievable.<\/p>\n

Policy Alternatives<\/b><\/p>\n

Access to finance for the Rwandan youth is earmarked by the National Strategy for Transformation (NST1-2018-2024) as a key area of intervention for the government to create decent and productive jobs for the youth. Policy alternatives and interventions are needed for Rwandan youth to access appropriate financial services. It should include<\/span> developing tailor -made financial tools for young entrepreneurs, such as access to credit and guarantee schemes when they lack collateral. It needs to be a multisectoral endeavor with the public and private sector and CSOs.<\/span><\/p>\n

Government: <\/b><\/p>\n