Young woman in the city center of Dar es Salaam, Tanzania / iStock

Financial inclusion helps youth mitigate COVID-19 impact

By Mohanad Salous, Chief of Financial Inclusion Division, Palestine Monetary Authority, and Diana Schvarztein, Policy Manager, Financial Inclusion, AFI

The coronavirus pandemic has further exacerbated youth’s vulnerabilities and is likely to have a greater negative impact on young people’s livelihoods, particularly for those in developing countries.

Recognizing this, financial regulators and policymakers should consider a series of factors when developing financial inclusion policies in the context of COVID-19 and beyond:

1. Understand and respond to youth’s exacerbated vulnerabilities

Young workers are over-represented in informal economic[1] sectors ravaged by the pandemic – including tourism, accommodation and food services – and, as such, are largely excluded from formal financial sector and social security schemes.

A recent International Labour Organization survey on youth unemployment found that youth around the world have been severely and disproportionately affected by the COVID-19 crisis, especially young women. More than one in six young people are out of work as a result of the pandemic.

At the same time, nationwide school closures[2] have hit almost 70 percent of the global student population. With many developing countries lacking the necessary digital infrastructure to ensure that classes can continue online, this will have negative medium- and long-term effects on their economic potential and the labor market[3].

2. Digital financial regulations for overcoming access barriers

In developing countries, youth (15 to 24 years old) are disproportionately excluded from formal financial systems with only 53 percent having access to such services. Young women are particularly disadvantaged with access rates at 51 percentage, five percent less than their male counterparts at 56 percent.

Digital solutions can enable more efficient onboarding to a range of formal financial services. By not requiring a physical presence, electronic know-your-customer (e-KYC) could have a highly positive impact on the inclusion of young women, particularly where they face cultural-based mobility restrictions.

Supporting this trend, the Central Bank of Egypt completed the testing phase of a new e-KYC earlier this year and launched a pilot of the new service to aid financial inclusion in the country.

3. Supporting the uptake and usage of digital financial solutions

Enabling access to digital financial services and financial technology can act as catalyst for financial inclusion.

In line with this, a social program called jóvenes construyendo el futuro (“youth building their future”) was launched in Mexico to integrate millions of 18-to-29-year-olds into the country’s productive sector through job training. It promotes account uptake and the usage of digital payments as beneficiaries receive subsidies through a bank account that can be accessed via debit card.  

For youth micro, small and medium-sized enterprises (MSMEs) to ensure continuity in economic activities, policy support must offer practical and scalable solutions that enhance cost and efficient digital payments, facilitate easier access to digital credit and build financial resilience through digital microinsurance.

4. Youth voice necessary for successful coordinated and effective policies

The development and implementation of financial and public sector interventions should include youth representatives when integrating youth considerations into COVID-19 policy responses, national financial inclusion strategies and other policy interventions.

In Sierra Leone, for example, youth is represented by key stakeholders in each of the central bank’s financial inclusion working groups: financial literacy, financial products and services, financing for micro, small and medium-sized enterprise and digital financial services.

5. Strengthen the financial capabilities of youth to cope with financial shocks

Promoting and enhancing financial capabilities and solid money management skills will help build the resilience of youth populations against economic shocks, enabling them to better navigate financial crises.

Palestine Monetary Authority organizes a child and youth banking week with the goal to enhance the financial capabilities of future generations. More than 98,000 students from schools in the West Bank and Gaza Strip joined the activities in 2019.

6. Policy and regulatory interventions must be gender sensitive

COVID-19 impacts women differently and disproportionately, deepening pre-existing gender inequalities. Age and sex-disaggregated data can enhance the understanding of COVID-19’s impact on various segments of the youth population and contribute to vital, specific gender-sensitive considerations in policy and regulatory interventions.

As a result of the COVID-19 crisis, a Youth Entrepreneurship Fund was established in Chad in agreement with local banks. A third of its budget was reserved for young women.

Looking ahead: leave no one behind

Youth financial inclusion, along with financial inclusion of women, is crucial in reaching the last mile. With the ongoing pandemic threatening financial inclusion gains made over the past decade, the prospects of many young people have worsened. We are now facing an urgency to address these vulnerabilities and place them at the core of COVID-19 policy responses to prevent and mitigate any medium- and long-term damage.

Having an in-depth understanding of the needs and specific vulnerabilities of youth is key to implementing tailored financial inclusion policy interventions. Financial regulators, policymakers and industry players must create and implement specific policy solutions to enhance financial stability and resilience through financial inclusion policies for the over 1.2 billion global youth, especially the 90 percent who live in developing and emerging countries, to ensure that no one is left behind.


[1] Youth are twice as likely as adults to be in temporary employment, with almost 80 percent of working youth employed in informal jobs, reaching more than 95 percent in developing countries (ILO, 2017)

[2] While more than two-thirds of countries have introduced a national distance learning plat­form, only 30 percent of low-income countries have done so.