2. HOW BEST TO MATCH MICROFINANCE WITH STREET CHILDREN63(*)
2.1. Prevalence of microfinance for street
children
2.1.1. Introduction
The beneficiaries of microfinance interventions are mainly
women64(*). Cheston and
Kuhn (2002) highlight three reasons that make women so popular among MFIs.
First is the financial criterion, which indicates that
«women's repayment rates are typically far superior to those of men,
leading therefore to lower arrears and loan loss rates and having a positive
effect on the efficiency and sustainability of the institution».
The second reason is the empowerment of women, which are
generally located among the poorest of the poor, the UNDP reporting that 70
percent of the 1.3 billion people living on less than $1 per day are women.
(UNDP, 1995)
Box. 3.3.
Microfinance
(1)
(2) Households (women)
(1)
Children/youth
(1) : Traditional approach
(2) : Innovative approach
The last commonly mentioned reason is related to the higher
impact created by the intervention on children. Children have, indeed, long
been a priority of microfinance interventions but, surprisingly, have not been
directly targeted by such interventions (Foy, 2001). Indeed, thanks to its
«demonstrated» role of income generation and vulnerability reduction,
microfinance is said to be able to improve children's access to education, to
enhance their nutritional and health status, reduce their need to work and even
prevent them from having to turn to the streets to survive (ibid).
However, this framework assumes that the impact of
microfinance
will be beneficial only if the household (especially the
mother) is playing the role of interface. However, as pointed by Nagarajan
(2004), «capital is assumed to flow from the family for adolescents
(...) but family support is limited for orphaned and poor adolescents to access
capital to start a business and to help accumulate assets».
Consequently, microfinance has recently opened its scope of
interventions to children and youth, as part of the new «Microfinance for
youth» framework being advocated by some youth serving
organisations (YSOs) and microfinance institutions
(MFIs)65(*) all
around the world, wherein it is supported that poor youth need access to
financial resources (i.e. credit, savings, and insurance) in order to
build their capacity and to increase their employability. Indeed, youth between
15 and 24 years are more than 1 billion in the world, 85% being concentrated in
developing countries where many are especially vulnerable to extreme poverty
(ILO, 2006). According to ILO, youth unemployment accounts for approximately
41% of all 180 million unemployed persons globally.66(*)
In these interventions, youth are generally defined as aged
between 15 and 24 years old, but some adopt other definitions and classify it
in a broader spectrum (e.g. 10 to 25 years old)67(*). Within that framework, we generally find
«young poor, unemployed and school-dropouts in relatively peaceful
countries (as well as) at risk youth, such as street children and
those living in high crime areas» (Nagarajan and McNulty, 2005).
Regarding the characteristics of such programs, very little
documentation is being found all around the world and a high knowledge gap does
exist. However, Chemonics International68(*), under a project financed by USAID and trying to
enlighten the topic of microfinance for at risk youth, lead a global survey in
September 2005 wherein a sample of MFIs and YSOs around the world have been
surveyed in order to assess the extent to which youth are being served with
microfinance and it was found that the youth were addressed by a mixture of MFI
and YSO, but the prevalence was still low (Nagaran and McNulty, 2005)
When referring to the specific segment of street
children/youth, the knowledge gap is much higher and very few studies make a
comprehensive review of microfinance programs addressing this particular
population, because such programs are «few and far between (...) and
largely consist of isolated, one-off projects supported by NGO's»
(Foy, 2001)69(*).
Moreover, our different literature researches tend to confirm this global low
prevalence, and the particular concentration of the supply in the YSO segment.
So, both MFIs and YSO are still reluctant to address street children with
microfinance.
Our two next sections are therefore aimed, first, at
enlightening the potential reasons of such reluctance. We then follow the
discussion by a review of the major microfinance for street children programs
worldwide.
* 63 We will confine our
analysis to «savings» and «credit», as the children who
took part of our research did only have access to those to financial products.
Therefore, this does not mean that microinsurance or other microfinancial
products may not be suitable to street children. But this question is beyond
the scope of our paper.
* 64 Mody (2000), quoted in
Morduch and Aghion (2005), found that 80 percent of the clients of the
thirty-four largest microlenders worldwide are women.
* 65 By youth serving
organisations, we mean any organisation serving at-risk youth and include child
rights organisations. By MFI, we use the definition adopted by Rutherford
(2002) who defines it as any NGO that provides financial services to
low-income people, either as their exclusive business or as part of a wider
programme of development.
* 66ILO means by
«unemployed» any person without work but having made him/herself
available for employment»(ILO, 2006)
* 67The age range for
`youth' is not scientifically defined but the World Bank and UN definitions of
youth define it as 15-24 years old. However, this is not unanimous and e.g. the
World Development Report 2007 expands this spectrum from 12 to 24.
* 68 We want to thank
Michael McNulty, from Chemonics International, for having shared some of their
resources on microfinance and youth-at-risk.
* 69 The only study found
that focus explicitly on microfinance for street children and that gives a
global picture on that topic is the unpublished Master Thesis of Deborah Foy
(2001) from the Institute of Development Studies of Sussex (UK)
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