Transcript Youth Financial Services - Making Cents International

YOUTH FINANCIAL
SERVICES
Fundación Paraguaya
Youth Loan Program
WHO WE ARE
Fundación Paraguaya is a cutting-edge social
enterprise, which develops innovative solutions
to poverty and unemployment in Paraguay and
proactively disseminates them worldwide.
FP is an entity that has dedicated 23 years to
promoting entrepreneurship, enabling people of
limited resources to create jobs and increase their
family income.
OUR BUSINESS MODEL
Fundación Paraguaya is a self-sufficient social
enterprise that promotes urban and rural
entrepreneurship through three interrelated
strategies:
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A Microfinance program that supports micro
entrepreneurs and emerging entrepreneurs generally
relegated by other microfinance institutions.
An economic education program for children and
young people (Junior Achievement).
A self sustainable agricultural school
OUR BUSINESS MODEL
The three programs are
separated in terms of budgets
and finances, but are strongly
integrated at the operational
level so that each program
enriches and is enriched by the
other two.
This synergy gives “added
value” to each of the three
programs and is the force that
guides the institution’s
“business model.” Additionally,
it is an important ingredient in
the success of the microfinance
program.
YOUTH LOAN PROGRAM
YOUTH IN PARAGUAY
62.1% of the population is under 30 years old.
 5.6% open unemployment
 26.5% sub-employment
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Young people are the most affected
by this situation
Western region (Chaco):
10% of the population.
Eastern region : 90% of
the population.
San Pedro
Amambay
Chaco
Canendiyu
Santani
Greater Asunción Area
6
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Coronel
Oviedo
Ofices: Matriz, Asunción, San
Lorenzo, Luque, Villa Elisa,
M.R.Alonso. Lambare
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Caacupe
Caaguazu
Ita
V.Rica
Ybycui
Carapeguá
San Ignacio
Pilar
Encarnación
Ciudad
del este
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30,366 clientes
Portolio US$ 14 millions
Overdue loans: 2,27%
21 Offices
140 cities/220
240 employees
Metodology: individuals,
solidary groups, village banking
Amount: fromUS$ 40 to US$
25.000
Interest rate: market rate
WHY A YOUTH LOAN PROGRAM?
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A neglected target market of young individuals
who showed interest in creating their own micro
enterprise, but did not have the chance to have
access to loans.
Sons and daughters of our clients
 Students of our economic education program
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FP decided to develop a specific financial product
oriented to young micro entrepreneurs between
18 to 29 years old, from urban and rural areas.
OUR COSTUMERS PROFILE
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6700 young entrepreneurs
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Age 18 to 29 years old
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Most of them come from poor families
and do not have the chance to enter
into the work force due to the lack of
opportunities or sufficient training.
These young individuals generally
decide to start their own business as
an alternative to unemployment and
poverty
60% from rural areas and 40% are in
urban and semi- urban areas.
40% of them have successfully
concluded high school and the majority
of the remaining 60% has successfully
concluded elementary school.
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Loans adding up to 3 million dollars
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Average loan of 500$.
OUR PRODUCTS
LOAN SERVICE FOR
YOUNG MICRO ENTREPRENEURS
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Grants loans for the creation and expansion of micro and small
enterprises.
Oriented to start up activities or for work and investment capital.
The amounts range between 40$ to $5,000. 500$ is the average loan.
Repayment terms vary from 2 to 24 months; most loans are re-paid at
a 12 to 24-month period.
Payments: weekly, bi-weekly or monthly basis.
The interest rates are those established by the market, around 30%.
Loans are granted based on the payment capability, adjusted to the
production capability of the micro entrepreneur and not necessarily
based on guarantees.
Parents assume the position of cosigners, which ensures the family
support of the business and allows the correct use of the loan.
LOAN SERVICE FOR
YOUNG MICRO ENTREPRENEURS
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We provide access to financial services
aimed at strengthening their
personal and business skills
Loan officers:
Provides technical assistance and
management training
 Assistance in drafting accounting
statements and investment plans
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Business Incubator
Training for the elaboration of
business plan.
 Assistance on: accounting, financial,
taxation and human resources issues.
 Conducts training on marketing, finance
and production
 Provides commercial contacts and business
opportunities.
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PRODUCTIVE LOAN PROGRAM
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Grants loans to the graduates from the
Agricultural School so that they can
apply what they have learnt at School
in their communities of origin.
Allows young people to develop feasible
projects.
All of the graduates present their
business plan as part of the academic
curriculum and all of them are analyzed
by a loan committee. As a result, credit
lines are financed for the projects.
The amounts range from100$ to 5,000$.
The loan amounts, payment term and
interest rates vary depending of each
project.
This loan “closes the circle” between
theory and practice, deepening the
impact and sustainability of our
entrepreneurial education program.
VILLAGE BANKING
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Targets groups of micro enterprising women.
Loan amounts vary per member according to each one’s
payment capability, they range between 20$ and 330$.
Each cycle has a minimum and maximum amount
established and culminates in terms between 2 to 4
months.
Payments are weekly or bi-monthly depending on the
decisions made by the women bankers.
The program encourages savings, making it mandatory
that each member save 10% on the amount of their
personal share.
The program offers training in areas such as: Family
Budget; Sales Costs; Self-Esteem; Leadership, among
others.
Two mandatory training sessions are offered in each cycle
in addition to coordinated training that crosses all phases.
OUR DIFFERENCE FROM OTHER
MFI’S
Two key aspects:
 We concentrate our efforts on loans
of low amounts granted to the
smallest microentrepreneurs and
entrepreneurs initiating activities,
which are generally excluded by
other financial entities.
 Second, we offer more than just
loans. Thanks to our particular
business model, we also provide a
broad array of educational,
business, and community
development services to the young
client.
 This is a self-sufficient and
profitable program in financial
terms, showing that it is possible to
successfully finance young people.
OUR MAIN CHALLENGES
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Legal Restriction in terms of
age
Misconceptions about youth:
Image associated to bad
payment and late repayments
Need of a higher level of
follow-up and assistance
How we overcame this
challenges
 Joint signature with parents
 Loan officer training
 Business Incubator
SOME LEASSONS WE LEARNED
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Supporting the loan and
providing financial
services
Evaluation of the family
situation.
Loan officer oriented
towards the work with
youth and with experience
in handling different types
of business
Timely loans
Work together to
understand the market
and its needs
AGUIJE