Unlocking Financial Solutions for Youth Enterprise Development

Project Status

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684,212

Youth Self-Employed

In Bangladesh, Micro, Small and Medium Enterprises (MSMEs) are considered the backbone of socio-economic development, including generating employment. MSMEs have emerged as one of the largest employment-generating sectors, comprising 80% of the total employment in Bangladesh. Moreover, access to finance is very crucial for this sector, as it enables the youth to carry on their business ideas through necessary investments in management and production. However, financial institutions are often reluctant to lend to youth-led enterprises as they are deemed too risky with no solid assurance offered by the individuals. Also, in the first quarter of 2022, default loans in the banking sector surged 19.3 per cent year-on-year, and small businesses generates the highest level of bad debt. As a result, the unavailability of access to finance often hinders the development and creation of youth-led businesses. Under such circumstances, Silatech and Brac are partnering in a project that relies on two main components:

A Partial Loss Credit Guarantee Facility, which will extend and expand small business lending and enable more youth-led enterprises to obtain financing while lowering the costs and risks.
A skills development component to provide training and support to youth-owned small businesses on business management, financial literacy, and entrepreneurship.

Founded in Bangladesh in 1972, BRAC acts as a catalyst, creating opportunities for people to transform their lives. BRAC has an annual expenditure of more than USD 1.1 billion, with the majority self-financed from its enterprises, and operates in conflict-prone and post-disaster settings in 11 countries across Asia and Africa. With more than 90,000 employees, BRAC operates in all 64 districts in Bangladesh and implements various development programs. BRAC’s Microfinance Program, has helped serving 8 million clients (o/w 87% are women) and disbursed more than USD 4.5 Billion in loans in 2020 only.

Targeted Sectors

Youth led income generating activities and micro enterprises across

trade,
agriculture and
services sectors

Impact:

Through Silatech’ s support, BRAC will extend and expand its lending activities to unbankable youth-owned small businesses as a result of the partial Loss Credit Guarantee Facility which works to reduce the risks associated with youth lending, at the same time offer skills development component to increases probability of the borrower's success.
Youth-owned Micro/small businesses will be able to access credit that they would not have been able to access without the guarantee and the skills development component.
Youth will be able to invest in their businesses, expand their operations, and generate more revenue.
Youth credit worthiness will be improved as their financial literacy and business management skills will make them more likely to succeed and repay their loans.
Youth-owned small businesses will become more successful, and they can employ others through job creation, contribute to economic growth, and help to reduce poverty.