Credit where it is due: YouthWorks finds reliable customers among young Filipinos
Source: Financial Times.
Original article available here.
MANILA, January 25 – After having created the Philippine Youth Employment Network to train and prepare young people to enter business, Audrey Codera found that few commercial banks, government financing agencies or microfinance institutions were prepared to give them loans to start businesses. So she decided to offer the loans herself.
Raising funds through family and friends, Ms. Codera pulled together enough money to offer loans to three young people. These were repaid within three months. “There’s one thing that can be learned by everyone from our experience,” she says. “That young people can be trusted with money and they will do well with it.”
In 2005, Ms. Codera won a Youth & ICT award of USD 500 from the Global Knowledge Partnership and later a Youth Social Enterprise Initiative programme grant of USD 15,000.
As a result, what is now YouthWorks, the first microfinance institution for young people in the Philippines, has given loans to more than 20 young people aged between 13 and 20 ranging from USD 100 to USD 400, with a 3 percent interest rate.
Ms. Codera stresses the continuing importance of the mission of the other organisation she founded. “The Philippine Employment Network provides the training, and we provide the money,” she says. “Because, before loaning money to anyone, you have to give them basic training on how to use that money.”
In addition to discovering that young people are reliable when it comes to repaying loans, Ms. Codera has found that, because they often do not have dependents of their own, the money is more likely to be spent on the project for which the loan was taken out than is the case with older borrowers.
Moreover, she says, young people often use their loans to create enterprises that generate social and environmental benefit. She cites the example of a small enterprise that is making fashion bags and wallets by recycling the tarpaulin used in the Philippines for advertising hoardings. The bags are being exported to Europe and the US, and the project has created work for about 300 people.
“There are a lot of people who want to do good things,” says Ms. Codera. “To tap into the creative and risk-taking sides of young people, you need resources – that’s where microfinance comes in.”
By Sarah Murray, Financial Times
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