Qatar-based regional social initiative Silatech and Lebanese microfinance company Vitas Lebanon have launched a new initiative designed to help finance youth-run businesses.
The initiative includes the introduction of a new dedicated youth startup loan product called Taasis as well as an outreach effort to finance more existing youth enterprises.
It is expected to create or sustain 2,400 youth jobs over a three-year period.
The Taasis (founding or establishment) loan provides young entrepreneurs with loans averaging $5,000 for financing for their startup businesses. In addition, Vitas Lebanon will seek to provide existing youth enterprises with loans averaging $2,000 to finance their expansion.
In parallel with providing financing, Vitas - with the support of Silatech - will provide business skills training to the youth and launch a business plan competition to raise awareness of entrepreneurship and generate successful business ideas, which they can then finance.
In June, Silatech conducted a two-day “training of trainers” workshop in Beirut for Vitas Lebanon credit officers, outlining approaches and communication techniques for effectively targeting youth clients, and advising on more accurate and relevant criteria to use when screening loan applicants.
At 30%, unemployment among young Arab men and women is the highest in the world. Youth unemployment in Lebanon is somewhat lower, at 21%, though still markedly higher than the global average of 13%.
Silatech’s support to Vitas Lebanon is part of a broader programme across the region, which includes the design and launch of youth-friendly financial products with microfinance institutions (MFIs) in multiple countries.
2015 will see new youth-focused products and initiatives launched by MFIs in Lebanon, Jordan, Iraq, Egypt, Tunisia, Sudan and Morocco.
Two examples of these are MicroCred Tunisia, which recently launched Irada, while Jordan’s Tamweelcom announced Amal Al Shabab, both in partnership with Silatech and designed especially for young startup entrepreneurs.
These products are designed to help youth create jobs not only for themselves, but also for other youth as their businesses succeed and grow.
Silatech works to expand access to finance for young Arab entrepreneurs, working with banks and financial institutions throughout the region to develop youth-friendly loan products and business support services.
Innovative financial institutions such as Vitas stand to gain from targeting the youth enterprise market, as younger clients can offer substantial lifetime value and institutions can gain significant positive visibility by implementing meaningful solutions in the fight against youth unemployment.
Mohamed al-Naimi, acting CEO of Silatech, said: “Working with established and experienced partners such as Vitas Lebanon is essential in order to understand the needs of young people and design interventions that enable them to start and grow businesses that create jobs for themselves and others.
Ziad Halaby, general manager of Vitas Lebanon, added: “This co-operation between Vitas and Silatech comes at a critical time, as Lebanon’s unemployment rate has been increasing drastically over the past couple of years.”
