# **1. Introduction**

Many African countries are going through a phase of demographic transition marked by a very high share of adolescent and youth population. This has led to a focus on programs that are aimed to facilitate the transition of adolescents into the labor market through vocational training and transfers. A number of more recent initiatives have also been trying to extend financial services to the youth as an entry point for their economic empowerment.<sup>1</sup> Such initiatives are often motivated by the limited participation of youth in mainstream financial services.<sup>2</sup> However, there is lack of evidence on whether savings and credit services for youth have any impact on their overall financial market participation and subsequently on their transition into the labor market.<sup>3</sup> In this paper, we evaluate the impacts of an intervention designed to improve the human capital of young women in Tanzania by providing them with vocational training and information on sex, reproduction and marriage, so‐called life skills. We also test for the impact of providing microcredit services to program participants in addition to the other components of the program.

This paper uses data collected in Tanzania for this evaluation of the Empowerment and Livelihood for Adolescents (ELA) program by BRAC.<sup>4</sup> The intervention package of this program is intended to combine the twin goals of social and economic empowerment. The core model has been found to be very effective for both goals in Uganda (Bandiera et al, 2015). Examining effects after two years, the evaluation in Uganda found an increase in income generating activities, increased monthly consumption expenditures, improved reproductive health knowledge and practices, and large decreases in teen pregnancies and early entry into marriage/cohabitation. Positive changes are also observed in several other outcome indicators related to gender roles and norms. In a medium‐term follow‐up, it appears that many of these effects are sustained four years after the program was first implemented.

Our evaluation in Tanzania is a replication of the Ugandan study with one key difference: In Uganda, we only evaluated the standard ELA model, consisting of vocational and life skills training. In the Tanzanian setting, we were able to introduce a second treatment arm which combined the standard ELA model with microcredit. After launching the core interventions of ELA (i.e. setting up adolescent girls clubs, and conducting life skills, livelihood and vocational training) in all treatment communities,

> 1 Among several examples, the YouthStart and Youth‐Inclusive Financial Services Linkage Program initiatives by UNCDF, MasterCard Foundation and Making Cents have been aiming to play the catalytic role of making financial service providers more pro‐youth.

> 2 According to the Global Findex Database, the ‘youth gaps’ in access to financial services (i.e. the difference in likelihoods of having an account by 15‐24 year‐olds compared to adults aged over 24) are larger in developing countries than OECD countries, and have not reduced between 2011 and 2014 (Demirguc‐Kunt, 2015). Using information of over 66,000 young account holders at formal financial institutions in four countries, Johnson et al (2015) argue that there is huge latent demand for financial services by the youth and they will save if affordable services are on offer.

3 Although there are a growing number of experimental evaluations of the impacts of credit interventions, the evidence is somewhat mixed and rarely focused on adolescents. Reviewing evidence from six randomized evaluations of credit programs, Banerjee et al (2015) conclude that credit does not have any transformative effects on the livelihood outcomes. However, the evaluations do not focus on young micro‐entrepreneurs. 4 BRAC is one of the largest southern NGOs originating in Bangladesh and expanded their multidimensional development programs in several countries in Asia and Africa. Youth development through various initiatives for adolescent girls is one of their priority areas in Africa. For more details on the NGO visit www.brac.net, and <u>http://brac.net/ela</u> for the program.

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