Address at EBRD Event
“Youth in Business Programme”
 Market Assessment Findings for Republic of North Macedonia

On behalf of the central bank, let me thank you for the invitation and the opportunity to be part of this event. As an institution, we highly appreciate, value and support initiatives that underpin stronger involvement of young people in the overall society.

On the issue of young people and entrepreneurship, what I think is our role as a society, is to bridge the gap between preferences and possibilities. Hard data do point that youth unemployment underwent significant adjustment in the last decade. In the EU, it went down from close to 20% in 2013 to around 11% last year. Similar is the trend in the Macedonian economy as well, although the rate is still significantly above the EU rate, standing at around 25%. What the soft survey data reveal (EC/OECD Survey 2021) is that 45% of the young people plan to become entrepreneurs after graduating, preferring being self-employed, rather than an employee. However, only 5% of young people are actively working on start - ups. The statistics shows that the percentage of young people working as self-employed is rather low, hovering around 6% in EU. Similar is the percentage in our case as well, with the share of self-employed young people, and more importantly, declining throughout the years.

The gap between the preferences of young people and the actual state of the labor market is a symptom of underlying hurdles. Some of the latest surveys show that young people face particular challenges in accessing finance, business development support, and knowledge and skills. Access to markets, institutional support structures and legal aspects are also critical for the business autonomy of young people. In an OECD YSE Survey, more than three quarters of respondents agreed that youth-led social enterprises are particularly concerned by at least one of these challenges. The most frequently reported challenges were access to finance (76%), access to markets (67%) and institutional support structures (65%).

If we do mirror these responses with those of the policymakers, an area where there is almost perfect overlapping of the perceptions is the constraining role of access to finance. Very often, it is the case that new businesses, including those of young people remain outside the perimeter of the traditional banking finance, due to the lack of credit history, lack of collateral, high transactional costs and absence of tailor- made financial instrument.

In this vein, an aspect that deserves a special focus is the financial literacy. Accessing finance for younger people also requires higher-level financial literacy, as a basis for stronger financial inclusion. The mapping of this ecosystem reveals that young people in the region, our country inclusive, do need additional support in this respect. The OECD study on Youth Financial Education in South East Europe shows that only 40% of the young people have achieved a high financial knowledge score. With the massive penetration of digital technology in the world of finance, not only conventional financial literacy is what matters, but digital, as well. The promotion of digital financial inclusion is becoming one of the main priorities on a global level. For instance, the G-20 Global Partnership for Financial Inclusion in late 2020 has set the digital financial inclusion as one of the main priorities in its Financial Inclusion Action Plan. Digital Financial Services are acknowledged as an opportunity to deepen financial inclusion and expand access to financial system for previously underserved groups, including young people. Data shows a scope for improvement in the region, and the Macedonian economy is rather large. For instance, the percentage of young people making or receiving digital payments (as a proxy for the digital literacy), according to the World Bank findex data in NM, is 64%, lower than the rest of the sample (with 76%), and much lower compared to the euro area, where this percentage equals 93% and the age gap is almost non-existent.

I have tackled only one, but I think very critical aspect, that is pivotal for stronger involvement of young people in starting a business. As a central bank, we have recognized the need to provide for higher financial literacy and inclusion, particularly for the most vulnerable ones. For these purpuses, in mid 2020 the financial regulators launched a National Strategy for Financial Education and Financial Inclusion, as a comprehensive, coordinated and streamlined approach for tackling the financial literacy and inclusion issues. Young people are a special target group, and many resources in the central bank are invested in order to support and promote their financial knowledge.

To sum up, there is a broad consensus on the need to provide for higher involvement of young people in business. Knowing that access to finance, skills and knowledge are the most critical obstacles for inclusiveness requires concerted efforts from different stakeholders. In this sense, comprehensive programs, such as the one of the EBRD, blending finance and expertise are important in spurring youth in business, unleashing their potential and the potential of the economy as a whole.

Thank you.