Recognizing the important role of the multiple drivers of change in the rural transformation process and the large population of rural youth facing new opportunities and challenges, the Rural Development Report (RDR) 2019 of the International Fund for Agriculture Development (IFAD) focuses on "Investing in Rural Youth." Building on the RDR 2016, the new edition of the report brings together fresh conceptual, analytical and empirical evidence to identify pathways to foster sustainable and inclusive rural transformation, and to unlock the potential of rural youth in driving this transformation, while ensuring prosperity and progress towards SDGs.

UNCDF has contributed to the RDR 2019 through the thematic background paper on "Inclusive finance and rural youth". This working paper deepens the analysis on inclusive finance and rural youth through cutting-age research and new insights and approaches that have emerged over the years in the field. The overall narrative clearly documents the ways in which rural youth engage with the economy, policy and institutions and identifies the rapid changes occurring across the globe as well as the opportunities and challenges that young people living in rural areas encounter in their different livelihoods. Within this context, financial inclusion has gained attention as a key contributing factor to unlock the potential of rural youth in driving sustainable and inclusive rural transformation. With this paper, UNCDF investigates how recent developments in this sector entail new opportunities for rural youth, and highlights persisting barriers that prevent rural youth from accessing financial and non-financial services, making the case for a market system approach to financial inclusion with specific attention given to digital finance.