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Youth Unemployment and Youth Entrepreneurship Funds

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This is a guest post written by Tawedzerwa Ngundu who is a Senior Economist at the Reserve Bank of Zimbabwe and is currently undertaking an International Leadership Training in German under a Scholarship from the German Ministry of Economic Development and Trade Promotion. He did an Internship at Bertelsmann for close to 2 months from March to May 2012.

Unemployment has emerged as the greatest challenge facing the world today exacerbated by the poor and uninspiring economic recovery from the recent Global Economic Crisis. The unemployment problem is more acute with young people in general; young people being three times as likely as adults to be unemployed. As a result, a host of policy measures have been adopted by different regions and countries to fight this scourge. A cursory analysis of these measures shows a wide use of concessionary youth entrepreneurship funds to support employment creation in developing countries, particularly in sub-Saharan Africa. However, the failure of the youth entrepreneurship funding to generate employment despite its wide application, has called into question its effectiveness. In most countries youth entrepreneurship funds have not only suffered huge default rates but even in cases where the funds have been repaid, the earmarked employment objectives would have rarely been achieved.

I would like to argue that the continued use of youth entrepreneurship funds have to some greater extent benefited from the poor measurement of the employment objectives and results. In Zimbabwe, for example employment entrepreneurship fund reports emphasize the amount of disbursements, the spatial distribution of the disbursed funds and the earmarked jobs to be created. Information on actual jobs created is missing. In few cases where actual numbers of people that have been employed are reported, critical information in terms of the longevity of the employment would be missing. Most of the jobs created are only maintained during the duration of the loan or grant period and would not be sustained in the absence of the support. Fundamentally disturbing is the fact that, in very minority of cases in which the 2 foregoing results are tabulated, still decency aspects of the job would not be reported. In most instances, the jobs created under youth funding suffer from low pay levels, poor working conditions and most importantly lack social security. Finally, there has been a tendency to overemphasize successful case/s, which normally account at the very most for 10% while ignoring the remaining 90% failures. While there is general consensus that we need to learn from success stories, this should not be done with the intention to hide failures normally inherent in the program. It is in light of this apparent measurement and assessment challenges that I think it is critical that the reporting framework be comprehensive, incorporating sustainability and decency aspects of the jobs created under youth entrepreneurship funds. To buttress this, authorities should also provide an analysis highlighting the costs and benefits of other alternatives to youth entrepreneurship funds before undertaking the programme and avoid unchecked continuous rollovers of this instrument.

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Comments

  • Philippines

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    The problem of this suggested project is “The poor person can’t engaged with this proposal project” and the one person who managed with this project abused the position and his power to control all the people who participate with the proposal project. They over rate the ratings of the money. All employees has no respect of all the respective participants of the related project and specially the manager in every branch. Just like here in Philippines. The manager always says bad words in his/her participant.

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  • makwara

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    In african and poor economies use of sub-sectorial stimulus like youth funding for employment generation has little effect particulary because the economic fundamentals of the entire economy upon which sustainable implementation depend on are non-existent or are uncoordinated. For example most youth employment projects like e.g bee-keeping, farming projects, cleaning services, or poultry raising depend on big and established businesses for market access as primary suppliers or for outsourced contracts for services. The successful operation of this cycle depends on close integration between these small businesses by the youth and the bigger players the absence of which sees small youth initiatives suffocated out of their life lines. As correctly stated the fanfare during funds disbursement is more of political enthusiasm usually by government agencies in poor economies to score political points among the volatile youth voting sector rather than a real commitment to sustainable job creation. That is why statistics about the successes and effectiveness of these projects do not get reported ( if by a miracle somebody remembered that the use of the funds have to be monitored and accounted for) After all it is not funds which create jobs, its largely an enabling environment defined by accessible opportunities, skills, resource ownership,vibrant industrial structures as well as sound macro-economic policy frameworks. Capitalisation of the youth cannot substitute these fundamentals necessary for job creation. And to single out the youth as the only hotspot of unemployment in a disfunctional economy like most third world economies is to miss a point of reality. I believe if funding is to be a option its target should be every willing entrepreneur. Practically those make redundant- the older- have skills and capacity to mentor the youth and supporting their entrpreneueral initiatives create micro job learning centres for youths.

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  • Tumain Michael Yanai.

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    I do agree with your article, the problem of unemployment is serious one and I can easily compare it with a bomb which if not well handled it can explode and cause a lot of trouble, as we have a large number of youth commonity which is unemployed. In my opinion I still believe that most of our youth community lack entreprenuership skills and that is created by poor education system which does not prepare our youth be self employed but rather to be employed am taking Tanzania as an Example.

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  • T.M.

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    I agree. Additionally, most of these Entrepreneurship Funds are hatched and implemented without a thorough need analysis, and without involving the youths from the start. As a result it is like curing a disease with wrong medicine. Is it capitalisation that the youths need? Or there is something more?

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  • Mili

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    Spot on! Indeed there is a myopic view and a belief that funding is the panacea when it comes to youth entreprenuership.As a society we are also guilt in the sense that we do not dig deep and assess what exactly should be the projects to be funded,relevant skills, sustainability.

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