Encouraging youth economic participation through Shared Growth
03 November 2017
Africa’s greatest resource and potentially its sharpest competitive advantage in the global economy is its young and growing workforce. Half of Africa’s population is under 25 years of age. By 2040, Africa is expected to have the largest workforce in the world, 40% of which will consist of young people. But the economic growth the continent has enjoyed in recent years has not created enough opportunities for its young people to use their talents to earn sustainable livelihoods.
Unless young people are given the chance to access the right education and training, or employment and entrepreneurship opportunities, Africa’s development potential will not be realised in full, and its young people may become a source of social and political instability.
Africa has 600 million young people, of which 72% are unemployed or vulnerably employed. Another 11 million youth are expected to enter the African labour market every year for the next decade, according to the Mastercard Foundation. Representatives at the World Economic Forum (WEF) on Africa have been set the challenge of finding ways of achieving inclusive growth, particularly for young people. There will, for example, be a panel discussion, “Leading for the Future,” with a focus on “How can the world’s youngest continent exploits this endowment to build a new generation of leaders capable of driving success in the Fourth Industrial Revolution?”
We believe that some of the answers lie in our philosophy of Shared Growth, and a recognition that we must use our expertise and resources to find sustainable, commercially viable solutions to the challenges of inequality, poverty and unemployment. Shared Growth initiatives focus on education, enterprise development and financial inclusion. We have chosen these three pillars because they are critical to human development.
Young people need skills that enable them to secure their future; entrepreneurs need access to opportunity, skills training and capital in order to grow their businesses, create employment and grow the economy; and people need access to reliable and affordable financial services and products. These are areas where we can help improve lives and fulfil our principle of stewardship – leaving the communities where we operate better than when we found them.
We have set ourselves a specific objective of preparing young people across the continent with the requisite skills to be competitive in the workplace. Our ReadytoWork programme provides them with free education and training programmes, online and in workshops, with accredited institutions.
So far, the programme has been rolled out to nine countries and helped equip 205 366 young people with people, money management and entrepreneurial skills. ReadytoWork seeks to address the challenges under discussion at the WEF meeting on Africa which include reinventing job-ready training, advancing digital fluency and other key skills, and reforming education and training systems.
In addition to ReadytoWork, we are investing R1.4bn in education over the next 3 years. Between 2016 and 2018 we will have provided over half a billion rand in university scholarships across all our markets, providing opportunities to thousands of deserving students. While many of the key pieces are in place, government, business leaders and educators need to work together to set out a shared vision and the necessary policies and programmes to prepare African youth for the Fourth Industrial Revolution and ensure their competitive advantages become sustainable livelihoods.
In its draft, June 2016 strategy document, the African Capacity Building Foundation cites a study on the capacities needed to implement the African Union’s Agenda 2063 development plan, which says that Africa has a projected gap of as many as 4.3 million engineers and 1.6 million agricultural scientists and researchers. In most African countries, the gap between the actual number of professionals in critical technical areas and the minimum required number is as high as 70%. Until there is a better match between the needs of the economy and young people’s skills, they will continue to struggle to find jobs.
Enterprise Development is critical to employment creation and economic growth. It is therefore imperative to build a culture of entrepreneurship and to support the development of small businesses and their integration into the African market. Almost half the labour force in Africa is employed by small businesses. These businesses are especially important in low-income communities, where they provide informal work to those who lack the qualifications or experience to secure formal employment. Small businesses also help diversify economies away from reliance on a single commodity, making them more resilient in the face of economic headwinds, and help broaden the national tax base.
Our Shared Growth enterprise development programmes not only offer entrepreneurs business support and training, but also access to markets, without which they cannot succeed. As a financial institution we are in a unique position to connect small businesses with large corporates. We have created a portal that links 59 000 small and medium enterprises to 7 000 corporate buyers where last year over R30 billion worth of tenders was advertised. Last year we agreed to R1.38 billion worth of mandates for SMEs who are doing business with corporate partners and provided training to thousands of SMEs.
The last pillar of Shared Growth is providing access to financial services, an important means of facilitating economic activity. Technology has reduced the cost of providing banking services. New digital platforms are being designed for those who – until now – have not had access to formal financial services. Already we have a network of 10 013 ATMs across the continent and are constantly expanding our network of branches and service points.
In its 2017 Inclusive Growth and Development Report, the WEF observes, “A coordinated global initiative is required to transform inclusive growth from aspiration into action – into a new global growth agenda that places people and living standards at the center of national economic policy and international economic integration.” We believe our Shared Growth philosophy goes a long way to achieving this. We look forward to continue collaborating with governments, our corporate partners, communities and other stakeholders to create more opportunities for inclusion and to grow the African economy.
Sazini Mojapelo is Head of Citizenship at Absa
Disclaimer: The advice contained on this blog is for general purposes only and does not take into account individual circumstances, objectives or financial needs. Accordingly, readers are advised to seek appropriate advice from licensed professionals prior to making any investment, or taking up a financial product or service.