Youth Unemployment and Youth Entrepreneurship Funds

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.