Thursday, July 18, 2024

How to Restructure Youth Empowerment and MSMEs Ecosystem to Create Jobs

“President HH should appoint a Youth Empowerment Czar”

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By Mwansa P. Chalwe Snr

On the basis of the positive feedback from Zambian youths through emails, regarding my recent articles on youth job creation, I have been compelled to continue sharing my thoughts and ideas on this issue. It is my hope that those in the corridors of power may also eventually take note and explore some of these new ideas. Zambian Youths who have written to me have been wondering why Government does not take up some of the suggestions in the articles and implement them because they make sense and appear very practical to them.

“I own a small manufacturing company. Well, I just want to commend you on the article you wrote concerning youth entrepreneurship. Your points are powerful, and if government can follow empowerment procedures on merit grounds, as you stated, millions of youth jobs will definitely be created. If the previous regime wasn’t biased on who to empower, my company would be counting fifty (50) workers by now-imagine,” wrote Philemon Mtonga, a Youth Entrepreneur in an email.

The second motivation for the article was the recent remarks by the Minister of Youth, Sport and Arts, Mr. Elvis Nkandu on Youth empowerment. It raised a number of concerns. The Minister of Youth, Sport and Art ‘s first major statement on Youth empowerment was that his Ministry will send out officers to recover loans from the youth empowerment programmes that were disbursed by the previous Patriotic Front (PF)

“I want to assure you that those that got money wherever they are, let them pay back otherwise, we will not spare anyone that got money from the well-intended projects for other things. What is correct is that a large percentage of those empowerment funds was given to the PF. A lot of that money was given to PF cadres. Those people are Zambians at the end of the day. If there are youths, they also have the right to obtain money from the government but the bottom line is that, that was a loan and if it is a loan, people should pay back,” Nkandu said. “We still have our officers at the ministry who we will send to go and look for those that had acquired these empowerment loans.”

The expectation from the Youth was that, by now, the New Deal Government will have put up a comprehensive statement of its plans as to “how” they will fix the Youth unemployment problem. The Youth are of the view that since the UPND had been in Opposition for 23 years, they must have had a ready-made blue print on how to deal with this problem, but they did not want to share it publicly before they took over power, for fear of PF stealing their intellectual property. The delay in the communication of its strategy on Youth unemployment by the New Deal government, which most experts believe could be rolled out in parallel to “fixing the economy”, is frustrating the youth.

The Republic of Zambia government under the Movement for Multiparty Democracy (MMD) created the Youth Development Fund (YDF) in 2000 in order to address the issue of Youth unemployment through encouraging young people who could not find formal salaried employment to pursue entrepreneurship and self-employment. In 2018, the Patriotic Front (PF) administration commissioned the Zambia Institute for Policy Analysis and Research (ZIPAR) to carry out an evaluation of the programme. And they concluded that the programme failed to achieve its objectives.

“The evaluation found that the YDF created a total of 742 paid jobs from 2011 to 2015. Compared to the amount of resources that were invested in the YDF, the jobs did not sufficiently contribute to reduction in the high youth unemployment rate. Additionally, the welfare of the beneficiaries did not improve compared to that of the non- beneficiaries”, ZPAR study concluded.

The previous PF administration ignored the findings of the ZIPAR Study, and went ahead and implemented a politically motivated, rushed youth empowerment programme in 2020, aimed at winning votes in the 2021election.

YOUTH EMPOWERMENT RESTRUCTURING

The starting point of the New Administration should have been to implement the recommendations of the report and other experts’ views having reviewed the report while in Opposition. The Minister’s statement brings out two major areas of concerns about the current empowerment ecosystem. The first is that he seems to suggest and imply that finance is the first intervention in the Youth empowerment value chain. Secondly, he also seems to suggest that the current arrangement where the Ministry of Youth, Sport and Art will continue to act as a financial institution or a bank despite the fact that they are ill equipped for such a task. Two years ago, in 2019, I penned an article where I outlined why the Youth Development Fund had failed to create jobs. It may be useful for the new Minister to read it.

Why Youth Development Fund has failed to create jobs and changes needed

There is a need for the new administration to consider the reasons why Youth empowerment programmes have failed to create jobs and consider restructuring the whole system in such a way that it overcomes past bottlenecks. The planned enhanced Constituency Development Fund (CDF) and the call for Youths especially in rural areas to form companies and cooperatives as the President suggests from his social media feeds, is not adequate. It is similar to previous approaches that were based on the upfront funding model which miserably failed. There are number of actions that are required to be taken to redress this situation.

The first issue that should be addressed is the issue of access to empowerment services. If any programme is to be succeed, it has to ensure that hundreds of thousands and better still, millions of youth have access to such programmes. The net has to be cast wider than before. There is need to have a structure and process that ensures that this is taken care of. How to navigate this conundrum is the New Dawn’s administration’s challenge. They have to think outside the box. However, there is help outside if they seek it.

The second issue that should be sorted out in terms of restructuring the Youth Empowerment Ecosystem, is the clear understanding of the composition of the youth empowerment value chain. This will reduce the risks of failure of youth led businesses. The Authorities need to understand the multiplicity of challenges that the Youth face in business and make a determination on how they will sequence the interventions required. The fallacious belief that finance empowerment upfront is the answer to the creation of jobs should be discarded. Zambia’s 21 years’ experience with the Youth Development Fund (YDF) and other countries’ experiences has proved that it is a flawed approach.

The third factor that is required to be considered in the restructuring of the youth empowerment ecosystem is the identification of the various youth demographics. The Youth population is not homogeneous and any interventions that approaches the problem with a one size fits all solution, as was in case in the past; and as it appears to be with the planned Constituency Development Fund (CDF), is bound to fail. There is a need for a differentiated approach. The type of interventions to be rolled out should depend on the identified youth demographics’ specific needs. For illustrative purposes, the needs for a youth start up business and a Youth going concern are different so are the STEM (Science, Technology, Engineering and Maths) College Youth’s needs which should be focused on imagination and innovation.

In the 21st Century, we have two major tools to solve humanity’s problems. These are knowledge and technology. The Ministry should avoid implementing policies based on guess work. There is need to make informed decisions by commissioning studies and researching. In addition, the technological tools that are available ought to be used in solving youth empowerment.

It is also vitally important that whatever interventions are designed and are implemented, there is need for the Ministry communicate to the Youth population using multiple channels of communications including those that are youth friendly. The communication budget ought to be substantial.

The need to depoliticize the Youth empowerment programmes cannot be over emphasized to ensure that awards are made on merit. All previous administrations have used Youth empowerment as a tool for advancing its political goals, but it in reality, it has proven to be a very ineffective strategy. The Ministry will need to consider sub-contracting the selection of youth beneficiaries for empowerment programmes to independent private sector firms.

The Ministry of Youth, Sport and Arts has to also now realize that with the creation of the Ministry of SMES, its role will have to change. It should do more coordination of Youth empowerment programmes through its own special purpose vehicle implementing Agency the National Youth Development Council (NYDC) rather than implementing them. The disbursement and collection of money for the youth, for example, should be under the SMES Ministry through the Agency CEEC.

MINISTRY OF SMES RESTRUCTURING

The creation of the Ministry of Small and Medium Enterprises is a very welcome development. It shows that the New Deal government intends to place MSMEs and Co-operatives at the centre of economic growth, job creation and poverty alleviation. But for innovation and effectiveness purposes, it would have been preferable to name the new Ministry as: the Ministry of Informal, Micro and Small Enterprises (IMSE). This would have made Zambia one of the few countries to formally recognise the informal sector’s importance in the economy. It would have signalled Zambia’s intention to include the sector into the formal economy with smart interventions. Zambia’s economically active persons are found in IMSE and it should be the target source of millions of jobs and potential economic growth. The medium and large companies should be left to Zambia Development Agency under the Ministry of Commerce and Industry.

The Author has been an ardent advocate of the promotion of local investors than foreign investors as that is the sure way to achieve inclusive growth and development. It is time that government paid more attention to the promotion of local investors while at the same time not neglecting serious foreign investors especially those that want to partner with Zambians. Since 2000, various administration have focused on foreign investors to the disadvantage of local private entrepreneurs, but have jobs been created and poverty reduced? The answer is an emphatic ‘NO’.

Youth entrepreneurship, not foreign investment, key to Zambia and Africa’s inclusive growth and job creation

The new Ministry’s overarching mandate should be to provide leadership in the coordination, integration and mobilisation of efforts and resources for the promotion of formal self- employment, and the development of entrepreneurship. The Ministry should ensure that there is an enabling legislative and policy environment to support the growth and sustainability of MSMEs and Cooperatives. But, in order for the Ministry to achieve these objectives, it has be properly structured from the word go.

The first step that the Government and the Minister of Small and Medium enterprises should take is to immediately carry out a restructuring and rationalisation exercise of Zambia MSME’s eco system. At the moment, the core activities of the MSMEs are spread out in various ministries and are uncoordinated. There is need to have these brought under one roof. The Ministry should be able to carry out both non-financial and financial interventions right from the beginning if it is to succeed quickly and avoid a long learning curve. The new Ministry should have two quasi government institutions as policy implementing agencies. These implementing agencies should be under Ministry’s supervision but outside it and operate fairly autonomously like ZRA, RATSA, RDA etc. do for their respective ministries.

The first implementing Agency should be providing non-financial support to SMEs. These services broadly fall under information provision, start- up advice and capacity building. This entity should carry out activities such as business advisory services like information on how to start a business, training course services, facilitation of access to finance, business planning, tender and procurement advice and assistance, export assistance etc. There is a need for the formation of a new entity because the old Small Enterprise Development Board (SEDB), which could have fitted hand in clove in the new ministry, was abolished and its activities housed in Zambia Development Agency (ZDA). The Micro, Small and Medium Enterprise division of ZDA should immediately be transferred to SME Ministry while awaiting formation of new vehicle.

The second Agency should be responsible for providing financial assistance. The mission of this implementing agency should be to provide access to financial products in an efficient and sustainable manner to SMMEs and Co-operatives throughout Zambia by providing loans ( Asset Finance, Bridging Loan, Revolving Loan, Term Loan),providing credit guarantees to SMMEs and Co-operatives, creating strategic partnership with Financial intermediaries and a range of institutions who can assist SMMES and Co-operatives, and developing innovative finance products that ensure that provision of affordable finance becomes a reality. In Zambia, this role should be played by the already existing Citizen Economic Empowerment Commission (CEEC) but its mandate should be expanded so that it enlarges its resource envelope expands its financial products through collaboration with strategic partners.

The issue of Youth unemployment is so important that President HH is well advised to give it more time and focus. He should seriously consider appointing a Youth Empowerment Czar who can advise him and coordinate policy for this serious and critical problem. He should consider taking a leaf out of former US President Barack Obama’s book who appointed a Motor industry Czar in 2008 to save it from total collapse. In fact, he should even consider a “China Czar” and a “Mining industry Czar”. These are key areas for economic recovery requiring special attention.

To conclude, in the event that the Ministers of Youth, Sport and Arts and Minister of SMEs finds some of the ideas in the article sensible and want to share notes further with the writer informally, they should feel free to do so. We could share ideas on a “Comprehensive Youth Empowerment Strategy” that is systematic and covers all youth demographics and challenges. And such strategies ought to involve all Youth cluster Ministries.

The creation of millions of jobs in Zambia is easy if blue ocean buttons were pressed and innovative strategies that have never been tried before are implemented. The current approach and the proposed initiatives like CDF in their current form, will not work in creating jobs but just pour money in a bottomless pit. They need refinement .We can only build the country as “Team Zambia” by utilising all Zambian thinkers regardless of political affiliation. The UPND Alliance needs to start consulting informal think tanks to complement their internal capacity.

The writer is a Chartered Accountant and Author. He is a retired international MSMEs Consultant and an independent financial commentator. He is also an Op-Ed Contributor to the Hong Kong based, Alibaba owned, South China Morning Post (SCMP) and a Co-developer of the Youth Employment Creation App (YECA). Contact: [email protected] or www.youthemploymentcreation.com

7 COMMENTS

  1. Do we have the Current outlook say 2021 on SMEs and Youth empowerment programmes from which we can move from and create infrastructures ??

  2. Great write up but in my opinion, very few green fields projects should be funded by CEEC or any government empowerment initiative.
    The first people to focus on should be those already doing something.
    Young people manufacturing wood and metal products or other entrepreneurial businesses already off the ground but lacking expansion strategies including finance.
    Business is habit and not everybody can have the patience to develop the required attributes so needed succeed there in.

  3. Great write up but in my opinion, very few green fields projects should be funded by CEEC or any government empowerment initiative.
    The first people to focus on should be those already doing something.
    I mean people manufacturing wood and metal products or other entrepreneurial businesses already off the ground but lacking expansion strategies including finance.
    Business is a habit and not everybody can have the patience to develop the required attributes so needed to succeed there in.

  4. We are very far look at fore instance the SME POLICY INDEX including the SME acts Its about issues of capacity Infrastructure capital and market support clearly defined and acknowledged in the acts We can be there with great focus and knowledge sets to create and administer small businesses from them to firms to be listed on Lusa and other in capitulation

  5. Important topic, but heavy reading for an audience of very short attention span. Write it again, shorter and you’ll get more clicks and comments if the title includes “…says Minister so and so”. We love gossip, click-bait us!

  6. Great insights…. I would add a few comments. Government has a clear mandate on job creation yet it needs to seriously consider the role of the private sector and other actors in all this. Government cannot be everything. Policy initiator, policy rationalization and enactment, policy and programs implementation…. capacity issues come up.

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