Katherine Hirst: Growing SMEs and Young People, Together

Image: Richard and Omara at Miracle Motors in Kampala. Phote Credit: Challenges Worldwide / Esther Mbabazi

By Katherine Hirst, Challenges Worldwide

We know the statistics - worldwide more than 1 billion young people will enter the job market between now and 2030, 600 million jobs are needed globally over 15 years to keep current employment rate, 71 million young people are unemployed globally, the youth population in Africa will double to over 830 million by 2050, 75% of young people in developing countries are in irregular or informal employment.[1]

 

Even among young people who are lucky enough to receive an education and go to university there is no guarantee of a job at the end. In Uganda 40,000 young people graduate university every year, with only 8,000 securing employment.[2] Part of the issue is a lack of jobs available, the other is the skills gap between what employers want and what graduates have.

 

To start solving the problem two things are needed:

  1. More jobs
  2. The right skills to do the jobs

 

Which comes first?             

With the job market as it is, there is little surprise that many people turn to starting a business – with 285-345 million informal enterprises in emerging economies. And, whilst starting a business can be a solution for many young people, most remain purely as livelihood businesses - remaining in the informal sector and struggling to move to a position where they lift their owner out of poverty, let alone create jobs for others.

 

So instead of focusing on starting a new business, why not look at the existing ones? There are 25-30 million SMEs in emerging economies, contributing up to 45% of total employment and 33% percent of GDP.[3] If each SME gave an opportunity to two young people then youth unemployment would be virtually eradicated.

 

However growing SMEs is not without its challenges, with failure rates high, access to finance difficult and leadership skills lacking. SMEs need more skilled employees who can raise the game in terms of management and leadership, financial accounting, and use of technology. These skills can help bridge the gap needed to access finance, and create more stable organisations – in turn helping them to grow and employ more people.

 

But which comes first? SMEs can’t grow without the right people working for them, and the right people can’t get the jobs unless they grow.

 

A virtuous circle

At Challenges Worldwide (no relation to Business Fights Poverty Challenges) we’ve looked at how we can solve these problems together. Our programmes place young people in an African SME for 12 weeks, pairing a UK volunteer aged 18-25 with a national from Ghana, Rwanda, Zambia or Uganda to work as Business Support Associates. We provide training in Professional Consulting and Management and Leadership that is accredited by the Chartered Management Institute. Through a structured programme these young people identify the needs of the SME, working to recommend solutions to help them grow. Longer term we utilise the information collected in our software to understand the barriers to growth and help SMEs access the finance they need.

 

We have spent over 15 years providing access to finance, consulting and private sector development services to SME’s in emerging economies. As you probably know, that sector is dominated by professionals with countless years of experience. So when we first started working with 18-25 year olds we were sceptical. They arrive mostly with no training in consulting, no experience in business, and if they do have a degree it is often in an unrelated subject. Honestly, we wondered what young people could achieve. But after working with over 700 young people providing 132,000 days of onsite support to 300 enterprises – the results have been overwhelmingly positive.

 

Our Business Support Associates have enabled us to identify the key barriers to growth for these enterprises – through learning about enterprises from within and getting their hands dirty they’ve discovered as much, if not more than many more experienced consultants we’ve worked with.

 

  • 51% addressed issues with marketing strategy
  • 31% addressed issues with lack internal processesa
  • 38% implemented new record keeping systems
  • 23% improved market knowledge
  • 20% addresses a lack of human capital

 

Our young people have demonstrated that they can learn the right skills - in a week; that they can apply these quickly and create lasting change for themselves and the SME’s - in 12 weeks; and that these SMEs can grow – and in many cases employ them.

 

Each SME we work with has seen that the skills of two young people for 12 weeks is hugely valuable; and each placement has demonstrated that real life experience in an enterprise provides more of the skills young people need to be successful in their career than months of classroom learning. Young people can start to create the jobs which will employ them. 

 

We’re 0.001% of the way there. How do we connect the other 29,999,700 SMEs and 70,999,300 young people?

Challenges Worldwide work to provide innovative solutions that engage, grow and connect people to emerging opportunities for development and investment. We support young people through structured work-based placements, support enterprises to grow organisational capacity and deliver a range of consulting services enabling growth connections in trade and finance. To find out more visit www.challengesworldwide.com

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