Creating High-Impact Employment Experiences for Youths

Youth unemployment, or the creation of “generation jobless” as it has been called, is a global crisis affecting both advanced and developing economies. It represents a colossal waste of human potential and a substantive drag on future economic growth.

A report from EY and the MasterCard Center for Inclusive Growth highlights the fact that while global youth unemployment is on the rise and is expected to remain unchanged through 2018, some businesses are discovering the dividends of offering work and employment opportunities to young people.

In addition to the 358 million young people (aged 16–24) not in education, employment or training (NEETs), a further one billion young people will enter the labor market between today and 2030. In addition to the unemployed, millions of young people are engaged in part-time, temporary or “zero hours” contracts that offer no security, few development opportunities and little autonomy.

In the Middle East and Africa, for example, 80% of young workers are employed in the informal sector. Youth under 25 and living in Spain or Greece have a 50% chance of being unemployed.

These are the headline data: a global crisis of challenging proportions.

There is no silver bullet to solve this crisis. Youth unemployment is not a one-dimensional challenge. But there is some good news.

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Solar energy to the rescue in Zimbabwe

As it increasingly becomes clear that climate change has become a reality in Zimbabwe, many are struggling to come to terms with its effects — especially the blazing heat that now characterises most days. But for people like Tundondeghe Chiraya and her family, the scorching heat spells an uninterrupted 24/7 supply of electricity.

Having recently moved into their new house built on a stand acquired in the new settlement of Budiriro 5B Extension — neighbouring thousands of houses built by banking institution CABS under the Budiriro Housing Scheme — life would have been most unpleasant without any source of power supply, as Zesa-powered electricity is yet to reach the area because getting connected to the utility’s power lines is proving to be a cumbersome process filled with hurdles.

But power problems are slowly becoming a thing of the past as people in the area have been left with no choice but to turn to solar power.

While the investment in a solar panel and battery was initially made sulkily, the Chirayas were soon to realise turning to solar energy was one of the best decisions they could have ever made. While it might have taken sacrifice to fund the initial setting up of the solar connection in their home, the return on investment that immediately followed has left them without any hint of regret.

“I have to admit that before we connected to solar power, I wished Zesa would hasten to connect the area so we would avoid the costs, but I have since changed my mind,” said Chiraya with a beaming smile.

“With our solar panel and battery, we are able to power lighting for the whole house, the entertainment set [television, home theatre system, DStv] and to charge all our cellphones. We use gas to cook and we are planning to invest in another battery so we can also power the fridge and other electrical gadgets.

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Solar the Answer to East Africa’s Energy Demand

Kenya continues to experience healthy economic growth due to increased foreign direct investments (FDI), better living standards in the urban areas, and more multi-nationals setting up base in the capital city as they seek to penetrate the regional market.

The upward trajectory in the economy has seen the construction of iconic commercial buildings as investors, local and international, seek to tap into limited office space and take advantage of the robust retail market. This competition in the property market is being driven by Nairobi’s status as an investment hub for the East and Central African region.

Devolution has also spurred more activity in the construction sector as counties seek to erect mega structures that will positively impact development in their respective areas. New buildings going up include county offices, hospitals, schools and agricultural facilities such as factories and processing plants.

The 2016 City Momentum Index (CMI) report by Jones Lang LaSalle, an investment management company specialising in real estate, points out Kenya’s booming economy as the driving force behind the development of new infrastructure and the country’s booming real estate sector. These activities, according to the report, have enabled Nairobi’s expansion as it registers among the highest levels of office and retail construction of any city globally at the moment.

FAST-GROWING DEMAND FOR POWER

All of this new construction amounts to a fast-growing demand for power, with current grid capacity sometimes struggling to meet this demand, which results in power rationing or blackouts. This interruption to business operations stifles efficiency, and therefore, profits.

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10 Ways Crowdfunding Will Impact Investment Banking

When enhanced technology touches an industry, there are often casualties. Unfortunately, in many instances, technology progression and creative destruction mean a net job loss. Jobs are created in one area, but higher-tech replaces many others elsewhere. We are seeing upheavals almost everywhere, from transportation to education. Investment banking is one industry on the cusp of a major overhaul. Financial technology, including crowdfunding is leading the way. While still in its infancy, equity crowdfunding and all that surrounds it does not seem to be going anywhere. With the crowdfunding industry’s substantial growth, many are wondering how this will affect traditional finance, including investment bankers. As always, there are pros and cons to the introduction of nascent trends and technologies into a very traditional business, but there is always opportunity in the face of change. The key is to find how to ride the wave as it moves along.

While crowdfunding and other financial technologies do not represent a cure-all or complete replacement of traditional methods, there are areas where both crowdfunding and traditional finance and investment banking will work in tandem to effect major change within small business finance. There are also downsides, some of which we discuss more in-depth here.

Speed of Transactions

In almost every instance, when technology touches a market, it increases both speed and efficiency. Corporate finance is no exception. With the help and encouragement of both regulators and technologists, companies are seeing much more rapidity in investment cycles. Services like digital signatures, escrow, accredited investor confirmations and bad-actor checks are all becoming more streamlined. The push for direct, internet investing is adding fuel to the fire to make this happen with more efficiency.

As the various required regulatory items in capital transaction see drastic reductions in their hurdle speed, transactions flow more smoothly and deals get done more rapidly. It’s a win-win for all involved.

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The importance of SMEs in growing inclusive growth in Africa

Inclusive economic growth is growth that leads to job creation, causing a ripple effect on the purchasing power of the majority of the populace. The private sector, and in particular small and medium enterprises (SMEs), are the drivers of an economy. SMEs are also the largest providers of direct employment and inclusive growth can be achieved through promotion of policies that would drive their development.

According to the Central Bank of Nigeria, 96% of Nigerian businesses are SMEs (US = 53%, EU = 65%). Inclusive growth can be achieved by positioning these SMEs to take advantage of the opportunities in the economy.

Financial services is crucial to SMEs

According to the Small Business Administration of the USA, two of the top 10 reasons why SMEs fail are lack of capital, and poor credit management. It is no different in Nigeria and the rest of Africa. While there are several aggregators/sources of capital including Private Equity (PE) funds, development finance institutions (DFIs) and insurance companies in Africa, the key players in the financial services industry that are optimally positioned to serve SMEs and therefore drive inclusive growth are banks and micro-lenders.

Government macro-economic policies impact SME financing

Lenders operate within the wider macro-economic environment, and government policies regarding inflation and infrastructure are crucial to keeping the cost of funding down. When inflation drives up the cost of funding and ultimately lending costs, it in turn drives up the cost of production, making SMEs less competitive.

Standardisation of physical address systems is another area where African governments can make a meaningful contribution to SME growth. Inconsistent address systems make it difficult for SMEs to establish formal relationships and credit histories with suppliers, customers and transient clients.

What can banks do?

At the credit application and processing stage, banks need to invest in systems that allow more efficient and tailored risk profiling. Such a system rewards diligent entrepreneurs with lower lending rates and greater access to capital.

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