Youth unemployment remains a significant problem across Africa, with population growth adding new levels of complexity to the challenge. Indeed, across Africa, estimates currently reach 60 percent youth unemployment and, unsurprisingly, COVID-19 has exacerbated the problem.
As businesses continue to recover from the economic disruption and devastation caused by the pandemic, many companies have paused hiring due to limited resources to recruit additional labor. Some have suspended efforts to rehire those laid off over the past year to reduce personnel costs as sales slowed. As well as finding it harder to find good quality jobs, young Africans have also faced disruption to education and training.
In response, governments must make concerted efforts to improve business opportunities to support employment, foster innovation and improve economic performance. This way, they can begin to reap the demographic dividend offered by the continent’s growing young population. In other words, this challenge can become an opportunity.
One method that governments – both at the national and municipal level – can explore is the development of job creation hubs.
What is a “job creation hub”?
A job creation hub is a structure in which companies that offer the same or similar services can use a common infrastructure to provide these services to different clients. This structure can help reduce startup costs, alleviate challenges of launching a business, improve business efficiency, provide networking opportunities, promote knowledge exchange, and increase revenue , thereby improving employment opportunities for young people.
These hubs should target nano and microenterprises to boost productivity, improve the inclusion of underserved businesses, and encourage informal sector service providers to formalize their operations. It enables more microentrepreneurs to access infrastructure and startup incubation with mentorship across different value chains. This concept has the potential to reduce barriers to accessing decent jobs.
Brief case studies
The expansion and application of these and other similar structures in various sectors and cities can help increase the supply of services with low barriers to entry. Growth in supply can reduce the cost to the end user and increase ridership and savings. In fact, this structure already exists in different sectors in different forms around the world to increase efficiency and reduce costs. Coworking spaces for tech startups are a great example of the job creation hub structure in action.
China. In China, “Taobao Villages» are hubs that host at least 100 companies involved in e-commerce in one place. In 2009, around three villages obtained this status. A decade later, there are more than 4,000 such “villages” across China.
The government and private companies provide these villages with targeted programs to support entrepreneurship, strengthen logistical connections and improve learning outcomes. Some initiatives have provided women with additional business development training and child care services. In particular, according to the World Bank, the creation of Taobao villages helped reduce urban migration across the country and lifted many rural areas out of poverty. It has also improved rural infrastructure, increased employment opportunities and boosted productivity.
UNITED STATES. In Washington, D.C., the concept of shared kitchen is a good example of a job creation hub. These kitchens come in different sizes and provide infrastructure for aspiring caterers or food vendors, and also offer training programs and employment. The infrastructures are made available by individuals or social entrepreneurs, and different restaurateurs rent work or storage spaces to offer their services.
While the LA Kitchen recently closed its doors, its parent company the DC central kitchenfirst launched in 1989, expands to a larger site.
Light Up Africa Initiative. The United Nations Development Program (UNDP) highlighted the Lighting Africa (LA) initiative as a good example of “inclusive business ecosystem“that provides appropriate information, incentives, investment and implementation support. » This concept is very similar to the concept of a job creation hub.
First launched in 2005, this initiative, funded by the International Finance Corporation (IFC) and the World Bank, supported the development of a market for off-grid lighting systems in Africa. Member companies were able to access product design advice, testing services and training support. More than 2,500 companies were registered in 2012, and this targeted support helped to significantly expand the market and offering of lighting products. The program is now present in more than 20 African countries.
While a job creation hub involves a physical space, the Lighting Africa initiative shows how policies, financing and knowledge sharing can facilitate the growth of inclusive businesses. UNDP also encourages dialogue between governments, institutions and the private sector to create the most effective solutions to support inclusive business.
Nigeria. The Nigerian government has implemented a number of major investment strategies to generate jobs, increase exports and develop the industrial sector, with varying success. The Nigeria Free Trade Zones (FTZs) – particularly Lekki (Lagos) and Tinapa (Calabar), the Free Industrial Zones (EPZs) and the Agege Technology Incubation Center (TIC) – have received many targeted investments. However, many of these projects are do not realize their potential.
The TIC was created in 1993 by the federal government to promote entrepreneurship, based on a model recognized for its strong business development. in the BRIC countries (Brazil, Russia, India and China). However, it lacks the necessary infrastructure such as electricity, broadband, machinery or equipment, as well as capacity development to support startups.
In contrast, structures such as the Co-Creation Hub Nigeria (technology) and the 360 Creative Hub (fashion) show that the job creation hub initiative can be harnessed to create vast opportunities for young Africans . In fact, in 2016, more than 55 early stages These projects were supported by Co-Creation Hub through its incubation unit, leading to the creation of more than 300 jobs. More recent data provided shows that they have supported over 650 startups and created over 7,300 jobs to date. In the same way, 360 Creation Center has expanded, trained and provided infrastructure to over 300 creative entrepreneurs, including designers, photographers, makeup artists and hairstylists, to deepen their understanding of the “fashion ecosystem”. As many as 30 unique designers from this initiative have been given platforms to showcase their products at international fashion shows.
Policies to support job creation centers
As policymakers consider creating job creation hubs as part of their strategies to boost employment, they should ensure that policies, particularly those outlining public-private partnerships, carefully spell out and clearly distinguish the distinct roles and responsibilities of government and private actors at the national and private levels. subnational levels.
The government’s role or support should include economic needs assessment, tax breaks for startups, and low interest rates on loans to participants. Governments and relevant agencies must also create a friendly regulatory environment to facilitate collaboration with private sector players. Private sector partners can provide expertise, particularly sector-specific knowledge or experience, to each job creation hub. These partners can also publicize the hub more widely in their networks and further develop other partnerships to ensure the success of the hub.
The establishment of an efficient job creation center requires solid investment and financing. Governments can offer incentives to partners such as information technology and telecommunications companies, for example, to provide operational services for e-commerce and broadband platforms.
Once built, job creation hubs can operate as self-sustaining social enterprises, run by the private sector and charging affordable rents for office space and rental, equipment rental or membership fees. Member benefits can then include technological and physical infrastructure, networking opportunities, business acceleration, capacity development, access to startup funding, and any licensing or registration requirements for each startup. Additional services or incentives to make the hub more attractive are essential, such as links to business development or training establishments which can provide coaching and educational support to budding and existing entrepreneurs.
The partners and experts involved in the development of a job creation center must also devote themselves to promote community development And knowledge sharing. By offering discounted memberships to young people and startups, job creation hubs can also provide an environment conducive to learning and skills development.
There is no silver bullet to create employment opportunities for young people in Africa, to create an environment conducive to innovation or to stimulate economic growth. However, through targeted policies and investments, such as investing in job creation hubs, governments can certainly get on the right path. As we seek to build back better and stronger from the pandemic, governments at all levels must seize this opportunity for renewed investment in our economies and our young people.