Africa’s Challenge: Africa’s paradox is a continent blessed with plenty of resources yet plagued by abject poverty, with a galloping, rampant, and unsustainable number of youths not in Education, Employment, or Training (NEETs). Africa has abundant gold, platinum, cobalt, copper, diamonds, uranium, chromium, manganese, rare-earth elements, bauxite, coltan, tantalum, and graphite. Africa is energy-rich with huge reserves of petroleum (oil), natural gas, and coal. Africa is blessed with fertile agricultural land and fresh water for growing food crops and cash crops, fisheries, keeping livestock, and forestry. Africa has the youngest labour force globally, requiring skilling, re-skilling, and repurposing where needed.
Entrepreneurs start Micro Small and Medium Enterprises by taking calculated risks to mobilize all factors of production to create wealth and jobs. Africa is estimated to have 52 million MSMEs, which compose 90 percent of all businesses and provide 80 percent of all jobs. Economic actors in Africa (government, private sector (MSMEs), banks, development partners) can provide large-scale, pervasive support for MSMEs to address Africa’s problems of poverty (by MSMEs creating wealth) and unemployment (by MSMEs creating jobs).
Behavioral Economics Global Insights on MSMEs Support for Job Creation
International Labor Organization’s (ILO) report entitled ‘’The Next 15 Million Start and Improve Your Business Global Tracer Study 2011-15’’ posits that its Start and Improve Your Business (SIYB) program has led to the creation of an estimated 9 million jobs globally by 2015. This followed training of over 15 million entrepreneurs. The result was the founding of at least 2.65 million new firms and the expansion of 40% of existing businesses.
Access to finance is perpetually flagged as the greatest hindrance to MSMEs’ efforts to create wealth and jobs. International Financial Corporation (IFC) estimates that SMEs in developing countries have an unmet financing need of nearly $4.1 trillion. IFC research established a jobs multiplier effect, estimating that for every $1 million in lending to SMEs, approximately 16.3 direct jobs are created.
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Extrapolating data of IFC lending to its partner financial institutions (banks, MFIs, Digital Credit Providers- DCPs, fintechs, etc.) for onward lending, estimated creation of 6.1 million direct jobs in 2018 alone by beneficiary SME borrowers.
Indirect job creation via indirect (supply chain linkages) and induced effects (increased household spending) showcased one study where 7,200 indirect jobs were created for 300 direct jobs created in an existing SMEs expansion project.
IFC support of Sri Lanka’s Commercial Bank of Ceylon (CBC) over 2009-2012 via equity investment, SME lending advisory services, and loans for onward lending to SMEs shows that a sample of 100 MSMEs which obtained loans from CBC in 2009 created 2,650 permanent jobs (26.5 jobs per sampled firm) with their annual job growth at 12 percent posting more than twice Sri Lanka’s job growth rate.
UNDP- and UNCDF-led catalytic credit guarantee scheme initiatives have successfully mobilized bank loans and demonstrated job creation. The UNDP-UNCDF Afghanistan Guarantee Facility mobilized approximately $20 million in bank loans to support 7,500 MSMEs and create 16,000 jobs, of which about 5,000 were held by women.
The partnership between Egypt’s UNDP and the Micro, Small & Medium Enterprises Development Agency (MSMEDA) disbursed over 27.5 billion Egyptian pounds in loans to more than 900,000 MSMEs, creating nearly 4 million job opportunities.
Streamline the Supply Side of Blue Collar Workers in Africa
On the supply side, doing TVET education differently would entail an orchestrated, unprecedented, taxpayer- and development-partner-funded expansion of TVET infrastructure and the recruitment of tutors to skill millions of people excluded from formal tertiary education over the years.
The TVET curriculum would need to be rebooted to adopt global best practices and incorporate modules for financial literacy and entrepreneurship education. Adopting the globally renowned German and Swiss apprenticeship model is paramount to ensuring that youths have substantive, relevant hands-on work experience.
All TVET blue-collar graduates should also be given a taxpayer-funded starter toolkit.
A public credit risk guarantee scheme would be able to entice banks to give credit to the TVET graduates to usher in an age of a ‘’TVET startups nation’’. This would be the self-employment route for the army of TVET graduates.
Orchestrate the Demand Side of Blue Collar Workers
African governments have to match the rapid expansion of the demand side by MSMES to revolutionize the domestic opportunities economy to absorb the millions of TVET blue-collar jobs graduates.
This requires governments and Development Financial Institutions (DFIs e.g., IFC, AFDB, EIB, Proparco, BII, Norfund, FMO, KFW, and Sovereign Wealth Funds- SWFs ) to provide banks, MFIs, digital lenders, fintech,s and Saccos with low-cost patient equity capital and subordinated debt as well as credit risk sharing guarantee schemes and Business Development Services (BDS) technical assistance grants to subsidize provision of financial literacy, entrepreneurship education, and digital tools to beneficiary MSME borrowers.
All participating financial institutions will be required to commit to the creation of 10 direct and 10 indirect jobs for each participating borrower MSME.
Lessons Learnt From Kenyan Banks Wealth and Job Creation Interventions
By September 2025, Equity Group Foundation had raised a cumulative total of KES 98 billion. Wings to Fly (WTF) and Elimu scholarships comprise 46 percent of this social investment. Equity Leaders Program (ELP) 36 percent. MSMEs’ enterprise development and financial inclusion of women and youths is 8 percent.
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Equity Afia health clinics franchise 5 percent. Energy (clean energy for institutions and households) and environment (tree planting), 3 percent. Food and agriculture 2 percent.
Equity Group Foundation’s investment of KES 7.84 billion over the years in enterprise development and financial inclusion has resulted in the financial education of 2.490,316 women and youths.
The Young African Works (YAW) program, supported by donated grants and a credit risk guarantee from the MasterCard Foundation, has trained 659,602 MSMEs in entrepreneurship education while crowding in KES 378 billion in loans disbursed by Equity Bank to 350,149 of the trained MSMEs.
Kenya Commercial Bank (KCB) Foundation, in 2016, founded its 2Jiajiri youth empowerment and job creation program that equips out-of-school youth and women with technical vocational skills in key sectors such as agribusiness, construction, automotive engineering, beauty & personal care, and ICT.
The objective is to empower and equip unemployed and out-of-school youth to grow micro-enterprises by providing technical skills training opportunities while upskilling and certifying existing micro-enterprises that wish to move their businesses from the informal to the formal sector.
Through government-accredited TVET institutions, participants receive hands-on training, financial literacy, business development support (BDS), mentorship, and access to startup kits and financing. The objective is to help them establish sustainable enterprises or transition into gainful employment. Since 2016, over 35,000 youth have been trained, and more than 150,000 jobs created, while KCB Bank was able to disburse over KES 1.6 billion as capital to the qualified 2Jiajiri youth beneficiaries.
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