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Marije Balt
Director, Springfactor Research & Consultancy
The Netherlands, 03-03-2015

The case for promoting youth entrepreneurship in fragile settings


Youth are holding an important key to stability and peace in Africa and the Middle East, but are no specific priority for the Dutch government. Preventing them from becoming youth at risk requires focused policies. This brief argues that the Dutch government should specifically promote youth entrepreneurship, working together with NGOs to provide the right conditions and companies to help create business opportunities.

Half of Africa’s population is under 18 years old, and their number will double by 2045; the Middle East is equally experiencing a youth bulge. This is a challenge as many of these youth are or will be unemployed, especially in the fragile and conflict affected regions. Unemployed youth not only has the potential to damage the social fabric, they provide a fertile breeding ground for crime, piracy, violent extremism and other symptoms of fragility and instability. Migration, or rather their attempts to migrate to Western countries, is one of the most visible and disquieting symptoms; a source of concern for many of our governments, requiring focused policies.

However addressing youth issues is no specific priority for the Dutch government’s  policies. This opinion brief is making the case for prioritising youth and specifically their entrepreneurship. Not only in so-called ‘fragile states’ but also in other developing countries with fragile regions or a turbulent past.

In a typical Nairobi slum, entrepreneurial activity is one of the most visible aspects of the local economy; buying and selling goods, offering services such as motorbike taxis or construction work. However these concern mainly short term survival strategies in the informal sector. These business hardly grow, are not sustainable and don’t manage to innovate; and will not keep youth away from better paying alternatives offered by political, criminal or other groups.

What we can do about this is limited; creating the right conditions and opportunities. However, young aspiring entrepreneurs in fragile settings can greatly benefit from programmes or initiatives that are based specifically on their drivers and the obstacles they encounter. These obstacles usually come down to:

  •         lacking enabling environment
  •         lack of education and skills required for entrepreneurship
  •         lack of business opportunities

This brief recommends three interlinked policy measures to promote youth entrepreneurship:

To donors:

  •         lobby with government to address obstacles and push reforms

Youth require favourable conditions to start and run a sustainable business, which many governments in fragile regions recognise on paper but do not implement. Major reforms fail to be implemented such as on rule of law,  the banking sector (for access to finance) and anti-corruption. In many cases this is due to vested political economy interests, excluding newcomers such as youth. Progress on this type of reforms that benefit youth should be addressed by the Dutch government in political dialogues and directly linked to aid and trade programmes.

To service providers and NGOs:

  •         train youth’s entrepreneurship skills

Creating the right conditions for youth to start a business requires different skills, such as initiative and innovation. Coaching these skills can help diversify the economy, but in what sector should not be predetermined. Farming for example has become less popular as youth are attracted to cities. Supporting entrepreneurship requires a flexible approached geared to where the economic opportunities lie at that moment.

To (international) companies:

  •         Promote inclusive value chains and local sourcing

Lack of business opportunities can prove to be a major obstacle for youth entrepreneurship, both due to the dominant political economy and general lack of economic dynamics. However recent empirical research demonstrates that international companies – in this case Dutch – investing in fragile settings do promote sustainable work for young entrepreneurs, mainly through local sourcing. An example is Equator Products, a company creating thousands of jobs for local (young) entrepreneurs. NGO Solidaridad helps raise the quality standard of their supplies and services. International companies generally look for new markets and have an incentive to work with youth. The Dutch Good Growth Fund (DGGF) might prove useful to help companies operate in a responsible manner, and continue to create work for young entrepreneurs in their value chains.

Implementing these policy measures in isolation from one another will not serve young entrepreneurs. The above mentioned actors – governments, NGOs and companies – should work better together in locations and sectors where the economic opportunities lie and youth is keen to engage – in small steps with granular support. These kind of partnerships also help cope better with the occasional geopolitical shocks.

While promoting youth entrepreneurship is certainly not a silver bullet to address fragility and prevent instability, it can help transform ‘youth at risk’ towards ‘youth at work’, and mitigate problems emerging from the youth bulge in Africa and the Middle East.

 


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Promoting inclusiveness in the Dutch policy agenda on trade and international cooperation

This contribution is part of a consultation for the Dutch Ministry of Foreign Affairs on how to promote inclusiveness in the Dutch policy agenda on trade and international cooperation.
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