Three winning ways to tackle ICON
Posted on 1 June 2019 by Xolisa Dhlamini
Emerging Market Business

Three winning ways to tackle youth unemployment through development finance

Development finance is an underutilised tool that can be directed towards tackling South Africa’s unacceptably high youth unemployment beyond the remit of mainstream finance.


Development finance is an underutilised tool that can be directed towards tackling South Africa’s unacceptably high youth unemployment beyond the remit of mainstream finance.

South African youth unemployment is unacceptably high at 55.2%. This means that over half of those aged between 15 and 34 are not gainfully employed or generating their own income. 

This is a complex problem, deeply rooted in a combination of historical, socio-economic and developmental causes. And it is going to be extremely difficult to solve it. Nevertheless, one currently underutilised and potentially powerful tool for addressing this issue is development finance — an emerging discipline that aims to serve especially underserved people and communities beyond the remit of mainstream finance.

In his book Development Finance: Innovations for Sustainable Growth, Professor Nicholas Biekpe, director of the Development Finance Centre (DEFC) at the UCT Graduate School of Business (UCT GSB), outlines how development finance can help address Africa’s development gaps in three key ways: through both commercial and not-for-profit initiatives as well as through training people in the relevant skills and attitudes to spread this approach.

1. Impact investing: Doing good while doing well

When Old Mutual set up its School and Education Investment Impact Fund back in 2011, the market did not really know what to make of it. The fund was trying a new approach to addressing one of the country’s most pressing challenges and one that is directly fuelling the youth unemployment crisis: education.

Education, or rather the lack thereof, is clearly an Achilles heel for youth development in SA. It is estimated up to 400 000 children drop out of school each year with very little education. Those who do pass matric or gain tertiary education still struggle to find jobs because the quality of the education they receive is sub optimal. The Old Mutual Fund attempts to “fix” this by providing debt and equity finance for school infrastructure and education-related requirements of schools, with the dual objective of delivering quality education and a commercially acceptable return for its investors. By 2019 there were approximately 21 000 learners enrolled across 36 schools benefitting from the investments, while the matric pass rate for learners in impacted schools in 2018 was an impressive 94.4%. 

The Old Mutual fund was one of the first to appear in South Africa. There are more appearing as the benefits of impact investment become better understood and documented. Globally, the impact investment market is growing apace and is now worth more than half a trillion dollars, according to the most recent study compiled by the Global Impact Investing Network. Driven by interest from the more socially and environmentally conscious millennial generation, most commentators agree that the potential of impact investing is as yet largely untapped. 

2. Channeling development finance for public benefit

While channelling development finance into viable commercial ventures such as the Old Mutual Education Fund can be highly effective, we must not neglect the role of not-for-profit organisations — many of which are working innovatively to tackle youth unemployment. 

One such organisation is RLabs (Reconstructed Living Lab). Founded on the Cape Flats in 2008 and aimed specifically at marginalised youngsters from poor, crime-ridden areas, RLabs offers free training and skills in subjects like basic computing, digital analytics and coding, as well as marketing and project management and services.

RLabs is specifically looking to plug a crucial skills gap in the country by providing young people with relevant and in-demand skills. According to Career Junction’s Index, South Africa’s most sought-after skills and qualifications are: software development, network and information security and web development. However, education department spokesperson Lunga Nqgengele says many high school pupils choose to study in fields where there is low demand such as communications, marketing, and journalism, and as a result remain unemployed.

RLabs has impacted an estimated 9.5 million people and over the last ten years has spread to 22 countries around the world. Founder Marlon Parker says more than 80% of graduates have found jobs or have gone on to further studies. RLabs has been recognised by the World Bank, United Nations and the World Economic Forum as a future-oriented skills development initiative. Parker says, "Our programme materials are also developed with industry requirements and future opportunities in mind".  

Channelling development finance into initiatives such as RLabs has the potential to create measurable, socio-economic impact in the form of economically active youth.  

3. Developing young financiers for development

On a continent where jobs and skills are scarce, it is also important to prepare young Africans professionally to address this. The UCT GSB Development Finance Centre is one of only a few global universities offering a Master's degree in Development Finance (MCom) accredited by the Chartered Institute of Development Finance (CIDEF). The Centre is also developing a Postgraduate Diploma in Management Practice specialising in development finance to support the growth of Development Finance as a discipline. These degrees seek to offer finance professionals practical insight into development finance and how it can be channelled to specific targets like youth and education. “This is especially relevant as the average age of our cohorts is below 35 years,” says Professor Biekpe.

One of the graduates of the MCom in Development Finance is Bongiwe Beja, Youth Stream Manager at Youth Employment Service (YES) South Africa, who has been involved in various youth employment drives and is the curator of the Global Shapers Community in the Cape Town hub (an initiative of the World Economic Forum). Beja was instrumental in winning grant money for the LadiesInTech programme, which will train 40 unemployed young women and empower them with digital and business skills. 

Beja is passionate about African development and bringing about positive change and is determined to put her development finance skills to good use for youth development. She says, “Be bold enough to believe that we are the generation that will live to see Africa developed.” 

Xolisa Dhlamini is a lecturer at the Development Finance Centre based at the UCT Graduate School of Business. 

 


MORE ON Emerging Market Business

Sharron McPherson Promises and Perils of Africa's
Emerging Market Business

The promises and perils of Africa's digital revolution

Exponential digital advancement across Africa, spurred on by the COVID-19 crisis, is indeed a game changer. But its impact – the good and the bad – requires a more nuanced and intelligent analysis if we really are to build back better.

Read Article
Posted on 15 September 2021 by Sharron McPherson
Cyber security: Professor Herman Singh
Emerging Market Business

Cyber security: a critical risk that’s only set to get worse

The Transnet cyber-attack should sound a warning bell to vulnerable State Owned Enterprises and private sector firms that have been slow to beef up their cyber security systems. The alarming rise in ransomware attacks means many are only one click away from disaster.

Read Article
Posted on 6 September 2021 by Herman Singh
Ralph Hamann
Emerging Market Business

Is the business community making environmental sustainability a priority in the wake of the pandemic?

National Environmental Awareness month is celebrated in June. We asked UCT GSB Prof Ralph Hamann to share his views on the role of business schools in addressing climate change, and whether COVID-19 has caused the business world to reprioritise environmental sustainability.

Read Article
Posted on 7 July 2021 by Ralph Hamann
Steven Kuo - Why AfCFTA
Emerging Market Business

Why AfCFTA will not put Africa at odds with China

While many worry the newly-launched African Continental Free Trade Area (AfCFTA) may harm Africa-China relations, more attention should be given to improving ease of doing business for local and Chinese businesses alike.

Read Article
Posted on 28 June 2021 by UCT GSB Press Office
Anton Eberhard - keeping SA in the dark
Emerging Market Business

Ministers are holding up energy reforms, keeping SA in the dark

A trillian rand needs to be invested in new power in South Africa over the next decade in order to restore energy security. Opening up the electricity sector to massive flows of private investment in generation capacity is now our only option, but key enabling reforms still have to be enacted.

Read Article
Posted on 27 May 2021 by Anton Eberhard
Nicholas Biekpe All eyes on DFIs as Africa
Emerging Market Business

All eyes on DFIs as Africa looks to economic recovery

DFIs can be the catalysts for a stronger and more inclusive continent, but they need to expand their remit to include a focus on SMEs as a key priority.

Read Article
Posted on 14 May 2021 by Nicholas Biekpe
society and economy - MEDIA
Emerging Market Business

SA is running out of time to fix its society and economy

Freedom Day celebrations ring hollow when the vast majority of black people in this country remain economically and socially marginalised. To unlock our future, we must invest in our people — and fast — to build a new culture of innovation, proactiveness, and risk-taking.

Read Article
Posted on 29 April 2021 by UCT GSB Press Office
democracy in SA - MEDIA
Emerging Market Business

Is support for democracy in SA waning?

On 27 April each year South Africans celebrate Freedom Day in commemoration of the first democratic elections in 1994. We asked UCT GSB Professor Thomas Koelble to give us his thoughts on whether support for democracy in the country is waning, and how this system is being affected by globalisation.

Read Article
Posted on 27 April 2021 by Thomas Koelble
KURTAPRIL2021- MEDIA
Emerging Market Business

Social justice in South Africa is as much business’ crisis as it is government’s

Busisiwe Mavuso (CEO at Business Leadership SA) was the speaker at the quarterly Allan Gray Speaker Series event, hosted virtually by the UCT GSB in March. We asked Professor Kurt April, who led the discussion, to share some of the key takeouts.

Read Article
Posted on 29 March 2021 by UCT GSB Press Office
MEDIA - 345X345
Emerging Market Business

Vaccine roll-out woes put spotlight back on Africa’s power crisis

As African countries scramble to acquire and roll-out vaccines across the continent, the urgent need for reliable energy supply is once again in the spotlight.

Read Article
Posted on 18 March 2021 by Wikus Kruger
Health Kathusa  - media
Emerging Market Business

COVID-19 vaccination is the social justice challenge of our time

The first COVID-19 vaccines have arrived in South Africa amid much fanfare — drowning out the voices of those asking why we are paying double for them in the first place and why they are unlikely to help those who need them most.

Read Article
Posted on 4 February 2021 by Katusha De Villiers
SA film industry - media
Emerging Market Business

UCT GSB teaching case study on SA film industry wins top international award

Researchers from the UCT Graduate School of Business (GSB) have taken top honours in a prestigious international case writing competition, for their teaching case on the challenges of financing digital entertainment.

Read Article
Posted on 26 June 2020 by UCT GSB Press Office
IE_Media_gumede
Emerging Market Business

New coal and nuclear power proposals undermine prospects of a post-Covid-19 economic recovery

The Department of Mineral Resources and Energy’s attachment to ‘clean coal’ and new nuclear as immediate options for a post-Covid-19 economic recovery would be comical if they were not financially ruinous. Their fixation on these non-competitive, non-commercial technologies is now wasting scarce public resources.

Read Article
Posted on 17 June 2020 by Anton Eberhard
mundia mundia - media
Emerging Market Business

The role of development finance in rebuilding South Africa’s economy post-COVID-19

The global COVID-19 pandemic has set back developing countries especially, but it also offers an opportunity to rethink their development path.

Read Article
Posted on 15 June 2020 by Mundia Kabinga
Africa needs to embrace digitisation​ - media
Emerging Market Business

It's the 80s rewind - but with internet

South Africa needs to seize the opportunities for digitisation which have emerged as a result of the COVID-19 crisis, in order to thrive in the new global economy.

Read Article
Posted on 18 May 2020 by Herman Singh
Cape Talk logo - Media
Emerging Market Business

Q&A with Siwe Kuse about the Open Africa Power programme

Siwe Kuse, a researcher at the Power Futures Lab spoke with Cape Talk's Kieno Kammies about being a fellow on the Open Africa Power (OAP) Programme, an education initiative co-hosted hosted by the UCT GSB in partnership with Enel Foundation and the Nelson Mandela Foundation.

Read Article
Posted on 17 February 2020 by UCT GSB Press Office
Press Office
Emerging Market Business

Enel Foundation and UCT GSB host energy training in SA in celebration of Nelson Mandela

Enel Foundation, together with the UCT GSB as host, has inaugurated the third edition of Open Africa Power (OAP), aimed at empowering a new generation of leaders to drive Africa’s clean energy transition.

Read Article
Posted on 10 February 2020 by UCT GSB Press Office
time is running up - media
Emerging Market Business

Time is running out if we want to fix SA’s power crisis

Eskom’s new CEO Andre de Ruyter says it will take time to solve the South Africa energy situation. But as a new CSIR report chillingly points out - time is not on our side.

Read Article
Posted on 5 January 2020 by Wikus Kruger
Can the Coming Digital Tsunami Media
Emerging Market Business

Can the coming digital tsunami carry Africa to higher ground?

There is growing evidence that digitalisation could create new opportunities particularly for innovative entrepreneurs, and bring more inclusive growth through real job creation if the right choices are made.

Read Article
Posted on 18 July 2019 by Mignon Reyneke
Improving healthcare in MEDIA
Emerging Market Business

Improving healthcare in remote areas of Africa requires radical collaboration

While there are many innovative healthcare initiatives working to improve healthcare in rural Africa, the reality is that no one organisation can go it alone. Radical collaboration between organisations and with governments is needed to overhaul the system.

Read Article
Posted on 9 July 2019 by Katusha De Villiers
4 March 2019 - Back to blackous energy pr
Emerging Market Business

Back to blackouts: SA's energy problems just the tip of the iceberg

Public-Private Partnerships, access to financing and targeted skills development will be crucial in addressing Africa’s chronic power shortage.

Read Article
Posted on 4 March 2019 by Wikus Kruger
DEVELOPMENT FINANCE INSTITUTIONS - MEDIA
Emerging Market Business

Development Finance Institutions (DFIs) can lead SA’s economic recovery

While government has identified DFIs as a key partner in delivering an economic turnaround — these institutions lack capacity and resources to do their jobs effectively. Fixing this will be a necessity.

Read Article
Posted on 4 November 2018 by Nicholas Biekpe