Youth Employment in Africa Framework for Engagement

1. Youth Employment in Africa Framework for Engagement Azedine Ouerghi The World Bank Tripoli - December 13-15, 2009

2. Outline • Understanding Youth Unemployment • Framework for Engagement • World Bank support for youth programs • Next Steps

3. I. Understanding youth unemployment African Youth • An 18.5 year-old female, living in rural areas, literate but not attending school. • Youth make up 37% of the working-age population, but 60% of the unemployed • About 70% of the youth population is still in rural areas • Young people are not a homogenous group and their employment prospects vary according to region, gender, educational level, ethnicity and health status Requiring different sets of policy interventions.

4. I. Understanding youth unemployment 1- The Development Context The Growth story • About 21% of the population lived in countries that had 10 years of weak growth  Net new wage and salary job creation very low • Another 31% lived in countries where the oil/natural gas sector is the main driver for growth  Sector that creates very few domestic jobs directly The Structure story • Agriculture: accounts for about 64% of total employment • Dominated by subsistence and low productivity • Industry: share of labor force has fallen to 9%  Much of the expansion in value-added has been in the non-manufacturing sector (high capital-labor ratio mining sector) • Service sector: emerged as the largest source of value-added  Growth of labor force (self-employment and family business)

5. I. Understanding youth unemployment 2- The Demographic Context • Africa’s population growth rate (2.2%/year) and fertility rates (5.2/woman) are among the highest in the world • Currently 200 million youth [15 to 24 year old] representing more than 20% of the population and are expected to double by 2045 increasing the pressure countries face with job creation • 7-10 million youth enter the labor force each year, often directly from school • Is the labor market ready for them? • Are they ready for the labor market?

6. I. Understanding youth unemployment 3- The Labor Market Context Only about 10% of the youth entering the labor force find wage jobs in either the formal or informal sector • Supply of labor • African youth lack general and soft skills  They leave school too early and enter the labor market unprepared • Demand for labor • The wage/salary jobs sector is small  Even in high growth cases Ghana: after 15 years of growth in private sector wage jobs; only 6.5% of labor force in formal wage jobs + 4% in wage jobs in informal SME • Other employment sources: casual labor, self-employment or family business  Their productivity is low and they remain vulnerable to change

7. I. Understanding youth unemployment 4- The Migration Context • The large majority (70%) of the youth lives in rural areas • Mostly employed in agriculture, for which they account for 65% of total employment • Rural non-farm sector account for about 20% of employment opportunities (including in rural towns) • As a way to escape poverty many youth look for better opportunities by migrating to the cities • Urban areas have been very slow in to create job opportunities for most new job seekers

8. I. Understanding youth unemployment 5- The Conflict Context Post-conflict settings pose specific challenges for youth • These settings have prominently young population, many of whom have been deprived of education, have grown up in violent societies, and often have been combatants themselves. • Employment and the creation of jobs should therefore form a key component of any peace building process.

9. I. Understanding youth unemployment 6- The Social Context • The long period of unemployment or underemployment is fraught with frustration and tension reflecting the impact of sluggish economy, poor institutions and the failure of the education and training system to equip youth with the relevant skills • Unemployment among the youth has now become a matter of serious policy concern in several countries that faced violent events [Kenya, Nigeria, etc.]. • The lack of action on the challenges that affect youth will escalate both the economic and social costs of development.

10. I. Understanding youth unemployment The call for immediate action • African Governments are spending significant sums on programs for youth with limited or unclear results • Increasing demand from Governments on World Bank for policy advice and design of interventions

11. II. Framework for Engagement The need for both short and long term actions • In the long term, the solution lies in rapid and labor-absorbing growth and stronger education systems. • The overall Bank-wide approach is guided by a framework called MILES • Macroeconomic stability, • Investment climate, • Labor market reforms, • Education and skills and • Social safety nets. • Challenge: This calls into play all the macro, micro and regulatory measures that attract investment, particularly from the private sector, and promote growth, including in agriculture and the rural areas non-farm activities.

12. II. Framework for Engagement The need for both short and long term actions • In the short term, there is need for well-chosen and cost-effective package of interventions to ameliorate the problem both in urban and rural areas, recognizing the importance of the informal sector • Develop a menu of possible actions in response to needs expressed by Governments for immediate action • Menu of possible actions would deal with various constraints faced by youth, and would be based on international experience and available evaluation results currently underway in the Africa region • Challenge: Weak knowledge base from which to work

13. II. Framework for Engagement Labor Market Constraints and Possible Responses (1)

14. II. Framework for Engagement Labor Market Constraints and Possible Responses (2)

15. II. Framework for Engagement The need for a customized approach The proposed framework for engagement should not be seen as a fix-all panacea  Structured framework to guide our dialogue with Governments and Partners. Country context and target groups also matter  Need for further customization: • Country-typology based on economic indicators (e.g. post conflict/fragile states, low-income and low-growth, low-income and high growth, and middle income) • Population typology based on specific labor market conditions facing individuals within any country (e.g. urban and rural, low-skilled and high-skilled, wage sector and non-wage sector, both formal as well as informal).

16. III. World Bank Support for Youth Programs Cumulative Investment between 1995 and 2007

17. III. World Bank Support for Youth Programs An expanding agenda in the Africa Region The operational portfolio witnessed a gradual shift from small interventions financed by grants to increasingly stand alone youth-focused large operations funded through IDA. • Completed operations: targeted post conflict countries and focus on individual groups such as ex-combatants, reintegration of children, street children etc. They are largely financed by small grants • Current portfolio: dominated by projects that contain youth related sub-components with relatively small budget allocations for the youth component. Topics include special vulnerable groups in post conflict and emergency situations; health related issues; skills and vocational training; and basic education. • Pipeline: clear shift towards larger budget standalone operations. The topics also witnessed a sharper focus on employment generation including business development and entrepreneurship; skills development and training programs for both formal and informal sectors; improving the quality and relevance of training and skills development systems; youth empowerment; and the use of technology. • Geographically: most of the operations have been concentrated in West Africa (Sierra Leone, Cote d’Ivoire, Liberia, etc.) with a gradual expansion to Central and Eastern Africa (Kenya, Rwanda, Uganda, etc.).

18. III. World Bank Support for Youth Programs An expanding agenda in the Africa Region The analytical work has also followed a trend similar to the operational interventions described above. The analytical work ranges from documenting trends to impact evaluations of innovative approaches to youth employment and included both country based analysis and regional studies. • Early analytical work: focused on the reintegration of children and youth in the society through access to education and labor markets in post conflict situations (Rwanda, Liberia, and Sierra Leone). • The current wave: focuses on more comprehensive analysis of the trends and determinants of youth labor market outcomes. It deals with topics ranged from the education and skills development (for both formal and informal sectors) and policy options for reform to youth perception of the determinants of economic success, to youth crime and violence as impediments to employment. Moreover, a few analytical pieces are focused on impact evaluations designed to help us strengthen our knowledge base and refine better our policy advice to governments on what works.

19. IV. Next steps Applying the Framework for Engagement in Africa • Continue our efforts to help Governments address employment challenges based on multi-sectoral reforms that create a favorable environment for job creation : • Focus on a smaller number of promising interventions to respond to short term needed actions • Build our knowledge base on what works • Ensure all new activities have a strong M&E component • Strengthen further partnership/collaboration and enhance coordination • Internally: HD, PSD, SDV, PREM • Externally: ITF, YEN, IYF, other Foundations, Youth Groups, etc. • Share and disseminate knowledge • Distill lessons learned and disseminate/show case best practices

20. References • Youth and Employment in Africa: the potential, the problem, the promise- Africa Development Indicators 2008-09; • Youth in Africa’s Labor Markets (2008); • Working out of Poverty: Job Creation and the Quality of Growth in Africa (2008) • Framework for Engagement to support youth employment on the short term (Draft 2009)