The Mastercard Foundation has announced that it has enabled 1.27 million young people to access employment opportunities in Ethiopia since the launch of the country’s Young Africa Works strategy in 2019. Of the total number, 49 percent are young women.
Speaking at the second Mastercard Foundation’s Young Africa Works in Ethiopia Partners Annual Learning Summit, Samuel Yalew Adela, Mastercard Foundation Ethiopia Country Director, said that since 2019, 38 partnerships (including four COVID-19 Recovery and Resilience Programs) have been developed in Ethiopia with a commitment of $664 million.
In conflict-affected areas, psychosocial support and business development have been provided for women, organized and established enterprises, as well as the facilitation of affordable and accessible finance. Women’s peace forums have also been established, and training and grants for women-owned and informal enterprises have also been provided.
Samuel shared that the result is obtained through the Foundation’s partnerships with an aggregation of innovative private, public, civil society (NGOs), and grassroots organizations that bring relevant competencies to work together. He added that the Mastercard Foundation is committed to ensuring that 75 percent of its partners are African organizations to address root causes and support solutions that are scalable and bring about lasting change. In Ethiopia, the Foundation works with 53 organizations, 83 percent of which are in Africa: 20 percent non-profit, 14 percent public, and 66 percent private.
Youth unemployment is a significant problem in Ethiopia. According to the Ethiopian 2021 Labour Force and Migration survey, the country’s unemployment rate was eight percent as of August 2021. The national unemployment rate for women (11.7 percent) is more than double that of men (5.0 percent). Youth unemployment (among those aged 15-29) is 7.7 percent. Urban unemployment (17.9 percent) is significantly higher than rural unemployment. The International Labour Organization assessment report in 2022 estimated that more than two million young people enter the labour market every year, yet the economy is unable to meet the demand.
The Mastercard Foundation launched the Young Africa Works strategy in 2018 aiming to enable 30 million young women and men (70 percent young women) to access dignified and fulfilling work by 2030. The strategy was formulated in consultation with young people, the private and public sectors, financial institutions, ministries of government, educational institutions, and experts. The Foundation’s extensive experience also informed the strategy.
At its core, the Young Africa Works strategy seeks to:
- Improve the quality of education and vocational training to equip young people with industry-relevant skills.
- Leverage technology to connect employers and job seekers; and
- Enable entrepreneurs and small businesses in priority sectors to expand through access to financial services, access to markets, productivity enhancement, and use of digital technology to drive growth and scale.
In Ethiopia, the strategy was launched in late 2019 to enable 10 million young Ethiopians (70 percent young women) to have access to dignified and fulfilling work by 2030. The Foundation’s country roadmap focuses on agribusiness, agro-processing/manufacturing, and the digital economy. These sectors have the highest potential to create work opportunities for young people.
Micro, Small, and Medium Enterprises (MSMEs) make up the economic backbone due to their potential for employment creation and overall contribution to economic growth. The financing gap for MSMEs in Ethiopia is estimated to be $6.1 billion, of which 80 percent of the need is working capital. The sector continues to face challenges including:
- The requirement of the financial institutions for collateral to provide credit.
- Financial institutions not having suitable and appropriate products for MSMEs and lack innovative products and services.
- Limited favourable policy and regulatory support that cater to the needs of the financial sector’s agility in this fast-evolving digital age.
- Lack of trust in formal financial services, and providers limiting the uptake and use of digital financial services.
- Lack of information on providers and services. Many potential clients do not have access to relevant information on available financial services, the conditions and terms, or the trustworthiness of providers.
- A lack of financial education and awareness about savings and loan management.
- Limited financial capabilities/financial literacy that contributes to all the constraints faced by MSMEs.
- Lack of market linkages, and inability to obtain work premises are the main challenges of MSMEs.
Aligned with one of its charitable objectives, the Foundation has been working with visionary organizations to enable MSMEs to become financially resilient by availing diversified, affordable, innovative, and accessible financial products and services. This year’s Foundation Annual Learning Summit was conducted under the theme, “Commitment to action: access to inclusive and affordable finance to stimulate job creation.”
The Summit brought together around 200 participants and created the opportunity for policy and decision-makers to engage in insightful conversations and discussions allowing them to take significant steps and build an enabling environment that stimulates entrepreneurship and job creation. The event also enhanced Foundation partner and stakeholder commitment to take meaningful action that will enable young entrepreneurs to access financial services. The event was an opportunity for young people to connect, learn, and share experiences.
At the summit, a panel discussion was held with high-level officials from the Ministry of Labor and Skills (MoLS) and the National Bank of Ethiopia (NBE) along with Kifiya Financial Technologies, and Hibret Bank to discuss access to Inclusive and Affordable Finance to Stimulate Job Creation.
An exhibition was a core part of the summit, where Foundation partners, financial institutions, and young people participated. This was an opportunity to learn, share insights, and facilitate conversations.