OYE: sustainable employment through a market-based approach

Companies in high-growth sectors offer ample employment and entrepreneurship opportunities. However, there is reluctance amongst these companies to engage young people, especially those with lower education levels – which constitute the majority of our target group.

This has given us – at least – two important insights. Firstly, we invest our resources in young people who are driven to succeed, to connect them to selected companies with specific opportunities. We harness young people’s motivation, drive and skills through employability training and coaching. Secondly, we consciously base our engagements with private sector companies on mutual interest to grow revenue, income and profits.

Easier said than done - inclusive business.

Engaging private sector companies is not a straightforward process. We have learned through trial and error that it is a balancing act and that managing expectation is crucial.

Private sector companies – especially during the early stages of our engagement – may expect to receive subsidies or funding in return for their ‘support’ to the project, especially when they are focused on a social enterprise model or consider youth employment as part of their corporate social responsibility. We’ve learned that for the long-term success of youth employment it is crucial to avoid this type of charity approach.

For example, in Tanzania and Rwanda, we applied a results-based finance (RBF) model to promote youth employment opportunities with the main solar companies in the two countries. SNV was already connected with these companies through another RBF project promoting the sales of solar products. Whereas RBF for the latter objective was strategic and successful, it appeared not to work for the development of youth employment. The focus of the involved companies was too much on quantitative results e.g. the number of trained young people, with the number of trained people exceeding the number of people the business model could accommodate. Only after we ended the RBF experiment, several companies got genuinely interested in including out-of-school youth who had solid motivation and skills obtained through OYE training and coaching in their business. These companies observed higher levels of retention amongst the employed youth and significant improvement in their sales. With these positive results, an increasing number of solar companies approached the OYE teams in the two countries requesting to work with young women and men, while expanding their sales areas.

Investments to make entrepreneurship work

Apart from employment opportunities, the bulk of opportunities in our projects are focused on self-employment. Our project experience has taught us that successful youth entrepreneurship requires some level of investment, and to build sustainability part of that investment should come from the private sector based on an envisaged return on investment.

With this in mind, SNV utilises a flexible cost-share or co-investment system, notably in training costs and providing input or starter kits to the participating young people. For developing private sector partnerships, such co-investment schemes can help to strengthen the burgeoning relationships. In the long term, these investments or co-investments by SNV are not sustainable. To optimise access for young people into private sector business models, co-investments between the company and young people are necessary. Building youth inclusive policies and credit systems is key in this process, to enable young people’s businesses to grow and match investments.

Mutual interest and sustainability over short-term results

The OYE approach uses a market-based system to ensure the sustainable development of meaningful employment and entrepreneurship opportunities for young people and avoid the creation of artificial or subsidised jobs. Our key focus is to engage young women and men with private sector companies based on their mutual business i.e. profitability interest.

For more information, please contact Roy van der Drift, SNV Youth Employment Coordinator.