Why are so many youths jobless?

Youths are deciding 21st-century elections, as they recently did in Senegal

By Mwansa Chalwe Snr

Zambia’s general elections are due in two and a half years, in 2026. With the New Dawn administration having almost sorted out the debt restructuring and mining issues, as well as sufficiently marketed Zambia as a good destination for foreign direct investment (FDI), they should now laser-focus on local solutions for job creation through innovative initiatives to promote Micro and Small Enterprises (MSEs), in order to create millions of jobs for the youths.

According to the latest empirical evidence, the majority of Zambian businesses are in the MSEs category and are mainly informal, as stated by the Bank of Zambia (BOZ) Survey. In its latest Survey of Micro, Small and Medium Enterprises (MSMES), the Bank Of Zambia reported that Zambia has 1,553,892 MSMEs, and out of that total, 98.8% (1,535,245) were micro (less than 10 employees), whereas one percent were small, and 0.2 percent medium-sized. Furthermore, the report stated that 95.6% of MSMEs were in the informal sector and presumably youth-owned. It is, therefore, evident from the data that micro-enterprises provide opportunities for formal critical mass job creation for Zambia.

From the political angle, in the 21st century, it has become abundantly clear that it’s the youth that determine elections in almost all countries. It all started with Barack Obama in 2008 in the US. Then, in 2019, in El Salvador, a 37-year-old Nayib Bukele, an independent-minded leftist former mayor of San Salvador (2015-2018), became the youngest politician to be elected president, and broke 40 years of the two-party rule in El Salvador, by winning in the first round by 53%, because of the Youth Vote. And recently in Senegal, 44-year-old Bassirou Diomaye Faye won 54% in the first round too. In Kenya, it was the same. It is apparent that politicians can only ignore the Youth vote in their economic strategies at their peril.

Causes of Youth Unemployment

According to this author’s research, there are seven major factors contributing to high youth unemployment in Sub-Saharan African countries, including Zambia. And these are: low economic growth, governments’ facilitation of informality, low entrepreneurship skills, low research and development budgets, deficiencies in the education system which have limited relevance to the requirements of industry resulting in skills mismatch between the education system and the labor market. The lack of experience by youth and lack of access to information, communication, and technology facilities and the internet. Let us highlight four of the above causes in more detail.

The first major cause of youth unemployment in Zambia is the low economic growth rate, which is insufficient to generate enough jobs. The Zambian economy grew by 4.6% in 2021, 4.7% in 2022, and 4.3% in 2023. It is forecast to grow by 4.7% in 2024 by the government but IMF recently forecast growth at 2.3%. These rates are insufficient for the country to develop, create jobs, and reduce poverty. And the IMF agrees with this assertion.

“Despite its abundant resources, growth has been insufficient to lift its young and growing population from poverty. More than 60 percent of Zambia’s population lives below the international poverty line compared to 35% across the Sub-Saharan Countries,” IMF said in a statement reviewing the Zambian economy.

It should be noted that in Zambia’s case, even if the economic growth rates were to be as high as 7%, based on past experience in the mid-2000s, such growth rates would not translate into substantial job creation. This is so because Zambia’s growth rates are mainly driven by mining activities, where raw materials are exported with little value addition. Furthermore, the mechanization of most of the tasks that were previously done by human beings means that very few jobs are created. In addition, the low level of subcontracting of Zambian businesses, especially by Chinese multinationals and mining companies, means that few indirect jobs are created.

The second major cause of unemployment is the flourishing informal sector in Africa, which makes up 90% of the economy. This author does not consider informal employment as value-adding employment. This is because informality retards development. African governments, including Zambia, have not realized that they are partly enablers of Youth unemployment through their policies which discourage youth entrepreneurs from starting formal businesses. Governments are facilitators of informality through labor policies, tax policies, and excessive regulations. Excessive regulations can make setting up a formal business cumbersome and expensive. Obtaining permits, navigating licensing procedures, and complying with labor laws can be overwhelming for aspiring entrepreneurs, especially young people.

In addition, stringent tax policies can make formalization unattractive. In a nutshell, these complexities and costs can discourage young people with entrepreneurial potential from starting formal microenterprises. And this hinders innovation and job creation in the formal sector, and reduces the number of formal jobs available.

Importance of Research and Development

When one looks around the world, countries that have succeeded in creating jobs are those that have been innovative. And innovation does not just happen, it must be facilitated. Zambia and other African countries spend very little on Applied research and development, and as a result, they are unable to create jobs through innovation. Applied research can help develop new technologies and solutions suited to Zambia’s specific needs.

Without enough funding, these innovations are less likely to happen. Applied research can identify new business opportunities in Zambia. This could be in areas like agriculture, renewable energy, or ICT. With limited research, these opportunities go unnoticed, hindering the creation of new businesses that could employ young people.

The lack of entrepreneurship skills is another major contributor to youth unemployment in Africa. According to the Organisation of Economic Cooperation and Development research, two out of five or 40% of youths want to start a business, but they do not know how to go about it.

What is the way forward?

The authorities need to realize that to solve a problem, the size of the solution must fit the size of the problem. To solve the Youth unemployment problem, there is a need to press the reset button, and a proper comprehensive diagnosis done before crafting solutions.

The detailed diagnosis should entail taking a systematic approach. First, there should be the identification of the different causes of Youth unemployment, secondly, it’s crucial that there is a recognition of the fact that the Youth demographic is heterogeneous and different demographics which require different solutions. Thirdly, there has to be categorization of solutions in the different timelines of short term, medium term, and long term, and thereafter proper sequencing of interventions should be done.

And finally, a comprehensive road map that captures the above variables should be drawn up. The roadmap document should be the basis for designing the different short term, medium-term, and long-term solutions, for the different Youth demographics. The approach of designing disjointed, one size fits all, theoretical and not well-researched solutions, as has been the case in the past, should be avoided as they have failed.

Traditional methods of internship, financial empowerment, technical and vocational training, alone, will not solve the youth unemployment problem. They will certainly create a couple of thousand jobs, but not the hundreds of thousands or rather even millions required, given that every year 350,000 are entering the job market.

Conclusion

The New Dawn administration should learn from their predecessors, who panicked after Artists conducted a virtual demonstration in the bush about lack of jobs, after being denied a police permit. The virtual demonstration attracted huge local and international viewership such that the previous administration had to take note.

In panic, they decided to throw money at the problem, by introducing a poorly designed K470 million multisectoral Youth empowerment program and a $30 Million Artists empowerment program, having ignored sound advice about initiatives for youth job creation previously, including from this author. The late interventions never made a difference at the ballot box. Financial capital (money), without intellectual capital has never solved problems.

The advice to Zambian politicians is: do not ignore the Youth unemployment problem till the last minute. And to the current administration, they should not entirely delegate the issue of youth job creation with the civil service technocrats, whose jobs are not threatened by elections. They should look for solutions outside the civil service bureaucracy and engage those in the private sector that may have solutions.

The advice to President Hakainde Hichilema is that he should consider taking a leaf from former United States President Barack Obama’s book when facing the 2008 financial crisis. He appointed Steven Rattner, a Restructuring and Turnaround expert as Car Czar to save US motor industry. The President needs consider appointing a “Youth Job Creation Czar” to help him solve the high youth unemployment problem.

The writer is a Chartered Accountant and Author. He is the Founder of Prosper Knowledge Solutions Ltd, a research-based virtual Knowledge and Strategy firm.