An innovative training and finance programme aims to provide young people with the skills and resources needed to transform them from job-seekers to job-creators.
Close to 60 percent of the Commonwealth’s citizens are under the age of 30, with India, the Commonwealth’s most populous member state, having one of the youngest populations in the world. And with global youth unemployment reaching a record high – 13 percent and rising according to figures from the International Labour Organization – ensuring that the job market doesn’t leave young men and women behind is a key Commonwealth concern.
Some of the painstaking work that the Commonwealth Secretariat carries out within its member countries includes building skills and capacity, as well as sharing expertise, strategic thinking and practical solutions – all primarily through partnerships.
So the Secretariat, in conjunction with Central Bank of India (CBI), has developed the Youth Enterprise Financing Programme, a unique initiative that aims to make young people bankable by harnessing their entrepreneurial potential.
This partnership in the area of youth enterprise development could not have come at a more appropriate time. The recent tumultuous events in North Africa and the Middle East – sparked in part by increasing youth unemployment – only confirm the urgent need to bring young people into gainful and productive economic activities. This is not an option but an imperative.
Through the 3D programme – Developing the Demographic Dividend – the Commonwealth Secretariat provides intensive training and mentoring to young people in four districts across India, where this project is being piloted. CBI offers collateral-free concessional finance at 4 percent per annum to enterprises owned by young men and women – both start-ups and existing businesses. The loans – typically between £1,500 and £15,000 – fill a gap in the market by bridging the ‘missing middle’ between microcredit and small business financing, which many young businesspeople seek but, in most cases, are denied.
The Secretariat’s training, delivered through local institutions, gives these young entrepreneurs the essential, but often overlooked, management skills that are needed to run sustainable businesses. Following the successful completion of this training, proposals for finance are submitted to the bank. To date, at the end of the project’s first cycle, 103 enterprises have been assisted and 595 jobs created. The aim is to ensure that at least 500 businesses have access to finance through this initiative, potentially providing employment for an additional 2,500 workers.
The initial success of the programme is based on three factors: ready access to affordable finance that can be easily absorbed by the enterprises owned and operated by the young persons – referred to as the 3A model. The Indian businesses assisted under this initiative range from agro-processing to information technology and are based in the districts of Chatrapathi Sahuji Maharaj Nagar, Ernakulam, Murshidabad and Sawai Madhopur. These specific locations, all of which have similar socio-economic characteristics to other Commonwealth countries, have been chosen to ensure that the model is replicated in other parts of the Commonwealth in a sustainable manner.
Innovative financing mechanisms such as these are imperative for creating conditions for transforming young people from job-seekers into job-creators. We have ensured that young entrepreneurs are made bankable through this partnership.
The challenge we face now is to guarantee that this bankability is sustainable and replicable. We have before us a once-in-a lifetime development opportunity to serve the youth by providing them with gainful and productive employment through enterprise development activities.
We have no doubt that this initiative will create an opportunity for both the Indian banking system and the Commonwealth Secretariat to establish a successful model for others to follow. Already, Corporation Bank, another commercial bank from India, has committed £2 million for a similar initiative, and many others have promised to follow suit. Equity Bank, a pioneer in social banking in Kenya, is also teaming up with the Secretariat to roll out a similar scheme in East Africa.
