An engine for youth start-ups
Abdurehman Eid, partner in the Empower Youth for Work programme, shares his views on the Business development services for youth start-ups in rural areas. One of the topics explored during the Global Learning Event. “We realized our initial assumption that we would find jobs nearby after skills training, has been refuted. As such, we need to support enterprises that have potential to create jobs.”
Micro and Small Enterprises (MSEs) and Small and Medium Enterprises (SMEs) are crucial sectors for poverty reduction in developing countries. These sectors are especially important for youth employment creation. It is also where the majority of youth are employed. MSEs and SMEs need continuous support to develop and grow their business. This support is mainly business development services (BDS).
Business Development Services
Business Development Servies are defined as non-financial services and products offered to entrepreneurs at various stages of their business needs. These services are primarily aimed at skills transfer or business advice. The field of business support has been growing alongside the SME development process internationally.
Business Development Services in Ethiopia
In Ethiopia, Business Development Services are mostly provided by the government and both the coverage and outreach are very limited. Moreover, BDS providers for Micro and Small Enterprises and Small and Medium Enterprises do not exist in rural areas.
Within the target areas of the Empower Youth for Work (EYW) project, there are villages where youth have organized themselves into groups to start Micro and Small Enterprises. They have done this through financial loans provided by the government. However, as these villages are outside urban areas, the youth groups do not have access to BDS.
For instance, some of these youth groups decided to start a poultry enterprise. This includes the process of raising domesticated birds such as chickens, ducks, turkeys and geese for the purpose of farming meat or eggs for food. This is unknown in Somali pastoral communities. The youth submitted their proposal to the government and received a financial loan. However, when we assessed their situation, we realized they do not have the required basic knowledge to start the poultry enterprises. These are thus the kind of youth led MSEs that need our support.
BDS within Empower Youth for Work
EYW has started encouraging steps in providing Business Development Services to MSEs and SMEs. In Ethiopia, an innovation pilot project on mobile Business Development Support service is implemented. BDS support is provided to youth business start-ups in rural areas.
At the EYW Global Learning Event all country teams came together for sharing and learning on the EYW project. This included sharing lessons on BDS support. Pakistan and Bangladesh shared good models of BDS provision through rural hubs. A rural hub is a place, located in rural districts, to support young people in finding a job. It is a creative working space with an internet infrastructure and joined services.
I think the Bangladesh model is very interesting, as the concept of a rural hub is planned to be developed without the need of a central area or building. Rather, the different services will be provided by experts from their homes or from already existing facilities. For me and many participants, this was the main takeaway from the Global Learning Event.
In conclusion, it will be good for the other three EYW project countries- Ethiopia, Indonesia and Pakistan- to closely follow how the Bangladesh model turns out to be when it is piloted practically. This is very important, as the project is not going to invest in the actual construction of rural hubs.
Furthermore, according to Karki (2016), traditionally donors and governments have intervened BDS markets at the level of BDS transaction directly providing services to micro and small enterprises (MSEs) via public BDS providers or permanently subsidizing services delivered by other BDS providers. In this approach, donors and governments have tended to substitute for underdeveloped BDS markets, possibly crowding out existing or potential commercial suppliers of services.
Therefore, EYW needs to have a strategy of how the provision of BDS under the project could be sustained beyond the project, and how we can work closely with commercial BDS providers in areas they already exist.
Read more on the Global Learning event here