EDUCATION: New financial tool can help create work
MAIL & GUARDIAN / 21 JUNE 2019 - 00.00 / XOLISA DHLAMINI
COMMENT More than half of South Africans aged 15 to 34 are not gainfully employed or generating their own income. This high unemployment rate of 55.2% is a complex problem rooted in a combination of historical, socioeconomic and developmental causes. One underused and potentially powerful tool for addressing this situation is development finance, an emerging discipline that aims to serve underserved people beyond the remit of mainstream finance.
Development Finance: Innovations for Sustainable Growth, edited by Nicholas Biekpe, Danny Cassimon and Andrew Mullineux, outlines how development finance can help address Africa’s development gaps in three key ways: through commercial and nonprofit initiatives as well as through training people in the relevant skills and attitudes to spread this approach.
IMAGE : JOHNMCCANN/M&G
Doing good while doing well
When Old Mutual set up its School and Education Investment Impact Fund in 2011, the market did not really know what to make of it.
The fund was trying a new approach to addressing one of the country’s most pressing problems and one that is fuelling the youth unemployment crisis: education.
Education, or rather the lack thereof, is clearly an Achilles heel for youth development. It is estimated that up to 400 000 children drop out of school each year. Those who do pass matric or gain entry to tertiary education still struggle to find jobs because the quality of the education they receive is sub-optimal.
The Old Mutual fund attempts to “fix” this by providing debt and equity finance for school infrastructure and education-related requirements of schools, with the dual objective of delivering quality education and a commercially acceptable return for its investors. About 21 000 pupils are enrolled at 36 schools benefiting from the investments, and the matric pass rate for learners in these schools in 2018 was an impressive 94.4%.
The Old Mutual fund was one of the first of its kind in South Africa. More are being set up as the benefits of impact investment become better understood and documented. Globally, the impact investment market is growing apace and is now worth more than half a trillion dollars, according to the most recent study compiled by the Global Impact Investing Network. Driven by interest from the more socially and environmentally conscious millennial generation, most commentators agree that the potential of impact investing is largely untapped.
Although channelling development finance into viable commercial ventures such as the Old Mutual fund can be highly effective, we must not neglect the role of nonprofit organisations, many of which are working innovatively to tackle the high unemployment level among young people.
One such organisation is Reconstructed Living Labs (RLabs). Founded on the Cape Flats in 2008 and aimed specifically at marginalised youngsters from poor, crime-ridden areas, RLabs offers free training and skills in subjects such as basic computing, digital analytics and coding, as well as marketing and project management and services.
RLabs is specifically looking to plug a crucial expertise gap in the country by providing young people with relevant and in-demand skills. According to the CareerJunction Index, South Africa’s most sought-after skills and qualifications are software development, network and information security, and web development. But, education department spokesperson Lunga Ngqengelele says, many high school pupils choose to study in fields where there is low demand for employment, such as communications, marketing and journalism, and, as a result, remain unemployed.
Over the past 10 years, RLabs has spread to 22 countries and reached an estimated 9.5-million people. Founder Marlon Parker says more than 80% of graduates have found jobs or have gone on to study further. RLabs has been recognised by the World Bank, United Nations and the World Economic Forum as a future-oriented skills development initiative. Parker says: “Our programme materials are also developed with industry requirements and future opportunities in mind.”
Channelling development finance into initiatives such as RLabs has the potential to have a measurable socioeconomic effect in the form of economically active young people.
Developing young financiers
On a continent where jobs and skills are scarce, it is also important to prepare young Africans professionally to address the problem.
The University of Cape Town, through its Development Finance Centre at the Graduate School of Business, is one of only a few universities offering a master’s degree in development finance (MCom), which is accredited by the Chartered Institute of Development Finance. The centre is also developing a postgraduate diploma in management practice, specialising in development finance to support the growth of development finance as a discipline. These degrees seek to offer finance professionals practical insights into development finance and how it can be channelled to specific targets such as education. “This is especially relevant as the average age of our cohorts is below 35 years,” says Biekpe.
One of the MCom in development finance graduates is Bongiwe Beja, who is now the youth stream manager at Youth Employment Service (YES) South Africa, a collaboration between business, the government and labour. She has been involved in youth employment drives and is the curator of the Global Shapers Community in the Cape Town hub, an initiative of the World Economic Forum. Beja was instrumental in getting grant money for the LadiesInTech programme, which will train 40 unemployed young women in digital and business skills.
Beja is determined to put her development finance skills to good use for youth development. She says: “Be bold enough to believe that we are the generation that will live to see Africa developed.”
Xolisa Dhlamini is a lecturer in the Development Finance Centre at UCT’s Graduate School of Business
Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER