NATIONAL ECONOMIC ADVISORY COUNCIL (NEAC)

SUMMARY REPORT ON THE PROPOSEDZAMBIA INTEGRATED YOUTH EMPLOYMENT MODEL

LUSAKA – OCTOBER 2012

1. SITUATION ANALYSIS

In this report, the youth labour force is defined as the sum of employed and unemployed youths, where the term youth refers to persons aged between 15 through 35 years old. According to our definition of youths, total Youth population according to the Labour force survey of 2008 is estimated at 6.7 million. Out of this population of youths, only 5 million constitute the total youth labour force implying that 1.7 million youths have been demoralized and left the labour force. However, the total number of youths employed is estimated at 4.6 million. By defining unemployment rate as a ratio of the sum of unemployed youths plus those that have left the labour force to the total labour force, then the total youth unemployment rate in Zambia stands at 42.15% (See Table 5, Appendix). This is a large statistic that needs government interventions as recommended in this report.

Youth unemployment is an important labour policy issue around the globe. Short-term unemployment includes all persons who either did not have jobs, were available for work or seeking work in the last seven days. Long-term unemployment includes all persons who did not have jobs and were available for work or seeking work in the last twelve months.

Unemployment tends to have more severe effects the longer it lasts. Short-term joblessness can be dealt with through public works programmes, such as garbage collection, grass planting, road, rail and airport construction, buildings rehabilitation, soft/hard skills training and mentorship, access to credit by micro, small and medium scale entrepreneurs. Long-term unemployment can cause substantial financial hardship, when these short term programmes do not exist. Long-term unemployment is not desirable for any society and must be corrected. To sustain this labour market problem, the country requires regulatory and supervisory body to be in place.

However, the following is a presentation of some of the labour market conditions in Zambia.

1.1. The causes of youth unemployment in Zambia include but not limited to the following:

- skills mismatch, where the skills offered by training institutions are generally not relevant to labour market demands and needs

- Low education and skills among young women and men- Low levels of entrepreneurship- Limited access to appropriate finance, technology and markets, - Low absorptive capacity of the labour market for new entrants and the - Concentration of growth in highly capital-intensive and urban-based sectors like

mining (jobless growth)1.2. Available employment Opportunities in the formal sector in Zambia:

- Some employers have internship programmes and others participate in the TEVET Learnership Programme

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- Employers hire young people in different sectors including construction, manufacturing, service, health, education, mining, agriculture transport, general trade among others.

1.3. Existence of Employment Opportunities in the Informal Sector in Zambia:- The informal sector has self-employment and wage employment opportunities in

construction, manufacturing, service, health, education, mining, agriculture transport, general trade among others.

1.4. Challenges employers face when recruiting youths (skilled and unskilled):- skills mismatch, where the skills offered by training institutions are generally

not relevant to labour market demands and needs.1.5. Existence of a category of Youths who do not wish to work:

- Some students receive government financial support and do not see the need to work while they’re studying.

1.6. Zambia’s Future Plans in Promoting Youth Employment:- The ILO is currently providing financial and technical support to the Ministry of Youth

and Sport with the review of the National Youth Policy and the National Action Plan on Youth Development.

- ILO is also conducting a Youth Employment Survey that will provide labour market information on young women and men in Zambia.

- Planned activities include engaging business development service (BDS) providers to build their capacity in developing and providing BDS packages tailored to suit the needs of young women and men entrepreneurs.

- Other activities include engaging financial institutions to explore ways that they can develop financial products tailored to suit the needs of young women and men entrepreneurs.

1.7. Existence of Information for Job Opportunities in Zambia:- Currently there is no central information system that is available to young people.

The most common place to look for opportunities is in the newspaper and other print media.

- Electronic media has also become very effective in delivering information through text messaging and social networks.

- However, access to these sources is not free and this can be a major difficulty for many young people.

1.8. Status of Micro, Small and Medium Enterprises in supporting Youth Employment:- Government programmes

o Finance is provided through the Youth Development Fund, business incubation through the Ministry of Youth and Sport, and enterprise training through TEVET institutions.

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- ILO programmeso ILO engages Government through the Ministry of Labour and the Ministry of

Youth and Sport and the Ministry of Education, Ministry of Commerce Trade and Industry and other line Ministries to explore ways of ensuring youth employment integrated in the different national development plans, policies and strategies.

o ILO provides business skills training to young people and institutions using various tools including Start Your Business (SYB), Start and Improve Your Business (SIYB), FAMOS Check Tool, GET Ahead, EMPRETEC and Know About Business (KAB) among many tools.

- YAPYA trust provides mentoring and business finance to young people. - The UNICEF/Barclays Bank partnership has an enterprise promotion and training

programme that targets Youth Resource Centres. - The Commonwealth Youth Programme also supports young women and men

entrepreneurs with coaching and linking them to BDS.

1.9. Existence of Cooperatives and Extension Services for the Youths:- There is a network of BDS providers around the country that provide business

support to all MSMEs including young people.

1.10. Current Status of youth policy design and coordination:- Currently the National Youth Policy designs and coordinates but has not been

effective and assertive in its functions.- Career centres exist for career guidance for the youths in some education and

training institutions. - The learner programme under TEVETA is engaged in providing work placement for

youths while in formal education.

1.11. Successful Youth Training Programmes:- Zambia National Service (ZNS) provided training to young people to equip them with

skills and keep them off the streets- The Ministry of Youth and Sport has a number of Youth Resource Centres around the

country which offer skills training including entrepreneurship skills to young people and many of them are quite successful.

- There are a number of other skills training centres around the country which are performing well, and include CHODORT in Choma and Youth Skills Training Centre (YCTC) in LivingstoneYAPYA Trust also provides a number of business skills training programmes and supports young people with access to finance.

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1.12. Relationship between entrepreneurship and leadership training in youth skills development:

- Promotion of youth entrepreneurship can be an answer to stimulate the demand side of the labour market and to create employment opportunities.

- The ILO provides entrepreneurship skills training using a number of tools including Start Your Business (SYB), Start and Improve Your Business (SIYB), Expand Your Business (EYB), FAMOS Check Tool, GET Ahead, EMPRETEC and Know About Business (KAB) among many tools.

1.13. Existence of Hard and Soft Skills Training Programmes:- The ILO in partnership with UNCTAD have developed a training programme on

Exhibition Skills for artists to teach them how they can improve the performance and profitability by investing in exhibition tools and techniques,

- The ILO has also supported Roan Youth Development Organization access training in making ceramic insulators; they later used these skills to make candle stick holders and ceramic plates and cups.

1.14. Existence of Funds for Youth programmes: Youth empowerment funds are part of a Government programme business financing

programme called the Youth Development Fund and other government funds include;

The CEEC Fund The Forestry Development Fund and Tourism Development fundHowever, these funds have not achieved their intended goals.

Mode of funding towards youth empowerment programmes: The various government agencies are involved in disbursement s. The following funds are the major ones:

Youth Development Fund- loans and no collateral necessary CEEC Fund – loans and no collateral necessary Forestry Development Fund-loans and no collateral necessary Tourism Development Fund-loans and no collateral necessary YAPYA Trust- loans and no collateral necessary

1.15. Specialized UN Agency’s Role in youth employment:

The ILO is a specialized agency of the UN that focuses provides technical support to member countries, it does not provide funding but can facilitate links to financial institutions.

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2. RECOMMENDATIONS FOR AN ACCELERATED YOUTH EMPLOYMENT PROGRAMME

1. PPPs and other business linkage programmes should be pursued with a view to finding ways of incorporating youth run SMEs into the value chain and should include skills development

2. Youth representation in the country should be strengthened 3. NYDC Act should be reviewed to make it more relevant and responsive to current

challenges 4. The knowledge base can be developed by building on existing facilities such as the jobs

portal under the Ministry of Labour and Social Security. Information on good practices in Zambia can be identified and included on this knowledge base, such good practices can be considered to be scaled up in the model

5. There should be social safety nets such as a mechanism that provides re-skilling opportunities to young people who will lose their jobs.

6. The government should consider developing more Public Private Partnerships (PPPs) as a way of encouraging private companies to get more involved in development programmes. The government can provide risk guarantee schemes to financial institutions in order to allow make loan facilities accessible for young people.

7. In order to ensure that the training remains relevant, training institutions should involve industry in the design and approval of training curricular.

8. Government can also put in place policies that provide incentives to companies to support training institutions through attachments and internships as this promotes skills and technology transfer.

9. Interventions should take into account the heterogeneity of circumstances of young people from rural and urban centres and the design of programmes should be contextual.

10. The model being developed should have a long term strategy and will require policy coherence and coordination at the top most levels of decision making as employment is a cross cutting issue and will involve the revision of the curricular in order to have the required impact on skills development and productivity.

11. Some best practices worth looking into are; the Roan Youth project in Luanshya where young people are now skilled in making ceramic products, CHODORT in Dortmund which offers skills training and fits out shipping container into state of the art mobile ICT units, YAPYA which provides business coaching and finance to young people and Plan International which has teamed up with Barclays Bank to encourage group lending and savings culture among young people. The Kalingalinga Youth Resource Centre received support under a UNICEF-Barclays Bank and ILO partnership through training in engineering, tailoring, catering, ICT, and entrepreneurship. Last but not the least, the ILO entrepreneurship package called GET Ahead should be enhanced under the proposed model.

12. The new model should seriously consider regulations and supervision laws in order to ensure that the proposed model has perpetual existence and acceptability.

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13. The monitoring and evaluation programme under the proposed model should be institutionalized under an independent umbrella organization.

14. M&E should ensure efficiency in resource use down to constituency levels. Thus, corruption proofing of programme shall be the centre stage of planning, implementation, monitoring and evaluation.

15. The first example of how to operationalize the model for youth employment creation in Zambia shall be taken from Kenya’s Youth Empowerment Project, National Youth Service and the Youth Enterprise Development Fund.

16. The second example on how to improve access finance for young people can be taken from Zimbabwe where different financial institutions including micro finance institutions have partnered with the ILO Skills for Youth Programme. They match the contributions of the ILO and this helps to lower risk for the institutions and make the loans attractive for young entrepreneurs. Over time the financial institutions take on the entire loan portfolio once they have gained confidence in the viability of the system and the banking culture of the young people has been cultivated and has matured.

3. OUTLINE OF THE ZAMBIA INTEGRATED YOUTH EMPLOYMENT (ZIYE) MODEL

This technical proposal describes the model in form of three components consisting of the following eight interventions:

1.1. Secondary School-to-University Scholarship Programme1.2. Financial Education Training and Mentorship Programme1.3. Savings and Micro-credit for Youths Programme1.4. MSMEs Skills Training and Entrepreneurship Programme1.5. Private Sector Internships and Training Programme1.6. Project Merciful Entrepreneurship Programme1.7. Zambia Youth Service Programme1.8. Regulatory and Supervision Programme

These interventions shall be implemented into three components extracted in the form of specific funding objectives. The three components shall then form the basis for the Zambian Youth Marshall plan. Component 1 is known as the Employment Youth Fund (EYF). Component 2 is the Micro, Small and Medium Enterprises (MSME) Innovations Service Fund. Component 3 of the model is known as the Regulations and Supervision Framework (RSF) Fund which creates the Zambia Integrated Youth Employment Service (ZIYES).

The first two funds shall be administered through the microfinance institutions, Banks and non-bank financial institutions. The third fund is meant for setting up a regulator of the national youth employment programmes. Thus, the three components establish the basis for the creation of the Zambia Integrated Youth Employment Service (ZIYES). The ZIYES is the umbrella organization that shall be formed by an Act of Parliament. This umbrella

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organization shall report directly to parliament but will be created in the Office of the President.

3.1. Component 1:

Component 1 shall aim at providing immediate short-term solutions to youth unemployment. Component 1 is known as the training, mentorship and entrepreneurship programme. This Zambia Youth Training, Mentorship and Entrepreneurship (ZYTME) programme shall initially be allocated K900 billion in the first year of implementation.

The target group is the unemployed youth in ages 16-35 years old bracket. Activities shall be engagement in short term employment opportunities for at most eight hours per day and pay them the newly revised minimum wage for days worked.

This component shall lead to a provision of employment opportunities to at least 100,000 youths per year countrywide. Priority sectors include water and soil conservation, afforestation, road maintenance, garbage collection and other environmental conservation activities, rural water supply, small scale irrigation projects and rehabilitation of educational and training infrastructure such as lecture theatres, sanitation, libraries etc.

Government ministries shall work closely with local communities to identify priority sub-projects, identify sites, prepare environmental management plans where necessary and compile annual reports of sub-projects under their mandate.

Specific interventions or sub-funds that shall be created and implemented under component 1 include;

i. Secondary School-to-University Scholarship Programmeii. Financial Education Training and Mentorship Programmeiii. MSMEs Skills Training and Entrepreneurship Programmeiv. Private Sector Internships and Training Programme v. Project Merciful Entrepreneurship Programme- NGOs Programmevi. Zambia Youth Service (ZYS)- formerly Zambia National Service (focuses on Youth

Service)

Component 1 shall be implemented as follows:

Unemployed youths will be provided with information on the availability of training and entrepreneurship opportunities which have been set up by government, private sector and NGOs. These unemployed youths shall first go through a two-stage 3-month training and mentorship programme namely;

Stage 1’s immediate measure starts with the financial training and mentorship in order for youths to understand and appreciate financial information. This training shall be for duration of 4 weeks. After completion of this stage the youth proceeds to stage 2, which is

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an eight week MSME skills training in garbage collection, construction, art, early childhood education, agriculture, finance, tailoring, mechanical, mining and electrical engineering, information, communication and technology (ICT), road safety and driving, and manufacturing.

Implementing agencies shall be universities, colleges, local community centres, NGO and Government resource centres, and the Zambia Youth Service.

Zambia National Service (ZNS) should be transformed into Zambia Youth Service (ZYS). Targeted youths under the Zambia Youth Service are street kids, school drop-outs and other school leavers, but the youth service should not be compulsory. Up to 10,000 youths shall be recruited every year. The Zambia Youth Service shall have 3 skills training components:

i. First 6 months military training done by engaging Zambia Army to instil discipline in the youths;

ii. Second 1-1.5 years of National Building to do voluntary works and other important national duties, such as defence, disaster management etc.; and

iii. Third 1-3 years skills training in farming, engineering, ICT, tailoring, pre-school teachers training, driving etc. These skills training programmes shall attract certificates and diplomas to deserving graduates.

The unemployed youth has a first option to either get into the financial training and mentorship government programme, such as Zambia Youth Service or enter into a 3-months duration private sector internship training and entrepreneurship programme.

The second option is to get into a Non-Governmental Organization (NGO) managed 3-month project merciful entrepreneurship programme. Project merciful entrepreneurship programme provides training and seed money for start-ups.

3.2. Component 2:

Component 2 is called the MSME Innovations Service and collects funds for product and service innovation and improvement. The second component also provides credit and savings as financial products to micro, small and medium enterprises. Thus, this component assists youths with both no educational background and those with educational backgrounds. Under this component, youths could have acquired skills either informally or formally but are informally employed producing lower quality products. The objective of the Innovation centre is to improve the quality of locally produced products and to provide 20,000 youths with access to credit. Thus, financial institutions shall be used as intermediaries to support youth product innovations which shall not be restricted to any sector. Key sectors such as Agriculture, Education, Health, Tourism, Financial, Infrastructure/Construction, Manufacturing, Mining and Energy shall be involved in encouraging innovation.

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The Zambia Youth Service, Universities and colleges shall operate the innovation centres countrywide. These innovation centres shall exist for value addition to poorly manufactured goods and services. Private Youth enterprises, wholesalers and supermarkets will be encouraged to establish innovation centres too. The initial fund for innovation centres in the first year shall be K4 trillion. Innovation centres shall access these funds through financial institutions. It is expected that Zambia will reduce on imported goods and services as the country will be capable of producing high quality products. The seed money shall be repaid over a period of 4 years with one year grace period.

3.3. Component 3:

Component 3 of the youth employment model deals with the design and implementation of the regulation and supervision framework. Because of the fragmented nature of the current youth employment interventions, there is need for establishing an umbrella service organization to regulate and supervise the business of youth employment. The Zambia Integrated Youth Employment Service (ZIYES) shall be the umbrella organization under the Presidency. The justification for placing this organization under the office of the President is to enhance strong coordination of programmes.

New Act: Enactment of the ZIYES Act of 2012- The supervision and regulatory framework of the Zambia Integrated Youth Employment model shall be vested in a Board established by an Act of Parliament and shall fall under the Office of the President.

The Employment Act Chapter 268 of the Laws of Zambia must be revised to give priority for employment of youths between ages of 15 through 35 years. This Act should strengthen the Labour Office to act as an effective employment bureau and be able to provide labour force data in relation to labour market dynamics. Most importantly, this Act should be reviewed to accommodate a 24-hour economy. This measure is expected to reduce unemployment by 50%.

The TEVET Act No. 11 of 2005 should remodel curricula to recognize informal sector demands.

The Zambia Development Agency Act of 2006 should be strengthened as principle legislation for micro, small and medium enterprises.

The Citizens Economic Empowerment Act No. 9 of 2006 should be strengthened to stiffen penal clause applicable in default. Furthermore, funds disbursement criteria should include provision of data by recipient, business support mechanism, mentoring and monthly inspection of projects.

The Companies Act Chapter 388 of 1994 should be strengthened to include mentor MSMEs on statutory obligations and consequences of non-compliance.

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The Banking and Financial Services Act Chapter 287 of the Laws of Zambia should review the lending rates to within a narrow band of the Bank of Zambia determined rate. Furthermore, the Act should stiffen penalties to banks who deny credit to eligible youths with a good credit record.

The Income Tax Act Chapter 323 of 2004 should be revised to provide tax incentives to youth friendly businesses by allowing for expenses for running youth employment programmes.

The Ministry of Youth and Sport should establish a Sports Act to regulate and supervise the sports business thereby attracting more investment in football, motorsport, water sport, and other sports where Zambia has comparative advantage.

The initial seed money shall be K1 trillion, which shall cover administration in form of regulation and supervision functions. The supervisory model shall be self-financing thereafter. The seed money shall have a provision for a possible repayment to Government over a 4 year duration.

3.4. Financial Component:

The Financing model will take a hybrid private-public partnership form. The central government shall finance through its treasury securities such as treasury bonds and bills. The local governments shall be allowed to finance these programmes through various types of municipal bonds. The Private sector shall do their financing through corporate bonds and loans.

The total financing for the implementation of this model is K5.9 trillion for the first year. For this financing model to be sustainable in the long-run, inflation should be kept under control below 5% and government should make additional measures aimed at strengthening the Kwacha and reducing interest rates. For example, this model would be supported by an inflow of copper export revenue to be deposited at Bank of Zambia. This will create a large financial base for both the interbank market and open market operations required to finance the Zambia Integrated Youth Employment model. From the interest rate stand point, government through Bank of Zambia will give direction on the interest rate levels.

As part of the mainstreaming model, the government should mainstream these programme funds in each ministry’s budget allocations and this would require streamlining the yellow book provisions to be centred on youth employment programmes. This year’s budget should therefore be called an Integrated Youth Empowerment Budget, because it is a budget which is youth centred by putting the youth in the centre of all government programmes. Budget streamlining and youth employment programmes mainstreaming should be accompanied by youth employment legislation streamlining under the Zambia Integrated Youth Employment Service.

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4. Conclusion

The youth employment model that describes our country shall take an integrated and well coordinated approach in its implementation. The youth jobs shall be regulated and supervised by the ZIYES, to be established by an act of parliament and shall fall under the Office of the President for coordination.

The immediate jobs creating activities that government should support are described under Component 1 and reinforced by those under components 2 and 3 and by the financial model. The financial model shields the government programme from corruption by design.

APPENDIX

STATISTICAL INFORMATION

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Table 1- Percentage distribution of Household heads by age group and sex-2008

Age Group Male Female % share of Households

Total No. Of Households

15-34 40% 28.8% 37.9% 902, 336

35-64 52% 57.4% 52.8% 1,256,990

65+ 8% 13.8% 9.3% 223, 453

Total 100% 100% 100% 2, 382, 779

Source: Central Statistical Office, Labour Force Survey 2008

Table 2- Total Labour Force for persons aged 15 years and above-2008

Age Group Total

15-34 4, 396, 032

35-64 1, 995, 744

65+ 324, 255

Total 6, 716, 031

Source: Central Statistical Office, Labour Force Survey 2008

Table 3- Labour Force by age group, rural and Urban-2008

Age Group Rural Urban Total

15-34 2,714,886 1,681,146 4,396,032

35-64 1,195,293 700,451 1,895,744

65+ 264,313 59,942 324,255

Total 4,274, 492 2, 441, 539 6,716,031

Source: Central Statistical Office, Labour Force Survey 2008

Table 4-Percentage Distribution of Employed Persons aged 15 years and above by Occupation and Age Group

Occupation Age Group

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15-34 35-64 65+ Total

Administrative, Managerial

35.2% 61.9% 4.4% 100%

32,274

Professional, Technical & Related

50.9% 48.1% 1.0% 100%

231,073

Clerical & Related

62% 37.2% 0.8% 100%

60,879

Sales 63% 35.6% 1.4% 100%

333,037

Agric, Forestry & Fisheries

59.1% 35.3% 5.6% 100%

3,285,785

Production & Related

51.9% 46.0% 2.1% 100%

348,111

Services Workers

61.1% 37.8% 1.1% 100%

303,951

Not Stated 52.8% 54.3% 1.5% 100%

11,736

Total 4,606,846

Source: Central Statistical Office, Labour Force Survey 2008

Table 5- Percentage Share of the Employed and Unemployed Persons in the Labour Force-2008

Number %

No. Of unemployed persons 397,025 7.9

No. Of Employed Persons 4,606,846 92.1

No. of Youths not in labour force

1,712,160 34.2

Labour Force Size 5,003,871 100

Source: Central Statistical Office, Labour Force Survey 2008

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Unemployment Rate

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