Exploring capital challenges for social enterprises in youth employment

By 2040, Africa will have 1 billion people of working age — the largest labor force in the world. But traditional job growth is lagging, unemployment is rising, and the future of work is in flux. Automation, gig economy models, and the accelerating migration of jobs and labor offer both promise and uncertainty for anyone trying to adapt to the 21st century world of work. Youth are particularly vulnerable to both high unemployment and to the changes sweeping the employment landscape.

While youth are the most vulnerable, they are also the entrepreneurs and innovators of today and the employers and economic leaders of the future. Enabled by technology, many social entrepreneurs are developing solutions to the challenges faced by youth in search of jobs that will improve their livelihoods now and create more meaningful work opportunities for them in the future. These social entrepreneurs are at the forefront of creating innovative approaches to provide youth with the training and credentialing that is linked to employment opportunities and growing industries. They are also building businesses that facilitate the matching of workers with jobs, or gigs, that help youth improve their livelihoods now as they build toward more meaningful work opportunities in the future. They are launching ventures focused on micro-work, distributed manufacturing and digital livelihoods, among many other areas, opening new avenues for youth to deploy their skills and engage in emerging work opportunities.

As exciting as these ventures are from an impact perspective, Mercy Corps’ Social Venture Fund has made only three investments that are focused on youth employment. We have realized that our offering of equity financing is not always the appropriate type of capital for social enterprises operating in this sector, especially when it comes to businesses targeting youth with low incomes who may struggle to afford their products or services. In short, our tool isn’t always the right one for the job.

So, we are looking to bring new partners to the table to explore collaborative efforts such as blended finance structures and other forms of support that are tailored to the needs of entrepreneurs in the youth employment sector. We are also working with Mercy Corps’ teams to design new large-scale youth initiatives that connect with social enterprises. By working together, we believe we can achieve much greater impact — and at a scale that meets the size of the youth employment challenge.

As a next step, we are collaborating with Village Capital to gather a select group of stakeholders — including funders, investors, and entrepreneurs — around the Sankalp Africa Summit to explore opportunities for collaboration across the youth employment sector.