European Union External Action

EU-UNDP support to improve entrepreneurship development and access to finance for Malawi’s Youth

14/04/2021 - 10:16
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As part of its partnership with Africa, the EU seeks to enhance inclusive and sustainable economic development and decent job creation across the continent. Its action focusses on promoting sustainable finance, supporting education and skills development, improving the business environment and investment climate and advancing regional economic integration, trade and connectivity. In this context, the European Union (EU) has an important role as partner for growth and jobs.

The European Union and UNDP signed a contribution agreement of EUR 13.5 million and USD 1.2 million respectively on 26 March 2021 termed the Zantchito – Entrepreneurship and Access to Finance project, laying the foundation of a wider EUR 55 million programme, the Zantchito – Skills for Jobs programme. This project will support the delivery of business support services to entrepreneurs, while also facilitating their access to affordable finance.

In his remarks at the signing ceremony, European Union Head of Cooperation, Ivo Hoefkens said that “the wider Zantchito – Skills for Jobs programme, under which this particular project falls, embraces the development philosophy of the country that is building an economy that serves the people through creating jobs in the context of the Covid-19 pandemic”. He further stated that “the economic impact of the pandemic has been heavy and many people have lost jobs.  This specific project will therefore contribute to the economic recovery of the country and help Malawi rebuild the economy by supporting the development and growth of vibrant and sustainable entrepreneurship ventures that are able to create decent employment in the country.”

In concurrence, Mr. Shigeki Komatsubara-UNDP Resident Representative highlighted that “The partnership with the EU is a strategic step towards more effective collaboration with the smaller scale enterprises to empower new ideas and under-served segments of the entrepreneurial community through business incubation, technical assistance and access to finance.” He added that, “The Zantchito – Entrepreneurship and Access to Finance project is one way for us to promote the increased participation of youth in the economic affairs of Malawi.”

EU and UNDP Partnership with Africa

As part of its partnership with Africa, the EU seeks to enhance inclusive and sustainable economic development and decent job creation across the continent. Its action focusses on promoting sustainable finance, supporting education and skills development, improving the business environment and investment climate and advancing regional economic integration, trade and connectivity. In this context, the European Union (EU) has an important role as partner for growth and jobs.

The UNDP in Africa has spearheaded several private sector initiatives (e.g. “YouthConnekt”) with the end goal of greater access to capital and markets; skills development and more dynamic Technical and Vocational Education and Training (TVET) schemes for industrialization of Africa.

The EU and the UN are two international organisations who share the values of a rules-based multilateral system that seeks to address global problems. As the Covid-19 pandemic has shown, there is no national solution to global problems that affect all nations in the world. A system of international cooperation based on values and underpinned by solidarity has to be at the centre of the response and the economic recovery out of the pandemic.

Malawi’s Social Economic Challenges

Malawi faces significantly high unemployment, skewed against the youth. Notably, the country has a very youthful population, with 51% of Malawians being 18 years or younger. Unfortunately, most jobs are in the informal sector, estimated at about 90 % of the total. Micro, Small and Medium Enterprises (MSMEs) make up approximatively 38% of the working age population.

The MSMEs lack necessary technical, financial and business regulatory environment support to grow their businesses to levels that would render them dependable players in the value chain. Entrepreneurs thus lack a viable ecosystem within which to develop. Business support services are very limited and access to finance, especially for the many smaller entrepreneurs is ranked among the key constraints for business development. Poorly developed business enablers, limited entrepreneurial skills, weak entrepreneurial culture and limited access to affordable finance are other critical constraints for business and job creation.

These challenges have a strong gender dimension with women facing additional cultural hurdles and prejudices to access decent jobs or start their own business in traditionally male dominated trades. Hence, this programme applies a different approach with intervention points at essential pressure points in the entrepreneurial and skills development eco-system.

EU Response, alignment to national strategy and key partnerships

In response, the EU has developed the Zantchito – Skills for jobs programme, for a total amount of EUR 55 million, which was signed by the Malawi Government in August 2020 with the double objective of:

  1. investing in people by investing in education and skills, and
  2. strengthening the business environment and investment climate.

The programme will improve the employability and self-employment opportunities of young Technical, Entrepreneurial and Vocational Education and Training (TEVET) graduates and entrepreneurs, with special attention to women’s entrepreneurs and the youth, so as to create an ecosystem of job creators, as opposed to job seekers. 

The Zantchito – Skills for Jobs programme therefore strongly aligns to the entrepreneurship development goals of Malawi 2063 (MW2063).  The MW2063 strategy was recently launched by the National Planning Commission and recognises the importance of creating a conducive environment for the growth of small and medium scale enterprises (SMEs), and increasing access to affordable and reliable capital for long-term productive investments to businesses.

The programme was developed in partnership with the government of Malawi, and various other stakeholders. It will be supervised by the EU, in close coordination with the Ministry of Labour and Ministry of Industry.

As part of the full programme, the implementation of the Entrepreneurship and Access to Finance component is to be led by the UNDP and is expected to be up and running by September 2021. A formal launch of the project is planned and invitation will be made to all the relevant stakeholders, in particular, entrepreneurs, business incubators, business development services, financial firms, micro-lending institutions, in order to inform them about how to integrate and benefit from this programme.

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