Blog – Jobs for Youth in the Agrifood Sector: Leveraging Micro and Small Enterprises

Lessons learned from global projects

Jean-Marc Delort, Vice President of Tech Dev, detailed Tech Dev’s decade-long efforts to support micro-enterprises in Mali, Senegal, Chad, and Burkina Faso. He presented the organization’s flagship program, HUB-IIT (Incubation and Technical Training Initiative), which provides comprehensive support to micro-enterprises, including training in technical and business skills, access to financing, and assistance with market entry. Tech Dev works with local technical centres to support small agrifood businesses, helping them scale production, improve business quality, and access new markets. Examples showcased include:

• A small Senegalese enterprise making fruit-based juices and jams, which sought Tech Dev’s support to upgrade equipment and implement better safety standards. With this assistance, the enterprise increased its workforce from 2 to 10 employees, enabling it to expand its product line and reach new hotel and supermarket clients.
• A small biscuit producer that was able to scale up through Tech Dev’s intervention, now employing 20 people and selling products to regional supermarkets.

Jean-Marc noted that while about 80% of Tech Dev’s clients enterprises are managed or owned by women, local governmental programmes that support micro, small and medium enterprises are particularly lacking for women. Around one thousand micro enterprises were supported during the last five years; he highlighted that financing assistance, local partnerships, and access to resources like equipment and digital networks are essential in creating viable, sustainable micro-enterprises.

Sven Braulik, Advisor to GIZ, shared lessons learned from GIZ’s “Rural Employment with a Focus on Youth” project, which promotes an integrated approach to youth employment promotion, supporting both entrepreneurs and job seekers in rural areas of Kenya, Malawi, Mozambique, and Burkina Faso. The 360-degree AgriJobs approach integrates skills training, entrepreneurial coaching, market access, and networking, addressing both demand and supply sides of employment. The project directly reached almost 50,000 beneficiaries,81% of whom were between 15-35 years of age and more than 50% whom were female. New or additional employment was created for 17,000 persons and the income for another 17,000 beneficiaries increased. Additionally, three out of four beneficiaries reported improved employment prospects. Micro-, small and medium-sized enterprises (MSMEs) were the most satisfied with their employment prospects and income, with nearly 2,500 MSMEs supported, resulting in the creation of approximately 5,000 jobs.

The project achieved this through business model workshops, pitch nights,  fostering networks and partnerships for accessing (local) markets to realize growth opportunities. GIZ also creates “Persona Profiles” to understand how to tailor support to specific youth needs. For example, a young female entrepreneur with limited education may need support with basic financial literacy and business management training, while a male university graduate may receive advanced coaching and networking opportunities. Sven noted that the approach is flexible in its application, but emphasized that access to a supportive ecosystem, affordable training, and networking are crucial for rural youth to succeed in agribusiness.

Policy implications on the ground

Tlotlo Neo Phuduhudu, Managing Director of Native Feeds in Botswana, produces innovative livestock feed from indigenous plants. To sustain and grow the business, Native Feeds has diversified its revenue streams beyond feed production, now offering on-site farm nutrition consulting and business management services to local farmers. Now in its eighth year of operation, Native Feeds employs two temporary animal scientists, a nutritionist focused on product quality control, and a branding and design specialist.

Tlotlo explained that one of the primary challenges Native Feeds faces is access to finance. Funding applications are often costly and require consultant support to help refine proposals, which can be a barrier for micro and small businesses like Native Feeds. Additionally, high collateral requirements from lenders, who frequently seek land or other assets as security, make it difficult for micro and small businesses to qualify for loans. Tlotlo highlighted that these challenges are compounded by limited access to research institutions in the agrifood sector of Africa, which are vital for testing and validating product innovations. To address this, Native Feeds partners with other companies that have similar products and have already conducted research, to leverage knowledge and resources.

As a young agribusiness owner, Tlotlo emphasized the need for policies that offer alternative financing options for small businesses, such as startup loans that don’t require asset-based collateral. She also called for increased investment in agricultural research to support product innovation in the sector and support the growth of enterprises like Native Feeds.

Hans Muzoora, Market Systems Finance Officer – Center for Agriculture-Led Growth – USAID Bureau for Resilience, Environment & Food Security, Aceli Africa, an innovative programme funded by USAID which uses risk-sharing mechanisms to incentivize banks to lend to small agribusinesses, especially those led by youth and women. By providing catalytic capital, first-loss guarantees, and origination incentives, Aceli Africa incentivizes financial institutions to offer smaller ticket loans to rural entrepreneurs.

Policies enacted by governments in response ag lending highlight the effect that a stronger enabling environment can have on the Agri finance sector. Specifically, the Tanzanian government established a Tanzanian Shilling (TZS) 1 trillion fund in 2021(roughly $435 million at the time) to be channeled through financial institutions for agricultural lending. Banks accessing these funds pay an annual interest rate of 3% in TZS and are required to lend to the market at rates of no more than 10% in TZS. Given the significant volume of these funds relative to the overall agri-lending market in Tanzania, this policy has improved bank liquidity, stimulated a substantial increase in agri-lending, and lowered interest rates for agricultural lending among the institutions supported by the Aceli incentives from 20.6% in 2019 to 11.4% in 2022.

Hans highlighted the impact of data-driven insights, which demonstrate the profitability of youth-led agribusinesses and encourage more inclusive lending practices. He concluded by noting that blended finance models, coupled with technical assistance, can improve financial inclusion by increasing lending to specific targeted projects, such as female-owned and youth-led enterprises, initiatives and projects.

Pilar Santacoloma, Nutrition and Food Systems Officer, FAO, emphasized the crucial role MSMEs, especially in low- and middle-income countries, where they generate one-third of all employment and one-third of women’s employment as they dominate in post-farm gate activities. Furthermore, MSME are engines of economic diversification and development by enhancing smallholders’ access to markets for both inputs and outputs and contributing to increase farm incomes. Pilar shared that in Sub-Saharan Africa, MSMEs facilitate 95% of food distribution, meeting 80% of consumer food demand Therefore, MSMEs have a huge aggregate power to determine the range of food that is available and affordable to consumers, and thus to shape diets and nutrition. Further. women are engaged in MSMEs as both workers and entrepreneurs, which is a potential driver for female empowerment. Despite this, MSME employment is predominantly informal, especially for youth and women, and this often leads to poor working conditions and income insecurity. Pilar outlined four key areas that can support MSMEs in employment, nutrition, and gender inclusion, which FAO has implemented in various regions.

• Improving value chain connectivity and supporting business environments, by increasing access to technologies and physical and digital infrastructures.
• Making nutrition a core business case, by embedding nutrition goals into agricultural policies, increasing systematic support to supply and demand of a balanced and diversified diet and increasing public procurement of nutritious foods.
• Ensuring affordable food safety standards, by developing frameworks that protect consumers without overburdening MSMEs and leading to high costs and increased informality.
• Improving business and regulatory environments. Pilar noted that according to the World Bank, it is nearly six times harder to start a business in low- and middle-income countries due to taxation and financial burdens.
• Pilar concluded that governments and financial institutions must work together to reform systems, reduce compliance burdens on small agribusinesses to encourage formalization and improve food safety practices, in turn benefiting both businesses and consumers. It should be multisectoral, since relevant policies and regulations are often spread across national and subnational levels and across ministries.

Key Takeaways

The speakers concluded that a multi-dimensional approach is needed to enable young people to engage in the agrifood sector, ensuring that they not only acquire the skills they need, but also have access to networks and financial resources. By reducing risk and transaction costs, financial institutions can be encouraged to lend to small businesses, inevitably bridging the financing gap for small-scale agribusinesses, especially those led by youth and women who typically lack significant collateral. Additionally, subsidized technical support and training can enable rapid growth in small enterprises, and help reduce female-led businesses’ barriers to expansion for inclusive growth.

The Rural Youth Employment Thematic Working Group (TWG RYE) remains committed to raising awareness and sharing knowledge on effective ways to support and empower rural youth and enable their contributions to sustainable food value chains.