At the end of the third quarter last year, South Africa recorded a high unemployment rate of 27.5%. Townships and informal settlements are at the helm of this problem where the youth lack resources to even apply for jobs.
A young, unemployed man crosses a busy street on 12th Avenue.
Dragging a greasy trolley filled with trash, he looks at us blankly as he continues to lug his garbage to the nearest junkyard.
It is a regular sight and a regular weekday on the streets of Alexandra, eight kilometers from Africa’s richest square mile, Sandton, in South Africa.
Sixteen-seater minibus-taxis dash from corner to corner, packing their vehicles with enough passengers before making their way out of the township.
It is 10.30AM on this sunny Wednesday morning in December.
The street corners are adorned with colorful tuckshops; they stand out against the backdrop of the grey homes around them.
One of the spaza shops is bright blue with light textures of yellow paint; a man sits behind a mesh by the sales counter. It is almost impossible to see his face.
He offers a young man a cigarette via a peep hole through the mesh.
Three men gather to smoke the same cigarette before making their way to the multi-purpose community center on the other side of the road.
Each carrying a sling bag and an A4 envelope, they disappear into a building located at the end of a twirling staircase. Young and old ceaselessly walk in and out.
The yard is filled with a number of service centers: the local clinic, revenue service offices, the post office, multiple internet shops and the Youth Advisory Centre (YAC).
At the end of the hallway, Themba Mafuya sits collecting dozens of résumés from the eager youth who are desperately in search of employment.
He gathers the pile of documents and hands it over to his assistant.
“People are hungry for jobs,” he says as he looks at the unending stream of visitors walking in and out of the center.
Mafuya’s institution creates a database of unemployed youth within the community with the sole purpose of collaborating with companies that are looking to hire.
By working closely with government, YAC reports to the City of Johannesburg on the state of unemployment in the community.
Dressed in casual wear, the 29-year-old has a friendly and positive approach when he advises potential employees.
“Go and correct the mistakes on your résumé that I explained to you. Make sure your documents are certified and bring it to me as soon as possible. Don’t worry, they will hire you,” he tells a young lady.
With Gauteng province being the economic powerhouse of South Africa, contributing 35% to the country’s GDP, according to recent figures released by Stats SA, unemployment remains an area of concern – 29.6% of people live in the province without jobs.
But the province is not among the lowest performing in the country. With an unemployment rate of 36.6%, the Free State has the highest provincial unemployment rate according to StatsSA, in 2018.
Limpopo, with a prominent rural population, surprisingly, has an unemployment rate of 18.9%, making it the lowest in the country.
Townships in the surrounding areas of Gauteng are still faced with an influx of challenges relating to unemployment.
Adding to the lack of jobs, social issues play a big part.
“We need to start doing follow-ups. Ask how many youth have been employed? Who are not employed? Why are they not employed? Maybe they do not have a correct résumé and we need to figure out why the employees do not choose them,” says Mafuya.
Just a few streets away is a compound adjacent to a block of fading pink apartments.
The yard is divided by a muddy passage with small dwellings on either side.
A smell lingers far beyond the cracks of the cement block as two buckets get noisly filled with hot water to clean chicken.
Alfredah Phuloane introduces herself after she wipes the chicken remnants off her hands using her multi-colored t-shirt.
With Phuloane is her uncle Velile Ndlovu who is her business partner.
“As long as I have chicken, they are going. If I have 55, all of them will be bought. I’ve already sold 25 for the day and we have just started,” she says.
A helper, who didn’t want to be named, gushes: “I love my job and I am proud of it.”
She too, like the 27.5% of the South African population who are unemployed, will celebrate any job that will help them put food on the table.
In 2018, StatsSA announced an increase in the unemployment rate at the end of the third quarter.
According to the Quarterly Labour Force Survey, there are 16.4 million employed people and 6.2 million unemployed people between the ages of 15 and 64 years in South Africa.
The latest figures record that the number of unemployed people in South Africa grew by 127,000 from the 6.08 million in the previous quarter.
StatsSA Statistician-General, Risenga Maluleke, says unemployment, according to the statistics collected, is calculated using the 4×4 rule.
These are job-seekers in search of employment four days a week in a four-week period.
Phuloane, who has been unemployed for three years, took the iniatitive to start the business when she realized there was a demand for freshly-slaughtered chicken in her community.
“At the time, when we were slaughtering the chicken for our own consumption, some people were coming in and asking if we were selling them. That is when we realized people needed chicken,” Ndlovu laughs.
Ndlovu leaves the compound at 4.30AM to stand in a long queue in Linbro Park where he buys the live chickens.
On his return, at around 7AM, he places the fowl in a makeshift coop.
With the helper, who earns a sum of money for her assistance, the trio spend the day processing and packaging chicken for customers.
Three years of unemployment led Phuloane, a former domestic worker, to entrepreneurship.
“If my business does succeed, I want to hire those who do not have jobs. I want to make their lives simple. They can start their own businesses then, because you can’t wait for work. There are no jobs now and it will be difficult,” Phuloane says.
Her uncle on the other hand, who worked as a recycler in a recycling company, decided to quit his job in late 2018.
When Ndlovu rejected a job transfer to South Africa’s capital Pretoria, it suddenly made him one of the thousands without employment.
The formal sector recorded job losses of 65,000 people, and agriculture lost 1,000 employees in the third quarter of last year.
Without the promise of an increase, had he accepted the job in Pretoria, Ndlovu’s expenses would have increased by $111 to travel 41 kilometers to the north eastern part of Johannesburg.
He decided to quit.
“We realized that there is a big opportunity in the township. We are trying by all means to not rely on anyone. We can take our children to school. No one will suffer if they think about starting a business,” he says.
Social engineer Action Setaka, from the organization ACTIVATE! Change Drivers (ACD), who advocates for the unemployed, says there is a copious amount of injustice hampering access to employment.
It is even worse in the townships.
ACD is a network of young people interested in driving change for the public good of the country through innovation and activism.
For Setaka, unemployment has become a commodity for business and institutions to exploit those desperately in search of work.
From the seemlingly endless amount of documentation required when applying for governmental posts, to the costs of printing and accessing the internet at internet cafés, money is required.
It does not end there.
“Transportation costs for traveling to interviews; posting of résumés cost money, which benefits the internet cafés; data to browse job opportunities and mobile networks make money out of this. Searching for employment requires money, yet you find people who claim that our young people are lazy and, therefore, they are not prepared to find work,” Setaka says.
The dire plight of the jobless youth in Alexandra is not in isolation.
Similar circumstances reverbarate throughout the townships of South Africa.
Another township, much like Alexandra, with compounds filled with shacks, is swarming with people seeking jobs for survival.
Located in the northern part of Johannesburg, Diepsloot has the highest concentration of unemployed people in Gauteng.
This is according to the Gauteng City-Regional Observatory (GCRO)’s Mapping Unemployment publication, released in August 2018.
The location, established in 1994, has grown into a community with a population of more than 160,000 with an estimate of “24,737 shacks alongside more than 5,000 formal housing units, such as RDP (Reconstruction and Development Programme) houses, self-built houses on serviced sites, and a small number of bank-financed houses,” as quoted in Diepsloot, a brochure compiled by the Johannesburg Development Agency.
Based on the StatsSA 2011 census, the GCRO map shows the concentration of unemployed people in areas that had rates worse than the provincial median in 2011.
According to GCRO statistics, “the square kilometer areas with the highest concentration of unemployed people are observed in townships such as Alexandra and Diepsloot and contain 4,965 and 8,758 people”.
Diepsloot’s South African Youth Project (SAYP) general manager, Clifford Legodi, says gaining access to employment for unemployed youth in townships is harder than it is for youth who grow up in urban regions. This points to a system exclusion due to the lack of access to resources.
Thus, the development programs that will meet the demands of the working environment will, in turn, open up opportunities.
It starts with breaking norms.
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“Young black people or previously disadvantaged communities are still using the traditional method of taking a taxi, printing a résumé or going to the offices. We felt that it was important to incorporate an online skills program. You look at their online presence. How they apply for a job online. Are they actually keeping a good online profile and how to secure opportunities in time?” Legodi says.
SAYP is a youth development organization aimed at the empowerment of young people by giving them the skillsets to utilize the opportunities around them.
This is done through the ‘Power Through Jobs’ program offered by the non-profit.
Life skills, work-readiness, and getting a job are some of the main points of focus for the youth of the township.
Online job-searching skills have been implemented in order to keep up with the evolving working environment.
Through encouragement and continuous skills development, Legodi says the notion of staying in one position will fade away, and the youth of Diepsloot will aspire to climb the corporate ladder.
“If they can conduct themselves in a professional manner, they will gain credibility,” he says.
The population is dominated by black people and for Legodi, the lack of opportunities within their reach means that those who are able find employment will have to travel long distances to get to work.
“Diepsloot has its own reputation that is quite limiting for young people to get opportunities out there.
“The media also has a bit of an influence, bad news sells. A lot of the things you see are about the crime, but everyone is treated equally within the community,” he says.
“The mistake we have been making in the past when it comes to addressing unemployment, is that we tried to develop a program that put everyone in the same box. We tend to forget that people come from different geographical locations and they are exposed to different lifestyles.”
Twenty-nine-year-old Thapelo Tau sits in a living room watching television.
It is noon and he is catching up on his favorite shows in the home he shares with his mother and two sisters.
“I have been unemployed for five or six years. It has been difficult to look for work. Many people here give up and they just sit at home and watch television,” he says.
He spends most of his time on his phone and reading.
“You may take your documents to look for work, but when you leave, they tear it up. We just give up because there is nothing we can do. I have an uncle who has been looking for work for a long time. He just stopped looking,” Tau says.
When approached for comment, the uncle dismisses the interview in vernacular.
“We are looking for work. We can’t even speak English,” he says.
English is widely considered the language of access in this nation where there are 11 official langages. Those who can’t speak the language are almost always immediately excluded from public participation.
“The problem that we have seen with people from townships is self-confidence. They get afraid when they have to leave their comfort space. They then need to present themselves in a different way, they have to adjust to a different lifestyle to showcase an approach,” says Legodi.
Afri-Berry founder and director, Relobohile Moeng, says the language barrier is one of the biggest challenges for the youth in the townships. Going the extra mile for an intern who lacked verbal communication skills, she offered mentorship and guidance. “The confidence part I had to build in, as her mentor,” attests Moeng.
Townships have the undying potential to contribute greatly to the country’s aggregate economic growth; this can be achieved only if the high populations are granted the opportunity to play their part in the economy. Alexandra and Diepsloot are testament to the facts.
In the interim, Ndlovu, much like the rest of the unemployed population, strives against all odds, hoping against hope to continue to put food on his own table whilst feeding his community.
Why The High Number Of Employees Quitting Reveals A Strong Job Market
While recession fears may be looming in the minds of some, new data from the Bureau of Labor Statistics shows that the economy and job market may actually be strengthening.
The quits rate—or the percentage of all employees who quit during a given month—rose to 2.4% in July, according to the BLS’s Jobs Openings and Labor Turnover report, released Tuesday. That translates to 3.6 million people who voluntarily left their jobs in July.
This is the highest the quits rate has been since April 2001, just five months after the Labor Department began tracking it. According to Nick Bunker, an economist at the Indeed Hiring Lab, the quits rate tends to be a reflection of the state of the economy.
“The level of the quits rate really is a sign of how strong the labor market is,” he says. “If you look at the quits rate over time, it really drops quite a bit when the labor market gets weak. During the recession it was quite low, and now it’s picked up.”
The monthly jobs report, released last week, revealed that the economy gained 130,000 jobs in August, which is 20,000 less than expected, and just a few weeks earlier, the BLS issued a correction stating that it had overestimated by 501,000 how many jobs had been added to the market in 2018 and the first quarter of 2019. Yet despite all that, employees still seem to have confidence in the job market.Today In: Leadership
The quits level, according to the BLS, increased in the private sector by 127,000 for July but was little changed in government. Healthcare and social assistance saw an uptick in departures to the tune of 54,000 workers, while the federal government saw a rise of 3,000.
The July quits rate in construction was 2.4%, while the number in trade, professional and business services, and leisure and hospitality were 2.6%, 3.1% and 4.8%, respectively. Bunker of Indeed says that the industries that tend to see the highest rate of departuresare those where pay is relatively low, such as leisure and hospitality. An unknown is whether employees are quitting these jobs to go to a new industry or whether they’re leaving for another job in the same industry. Either could be the case, says Bunker.
In a recently published article on the industries seeing the most worker departures, Bunker attributes the uptick to two factors—the strong labor market and faster wage growth in the industries concerned: “A stronger labor market means employers must fill more openings from the ranks of the already employed, who have to quit their jobs, instead of hiring jobless workers. Similarly, faster wage growth in an industry signals workers that opportunities abound and they might get higher pay by taking a new job.”
Even so, recession fears still dominate headlines. According to Bunker, the data shows that when a recession hits, employers pull back on hiring and workers don’t have the opportunity to find new jobs. Thus, workers feel less confident and are less likely to quit.
“As the labor market gets stronger, there’s more opportunities for workers who already have jobs. So they quit to go to new jobs or they quit in the hopes of getting new jobs again,” Bunker says. He also notes that recession fears may have little to do with the job market, instead stemming from what is happening in the financial markets, international relations or Washington, D.C.
So what does the BLS report say about the job market? “Taking this report as a whole, it’s indicating that the labor market is still quite strong, but then we lost momentum,” Bunker says. While workers are quitting their jobs, he says that employers are pulling back on the pace at which they’re adding jobs. “While things are quite good right now and workers are taking advantage of that,” he notes, “those opportunities moving forward might be fewer and fewer if the trend keeps up.”
-Samantha Todd; Forbes
Roadmap For African Startups
Francois Bonnici, Head of the Schwab Foundation for Social Entrepreneurship, explains how African impact entrepreneurs will continue to rise.
Does impact investment favor expats over African entrepreneurs? If so, how can it be fixed?
There is a growing recognition all over the world that investment is not a fully objective process, and is biased by the homogeneity of investors, networks and distant locations.
A Village Capital Report cited that 90% of investment in digital financial services and financial inclusion in East Africa in 2015-2016 went to a small group of expatriate-founded businesses, with 80% of disclosed funds emanating from foreign investors.
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In a similar trend recognized in the US over the last decade, reports that only 3% of startup capital went to minority and women entrepreneurs has triggered the rise of new funds focused on gender and minority-lensed investing.
There has been an explosion of African startups all over the continent, and investors are missing out by looking for the same business models that work in Silicon Valley being run by people who can speak and act like them.
In South Africa, empowerment funds and alternative debt fund structures are dedicated to investing in African businesses, but local capital in other African countries may not also be labelled or considered impact investing, but they do still invest in job creation and provision of vital services.
There is still, however, a several billion-dollar financing gap of risk capital in particular, which local capital needs to play a significant part in filling. And of course, African impact entrepreneurs will continue to rise and engage investors convincingly of the growing and unique opportunities on the continent.
What are the most exciting areas for impact investing and social entrepreneurship today?
After several decades of emergence, the most exciting areas are the explosion of new products, vehicles and structures along with the mainstreaming of impact investment into traditional entities like banks, asset managers and pension funds who are using the impact lens and, more importantly, starting to measure the impact.
At the same time, we’re seeing an emergence of partnership models, policies and an ecosystem of support for the work of social entrepreneurs, who’ve been operating with insufficient capital and blockages in regulation for decades.
The 2019 OECD report on Social Impact Investment mapped the presence of 590 social impact investment policies in 45 countries over the last decade, but also raises the concern of the risk of ‘impact washing’ without clear definitions, data and impact measurement practices.
In Africa, we are also seeing National Advisory Boards for Impact Investing emerge in South Africa and social economy policies white papers being developed; all good news for social entrepreneurs.
What role does technology play in enabling impact investing and social entrepreneurship?
The role of technologies from the mobile phone to cloud services, blockchain, and artificial intelligence is vast in their application to enhancing social impact, improving the efficiency, transparency and trust as we leapfrog old infrastructures and create digital systems that people in underserved communities can now access and control.
From Sproxil (addressing pirated medicines and goods), to Zipline (drones delivering life-saving donor blood to remote areas of Rwanda) to Silulo Ulutho Technologies (digitally empowering women and youth), exciting new ways of addressing inclusion, education and health are possible, and applications are being used in many other areas such as land rights, financial literacy etc.
While we have seen a great mobile penetration, much of Africa still suffers from high data costs, and insufficient investment in education and capacity to lead in areas of the fourth industrial revolution, with the risk that these technologies could negatively impact communities and further drive inequality.
Towards One Africa
In the alphabet soup of regional African trade blocs, will the AfCFTA ease the cost of doing business on the continent?
Ghana has been named the host of the African Continental Free Trade Area (AfCFTA) following four years of talks to form a 55-nation trade bloc. It will be the base for the AfCTA secretariat.
The opportunities for Africa with this new trade bloc are immense. The Economist Intelligence Unit estimates that the AfCFTA will create the world’s largest continental free-trade area, provided all 55 African Union (AU) members join, and has the potential to create an African single market of 1.2 billion consumers whilst eliminating about 90% of tariffs on goods over the next five years.
So far, 44 African countries have signed up for the historic agreement, the world’s largest free trade area since the formation of the World Trade Organization.
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The AfCFTA is expected to boost the economies of African countries through employment creation and the promotion of made-in-Africa goods. But Kayode Akindele, a partner at TIA Capital, a pan-African investment partnership focussed on credit-based investing across sub-Saharan Africa, is not opening up the bubbly just yet.
“We already have ECOWAS [Economic Community of West African States] which doesn’t seem to be working and so why don’t we sort that out first before we enter a continental trade agreement for Africa?”
And he is not alone in his concerns.
“There are other factors we need to also consider. Firstly, with the implementation of the AfCFTA, goods made in other continents could be disguised as made-in-Africa to qualify for duty free treatment. There could also be a reduction in government revenue and also this trade bloc also threatens the profitability and survival of infant industries,” says Vincent Acheampong, an economist based in the United Kingdom.
Of the regional blocs in Africa, including EAC (East African Community) and SADC (Southern African Development Community), the ECOWAS has some way to go in terms of performance, according to Muda Yusuf, the Director General of the Lagos Chamber of Commerce and Industry, in an interview with CNBC Africa. But he believes there is still reason to be optimistic.
“A continental trading bloc is going to build on the success of the regional blocs like ECOWAS and other blocs across Africa. So, this integration is going to build on those blocs. In terms of performance, of course ECOWAS is the least performing because East Africa is doing very well and South Africa is doing far better also. But there is no perfect time for things like this, what is important is for us to get a conviction that economic integration will work for us and also if we can get our institutions to make it work,” says Yusuf.
Amongst the many challenges of the ECOWAS is its failure to implement its vision of a single currency, the ECO, which is part of its plans to make Africa a more integrated continent. That vision has been postponed several times by the 15-member group with the newest target date set for 2020 although most experts believe the date to be unrealistic.
The success of the AfCFTA requires not only a trade policy but also a manufacturing agenda, competition, industrial policies and property rights to work well according to Vera Songwe, the Executive Secretary of the UN Economic Commission for Africa, in a statement at the launch event that took place in Niamey, Niger.
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The ninth edition of the flagship Assessing Regional Integration in Africa report (ARIA IX) stipulates that AfCFTA’s success will be due to its ability to actually change lives, reduce poverty and contribute to economic development in Africa.
In support of the new trade bloc, Ghanaian President Nana Akufo-Addo pledged to donate $10 million to the AU to support the operationalization of the secretariat of the AfCFTA.
Although the AfCFTA will be economically transformative for Africa in the long-term, the immediate benefits will be restricted due to the macro-economic uncertainties of regional trade.
“Most African countries are currently not producing the goods and services that their neighbors import, as a result we do not trade a lot with each other. It is easier for an African country to trade with a country in Europe than a country that lies right next to it and these low levels of intra-African trade need to be addressed before we can reap the full benefits of the AfCFTA,” says Acheampong.
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