Generation Jobless: How Impact Enterprises Works to Reduce the Skills Gap

Youth unemployment has become a growing problem worldwide, both in developed and developing countries. As the world’s youth population continues to grow in size, there simply aren’t enough jobs to employ them. This led The Economist to dub today’s youth “Generation Jobless.”

According to the United Nations, nearly 3.5 billion people globally are under the age of 27.  One-third are between the ages 15 and 24, of which 600 million are either unemployed, work in the informal sector, or earn less than $2 a day. This means that unemployment for youths is three times higher than for adults.

To make matters worse, the world is facing a huge skills gap. Those leaving school are finding they still lack the skills required by employers. This may be a matter of not having the soft skills to be prepared for the workplace or aren’t being educated in sectors where job creation is happening, such as technology.

This is especially true in Sub-Saharan Africa, where, although literacy rates and school enrollment have increased over the years, many of the schooling systems still promote “rote learning.” This means students are taught to pass exams instead of gain real world workplace skills.

A recent report by JA Worldwide titled Generation Jobless gives five suggestions for helping the youth find employment. These include:

  1. Boost job creation and labor demand
  2. Better prepare young people for the job market
  3. Increase access to career counseling
  4. Improve current and long-term financial literacy
  5. Foster entrepreneurship

This is an undertaking requiring the commitment of governments, employers, educational institutions, civil society organizations, and financial institutions. All these stakeholders play a part in contributing to fighting unemployment.

Here at Impact Enterprises, we’ve taken the initiative to create a solution to this huge problem in Zambia, where the problem is as acute as anywhere. Our mission to create valuable employment for high school and college graduates means we’re not only providing jobs, but also addressing the skills gap that exists in today’s workforce head-on.

For the majority of our employees, working at Impact Enterprises is their first formal job. Through weekly workshops, we teach the soft skills necessary in the workplace to our employees, such as problem solving, creative thinking, teamwork, and communication. We also provide information on life skills such as savings and goal setting. This means that, beyond the hands-on technical skills they gain on the job, they are now better prepared to compete in the digital economy.

We are also engaging stakeholders domestically and abroad to promote job creation here in Zambia. Fostering an active, mutual dialogue about this global issue ensures that everyone is focused on the future. In Zambia, where development and entrepreneurship has been slow, these partnerships are only taking root. But over the last 2 years, we have seen that so many partners, from the universities to foreign embassies to local startup scenes, are committed to changing the prospects of this generation.

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Social Impact Measurement: What are the Tools?

Part 2 of 2

Recently, we looked at how social enterprises are establishing a model for future industries. By blending social awareness into traditional business practices, companies gain various benefits that lead to long-term results. At first glance, this may seem obvious and optimistic, but how do we actually measure the social impact?

Measuring the social impact of these organizations can be difficult, but the Global Impact Investing Network (GIIN) is attempting to standardize impact research and measurement through their Impact Reporting and Investment Standard (IRIS). The IRIS catalog is designed to work across sectors and applies to various measures of performance including financial, operational, product, sector, social and environmental objectives.

By utilizing standardized impact measurement tools, new investors are able to fairly compare potential investments based on quantifiable data. Social investment fund managers are able to track the performance of their funds with ease. The social entrepreneur is more easily able to track the impact of their company and demonstrate its scalability. Finally, the general public will have a more transparent view of the social enterprise.

From the data gathered so far, this model of sustainability seems to be working. According to the recent GIIN Impact Investing Benchmark Report, social investment funds formed between 1998 and 2004 have outperformed comparative conventional private investment funds. Social investment funds were also more likely to weather the 2008 financial crisis. More recently launched impact funds trail their peers, but this is in large part due to the longer investment horizon for impact investors.

Overall, the study finds social impact funds are performing mostly in line with conventional peers. These figures demonstrate that being socially minded can have high returns on investment for all involved.

GIIN Benchmark

Source: Cambridge and Associates, GIIN Impact Investing Benchmark, 2015

 

From personal experience, being socially minded has benefited us at Impact Enterprises as well. We realize our mission of creating valuable employment in Zambia by providing not just jobs but professional development for our employees. Internally, this results in more dedicated employees and higher overall satisfaction. For our clients, they know that they are offshoring their work in a socially conscious manner. This means we are able to stay competitive even against more established peers.

The question ahead is, what will happen to social enterprises as they grow? As more players become involved in the sector, how will that tip the balance of supporting stakeholders versus satisfying shareholders? For example, in April 2015, Etsy, a certified B-Corp, went public, being only the second company to do so. As a publicly traded company, they will be particularly responsible to their shareholders who have the right to dictate the course of the business.

Public companies are often criticized for focusing on short-term profits over long term economic sustainability. Can these companies that are accountable to profit minded parties – be it the investment funds or shareholders – find the right model of maintaining their social impact?

Can Social Entrepreneurship Succeed?

Part 1 of 2

The Social Enterprise Model

Social enterprises are on the rise and they’re demonstrating a new way of doing business. Emerging from the innovations of decades of social initiatives, they are now reshaping companies in ways not thought possible. And there’s much we can all learn from their example.

The social enterprise movement isn’t just a small niche focused on causes in the developing world. Estimates suggest that there are 62,000 social enterprises in the United Kingdom with revenue of £24 billion. In the United States a recent survey suggested that social enterprises could potentially account for up to $500 billion in revenue.

This industry is blurring the lines between for-profit businesses and the non-profit sector. On one side are non-profits (or the more aptly described not-for-profits), organizations that use their proceeds for the benefit of a social problem. On the other are for-profit companies that direct their earned profits to the owners, such as the partners or shareholders.

For-profit companies can still be involved in social missions, but today this is largely in the form of corporate social responsibility (CSR) and philanthropy arms. These programs are typically an appurtenance to the primary service of the business where consumer and shareholders’ interests are at stake.

Social enterprises fit somewhere in the middle of the business spectrum. Jonathan Greenblatt, Director of the Office of Social Innovation and Civic Participation in the U.S. Domestic Policy Council, describes a social entrepreneur as someone who creates change through a market based approach using direction action. Rather than trying to change the market environment through say lobbying or policy changes, they come up with solutions using a business model.

Take for example VisionSpring, which trains local entrepreneurs to check eyesight and sell eyeglasses. Their model tackles both unemployment and healthcare needs. Or Ethos Water, now a Starbucks subsidiary, which donates a portion of revenues towards water and sanitation initiatives.

Social Enterprises

The Benefits of Social Entrepreneurship

The recent growth in popularity and size of socially-conscious companies is reshaping markets around the world. Consumers in particular are demanding more from their products. The sophistication of Millennials, driven by information ubiquity, is putting pressure on companies to connect consumption to cause.

Today, companies are reviewing their entire supply chain, including the labor, materials, transport, and logistics of operations. They are being more transparent with the allocation of their profits. Third parties are able to attest to a company’s social impact, such as the B-Corp certification or the Impact Reporting and Investment Standard (IRIS).

In the past, companies would eschew social causes, seeing them as a cost or logistical burden. Today, social enterprises are proving that adopting a socially-conscious business model has many benefits.

On the top line, companies gain brand differentiation and customer engagement. They attract sophisticated consumers attracted to socially minded companies or a new consumer base that typically might be overlooked or priced out in a traditional for-profit approach. Cone Communications and Echo Research found that

90 percent of shoppers worldwide are likely to switch to brands that support a good cause, given similar price and quality.

These consumers are also having deeper, richer conversations with companies. When a brand stands behind a vision, they can connect with consumers on a whole new level.

On the bottom line, companies can gain cost savings and long term sustainability. For example, reducing the amount of packaging required for shipping can immediately reduce costs but also ensure companies don’t need to reconfigure supply chains in the future.

Even internally, a company benefits from adopting a social enterprise model. Employees become motivated by a higher purpose in their companies. They also strive for higher innovation, to ensure their products are sustainable and socially conscious. Moreover, as Millennials become a more dominate part of the workforce, corporate culture will need to change. A study by Brookings Institute states that two-thirds of Millennial employees said they wanted their employers to contribute to solving social problems, compared to only half of Baby Boomers and Generation Xers.

On the grander scale, it behooves all companies to adopt some mix of social awareness. Pressing issues like global warming, deforestation, food security, and human rights abuses can only be overcome by integrating social entrepreneurship into the market. Today’s social enterprises will hopefully be seen as pioneers for tomorrow’s new industries.

How Investment in Internet is Changing Africa

Information and communication technology is driving the new “knowledge-based” economy in the developed and developing world. However, internet access remains comparatively low in Africa, with internet penetration at 20% for the continent.

The barriers to internet usage are many, including the high cost and lack of access, and for those who do have internet access it can be unreliable and slow. Zambia is no different, with an internet penetration rate of 16% for its population of 14 million people. Even worse, 75% of users are only in the capital city of Lusaka.

This creates obstacles for the small and medium enterprises and start-ups in the region, such as us at Impact Enterprises. Beyond just the price tag of getting reliable access, online services are rarely available making simple tasks cumbersome. Online payments and services are costly and rarely available and ecommerce is practically non-existent.

Countries are beginning to see that low internet adoption is becoming a hindrance to their economies, with 140 countries creating a specific broadband plan, compared to just 15 in 2005. As a result, many African countries, including Zambia, are looking to develop their fiber optic networks.

Expansion in Zambia

Internet in Zambia traces back to the Copperbelt Energy Corporation (CEC), which has provided power supply to the Copperbelt mining region of northern Zambia and southern Congo since the 1950s. Investment in the telecom infrastructure of the region eventually led to a joint partnership with Liquid Telecom Group to provide retail internet services.

Today, CEC Liquid Telecom is one of the largest companies contributing to fiber optic development in the region, which plans to lay 18,000 kilometers of cable on the continent by the end of 2015. The Zambia Electric Supply Corporation (ZESCO), the country’s power utility company, itself had installed 5,300 km of fiber network in the country by the end of 2013.

These investments have already led to great benefits. In February 2015, Liquid Telecom announced the launch of its Fiber to the Home (FTTH) service, which provides broadband services to homes and businesses. The new network means individuals gain access to unlimited data packages at speeds up to 10 Mbps with prices less than one fifth of the current available broadband options.

Success in Unusual Places

The increased fiber network and increased access has great potential to impact the local economy. By bringing data packages to homes and small business, it fosters the environment for the development of the technology sector in the economy.

According to a report by McKinsey on the impact of internet on developing countries, SMEs that leverage the internet have higher growth, higher profits, and productivity gains of 5-19%. Furthermore, for every job lost due to internet innovation, 3.2 new jobs are created.

Believe it or not, no place has demonstrated this potential better than Rwanda. Yes, that Rwanda.

20 years ago, the small east African country experienced one of the worst humanitarian events in history. Out of the ashes of the genocide emerged a well-organized economic restoration led by their visionary president, Paul Kagame. In cooperation with foreign governments, NGOs, and consultants, Rwanda laid out a clear plan for its future called Vision 2020.

A major chapter of the plan recognizes how critical ICT is for a country to compete in today’s world. Through major investment in infrastructure and partnerships, their telecom companies now provide coverage to 99.8% of the country, with user penetration predicted to be 95% by 2016. The capital, Kigali, even offers free WiFi across the entire city.

That’s an astounding accomplishment, considering the state of the nation just two decades ago. As a result of these reforms, Rwanda now ranks 3rd in Africa on the Doing Business rankings and is becoming a tech hub for entrepreneurs.

Looking at Zambia’s Future

The value that investing in the telecom network has on the economy is not lost on the Zambian government. The Zambia Information and Communication Technology Authority (ZICTA) acting Director General, Mulenga Chisanga, stated recently, “Broadband services would ease the way of doing business in the country and add value to the economy. There is therefore need for industries to embrace broadband services to complete on a global level to grow their businesses.”

According to the McKinsey report, governments need to focus on three types of initiatives – promoting access and literacy, creating a favorable regulatory environment, and e-government services. These all face challenges, including massive investments in curriculums and equipment and receiving pushback from incumbent parties who will be disrupted by change. But the benefits far outweigh the costs.

For us at Impact Enterprises, we are fully embracing the digital age in pioneering socially conscious outsourcing here in Zambia. The developments happening today are laying the foundation for success, but there is still a long way to go. Through our work, we hope to demonstrate the amazing potential the internet age has to offer the brilliant youth of this country and hope that will inspire a cohesive vision for the future.

Generation Jobless: How Impact Enterprises Works to Reduce the Skills Gap

Youth unemployment has become a growing problem worldwide, both in developed and developing countries. As the world’s youth population continues to grow in size, there simply aren’t enough jobs to employ them. This led The Economist to dub today’s youth “Generation Jobless.”

According to the United Nations, nearly 3.5 billion people globally are under the age of 27.  One-third are between the ages 15 and 24, of which 600 million are either unemployed, work in the informal sector, or earn less than $2 a day. This means that unemployment for youths is three times higher than for adults.

To make matters worse, the world is facing a huge skills gap. Those leaving school are finding they still lack the skills required by employers. This may be a matter of not having the soft skills to be prepared for the workplace or aren’t being educated in sectors where job creation is happening, such as technology.

This is especially true in Sub-Saharan Africa, where, although literacy rates and school enrollment have increased over the years, many of the schooling systems still promote “rote learning.” This means students are taught to pass exams instead of gain real world workplace skills.

A recent report by JA Worldwide titled Generation Jobless gives five suggestions for helping the youth find employment. These include:

  1. Boost job creation and labor demand
  2. Better prepare young people for the job market
  3. Increase access to career counseling
  4. Improve current and long-term financial literacy
  5. Foster entrepreneurship

This is an undertaking requiring the commitment of governments, employers, educational institutions, civil society organizations, and financial institutions. All these stakeholders play a part in contributing to fighting unemployment.

Here at Impact Enterprises, we’ve taken the initiative to create a solution to this huge problem in Zambia, where the problem is as acute as anywhere. Our mission to create valuable employment for high school and college graduates means we’re not only providing jobs, but also addressing the skills gap that exists in today’s workforce head-on.

For the majority of our employees, working at Impact Enterprises is their first formal job. Through weekly workshops, we teach the soft skills necessary in the workplace to our employees, such as problem solving, creative thinking, teamwork, and communication. We also provide information on life skills such as savings and goal setting. This means that, beyond the hands-on technical skills they gain on the job, they are now better prepared to compete in the digital economy.

We are also engaging stakeholders domestically and abroad to promote job creation here in Zambia. Fostering an active, mutual dialogue about this global issue ensures that everyone is focused on the future. In Zambia, where development and entrepreneurship has been slow, these partnerships are only taking root. But over the last 2 years, we have seen that so many partners, from the universities to foreign embassies to local startup scenes, are committed to changing the prospects of this generation.

Digital Jobs Are The Key for Tomorrow

According to the Population Reference Bureau, up to 51% of youth are unemployed in southern Africa. Unemployment undermines the foundations of a stable, prosperous society and restricts opportunities for growth.

The economic and social costs of unemployment are well known, often locking people into a vicious cycle of poverty and exclusion. With 90% of the world’s youth living in developing countries, the lack of job opportunities leads to a dangerous expansion of the informal sector, forcing young people to accept a reality of job insecurity, low, erratic income, and few options for advancement.

The rapidly growizmoutng “impact sourcing” industry, a subsector of the business process outsourcing (BPO) industry, focuses on addressing social issues and employing those from disadvantaged backgrounds.  Impact sourcing service providers (ISSPs), like Impact Enterprises, are harnessing technological innovation to tackle the challenge of unemployment while providing valuable services to global customers.

Impact Enterprises attempts to address this major challenge facing humanity in Zambia, where, as the 11th youngest country by median age, the problem is as acute as anywhere. What we witness, however, is that so many youth idling in the economic torpor already possess the skills, understanding, and alacrity to compete on a global scale.

We have already seen that they can succeed and drive Zambia into the 21st century, if only given the proper opportunity.

The Zambian economy is almost entirely reliant on the mining of one element: copper. The mining industry has been the backbone of the economy, but one sector cannot support a country forever. Already the foundation is caving, as copper prices have consistently fallen in the last 4 years and the Zambian Kwacha has devalued to an all-time low.

Existing initiatives by the Zambian government and foreign investors to tackle unemployment prioritize the agriculture and manufacturing sectors. To reach economies of scale, these industries require huge capital investments and a complex network of trade.

Diversification and innovation, therefore, is necessary for creating the opportunities that young Zambians are crying out for.

With relatively few of these commitments entering Zambia, the job market continues to fall farther DSC04452behind its emerging market peers. However, the IT industry, which has been virtually ignored to date, has huge potential to quickly employ youth with lower capital expenditures. In just our first year of operation, our workforce expanded sevenfold.

While the challenge at hand is enormous, so too is the potential of the technology sector to address it. Globalization and advances in digital communications have created a world where access to information and employment in the global economy are no longer determined by where you are born.

The rapidly expanding impact sourcing sector, growing at 29% annually, is demonstrating that eager individuals across the developing world have the skills to work and compete in the international marketplace.

Impact Enterprises, as well as many other ISSPs, is at the vanguard of this movement, distinguishing itself as a socially driven outsourcing company. As we scale, we will demonstrate how innovative start-ups can be role models for economic development in the region. Together, we can unlock a new generation of jobs for young Africans in a sector otherwise overlooked by the status quo.

The Changing Face of Outsourcing

As the outsourcing industry has matured over the last 30 years, a shift in the competitive landscape has exposed the colossal opportunity for impact sourcing. The industry has reached a divergence point, exposing inefficiencies that require new solutions.

The business process outsourcing (BPO) industry has played a crucial role in the growth and improved efficiency of businesses around the world for more than twenty years. However, the industry’s remarkable success in destinations such as India and the Philippines has begun to undermine their competitiveness.

Rapid economic growth has contributed to rising wages in the business centers, which is threatening the ability of these outsource destinations to deliver the same value to clients as was previously possible.

Businesses are now looking for the next great outsourcing frontier.

Impact sourcing service providers (ISSPs), like Impact Enterprises, are proving that new locations like Africa are the land of opportunity. We are leveraging high-potential countries that can deliver superior cost-effectiveness and reliability.

costThe increasing diversity of companies and institutions looking to outsource their operations is in turn increasing the diversity of services being demanded. From the customers’ perspective, ISSPs are solving a mismatch between the types of client services provided and demanded at the lower end of the outsourcing spectrum.

Companies, particularly small and medium enterprises (SMEs), demand lower-cost back office and data management solutions. Unfortunately, large high-end traditional outsourcers often lack the flexibility to take on minimum contract sizes and low-end crowdsourced freelancers cannot provide a reliable, scalable solution.

ISSPs like Impact Enterprises in particular fill this gap by

  • Taking on small contracts that other BPO providers overlook
  • Working directly with clients to develop personalized solutions that we can scale alongside their growth
  • Ensuring quality beyond that of freelancers through continuous in-house training and management oversight
  • Minimizing costs from our emerging location

The burgeoning tech start-up industry is becoming a highly lucrative outsourcing target for those who can provide the appropriate services. Our goals and prospects grow brighter every day. In our first year alone, Impact Enterprises grew on average 30% month over month. To date, we’ve partnered with 17 companies and universities, large and small, in the U.S. and Europe to provide exceptional outsourcing services.

ISSPs are bridging an industry gap for start-ups, universities, and public institutions. They are first entrants into a new, high-potential niche market and positioning themselves to become a major player in the post-Asian era of outsourcing.