On 28 August, 2020, Mr. Stephen Rodriques, the Resident Representative of UNDP in Rwanda, was invited by the Commonwealth Youth Council (CYC) to be the guest speaker at its first Youth Entrepreneurship Support (YES) Webinar Series.

This e-event sought to discuss the challenges that youth-led small and medium enterprises are facing due to the COVID-19 pandemic, while also presenting options and opportunities to support these businesses to get back on their feet and create new products and services. It was organised under the initiative of the Africa and Europe Committee of the Commonwealth Youth Council, which seeks to support youth entrepreneurs in both regions.

Themed “Supporting SMEs through COVID-19 Crisis: Challenges and Opportunities for Youth Businesses”, the event brought together young African and European entrepreneurs, economists, development experts and practitioners, partners and decision makers.   Though closed, it was livestreamed through CYC’s Facebook page for a broader audience.

In his key note address, Rodriques highlighted the significant disruptions and hardships that the pandemic has caused across Africa and the rest of the world, but was also optimistic based on the resilience that many companies have shown, and the new innovations that have emerged to tackle the pandemic. 

Over the past 5 years he has spent a lot of time visiting young entrepreneurs that UNDP supports through the YouthConnekt programme, witnessing their incredible energies, innovativeness and hard work. He is now concerned about the level of impact the pandemic has had on many of these youth-led SMEs.

Citing the findings of various socio-economic impact assessments that UNDP has done jointly with the World Bank, Rodriques noted that many economies fell off a cliff. In some cases, business transactions and economic activities declined by 75% or more.

The International Labour Organisation data show that millions of jobs have been lost and scores of businesses have been forced into closure while data from the International Monetary Fund draw attention to public debt levels, which have risen as governments continue to borrow to finance recovery.

Rodriques stressed the fact that SMEs are the backbone of economies in Africa and employ an estimated 80 percent of the continent’s workforce in both the formal and informal sectors. One of the things that have exacerbated their situation is that most of them don’t have cash reserves that they can tap into, and neither do they have lines of credit with banks that they can fall back on.

Despite loan facilities being made available as part of various economic recovery programmes put in place by governments and banks, SMEs are hesitant to take loans because of the protracted nature of the COVID-19 pandemic. Referencing a conversation, he had with the CEO of the Rwanda Private Sector Federation a day before the CYC webinar, Rodriques said “Many SMEs indicate that it is difficult to take a loan to use for working capital if you don’t know how long the crisis will last, how much worse your business will get, and how you will be able to pay back that loan afterwards.”

He added that many SMEs are informal and may not meet the requirements to access these kinds of economic relief facilities.

What UNDP and partners are doing to support hard hit young entrepreneurs?

The UNDP Representative noted that many entrepreneurs facing the crisis saw opportunities to launch new businesses, change business models, and introduce new products and services. Some of the innovative initiatives or new products that can be listed here include solar-powered and touch-free water dispensers, various forms of handwashing stations, new protective gears, creatively designed face masks, and several disinfecting equipment.

UNDP is partnering with other actors to provide young entrepreneurs and SMEs with financial and technical support to be innovative, flexible, resilient and adaptive to the changing environment.

By way of example, in Uganda, UNDP has partnered with Stanbic Bank to launch a new multi-million-dollar youth financing facility. In Zimbabwe, under the YouthConnekt programme, UNDP is helping to promote local production in response to COVID-19.

In Rwanda, the Ministry of Youth and Culture with support from UNDP and KOICA, conducted a nation-wide rapid impact assessment among 970 youth entrepreneurs to understand the scale of the impact of the COVID-19 pandemic on youth led SMEs.  The results show that 95% of the young entrepreneurs from all sectors reported severe impacts on their businesses, ranging from reduced revenues linked to reduced demand, limited access to markets, as well as transport challenges, among others. The vast majority expressed a need for capital in order to ensure business continuity and survival and to make investments to expand their businesses and take advantage of new opportunities.

Based on the data, the Government of Rwanda has developed a plan to support those young entrepreneurs impacted by the pandemic. UNDP and KOICA are partnering with the Government and other development actors to provide both the technical and financial support needed to implement this plan and support the young business owners.

On a continental level, UNDP is pulling together examples of some of the youth homegrown solutions designed to tackle COVID-19. These will be made public in the first ever Africa Innovates Magazine that will be launched soon. The aim of this initiative is to feature businesses that are changing and innovating and which can serve as good practices for others to learn from.

Rodriques urged the audience not to only focus on the negative side of the COVID-19 pandemic but to also explore the opportunities that it presents. “We should recognize that COVID-19 presents us with a very unique opportunity to reimagine society, rethink the traditional ways of doing things, and to not just adopt new digital technologies, but also adopt healthier lifestyles and more local and sustainable ways of producing, distributing and consuming goods and services,” he said.  

Role of government and partners

He also called on governments and partners to continue playing their role in supporting youth-run SMEs through different initiatives and schemes including grants and soft loans, investments in skills and capabilities development (specially to enable SMEs to adopt e-commerce technologies), tax relief, subsidies, and other tailored forms of support to SMEs. He also recognized that partners can help facilitate partnerships and joint ventures that can help boost the viability and sustainability of youth-led businesses and enable them to acquire expertise and reach new markets.

He insisted further on the need to look beyond the COVID-19 pandemic. “Outside of Covid19 specific instruments, we need a longer-term continental youth entrepreneurship fund and we are looking for partners to help get this off the ground,” he stated.

In his conclusion, Rodriques drew the attention of the participants to the African Continental Free Trade Area (AfCFTA), which creates much wider opportunities for businesses on the African continent by opening up frontiers and removing borders and barriers. “We need to have a specific focus on supporting youth SMEs to take advantage of this opportunity,” he advised.   

He congratulated the Commonwealth Youth Council for this YES webinar series and challenged other actors to continue contributing constructively to the discussions on what can be done to support young entrepreneurs to grow their businesses and create new products and services that will contribute to the development of their countries.