Michael Gondwe: Skills development as a catalyst for youth employment
promotion, income growth, and micro, small and medium enterprises
Keynote address by Dr Michael Gondwe, Governor of the Bank of Zambia, at the stakeholder
consultative workshop, organised by the Technical Education, Vocational and
Entrepreneurship Training Authority (TEVETA) of the Republic of Zambia, Lusaka,
18 October 2012.
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Chairperson
Ladies and gentlemen
It is indeed an honour and privilege to make this keynote address on skills development as a
catalyst for youth employment promotion, income growth, and micro, small and medium
enterprises (MSMEs) development.
Mr Chairman
Over the recent past, macro-economic stability and appreciable economic growth has been
achieved in Zambia as reflected in:
i. Positive real GDP growth averaging 6.5% per annum in the last 5 years coupled
with rising per capita incomes;
ii. Falling inflation, relatively stable exchange rate and downward trend in lending
rates;
iii. Favourable external sector performance; and
iv. Stability and growth in the financial sector;
The main challenge that still remains is that of meeting the basic needs of the majority of
Zambians, in particular our youth and women, who suffer the brunt of high unemployment.
It is for this reason that action is urgently needed to boost skills development in order to
enhance productive capacities, investment and decent jobs to sustain the incomes of
working families, the poor and the vulnerable.
Dear participants
The productivity and the quality of work are major determinants of life quality, affecting
nutrition, health and education, social protection, and fair treatment. Jobs are particularly
important for the poor, whose labour is often their only asset and a primary route to poverty
eradication.
It is for this reason, that we at the central bank recognise skills development as an economic
imperative. This is because it increases productivity of economic agents.
Chairperson
In the aftermath of the recent global financial crisis of 2008, employment has re-emerged as
a top priority area across the world.
A large and growing young population can be a driver for economic growth and social
progress provided they access quality education and health, and are engaged in decent
employment, without which, many young people will not be able to escape negative social
vices and poverty.
In recognition, of the foregoing, the National Budget for 2013 whose theme is; "Delivering
Inclusive Development and Social Justice" has for the first time put job creation at the
centre of its development agenda by explicitly targeting the creation of 200,000 jobs in 2013.
Sectors targeted for these jobs are agriculture, tourism, manufacturing and construction
(including infrastructure).
Ladies and gentlemen
Sustained efforts to bring in private investment coupled with supportive public policies and
investment, would contribute to enhancing productive capacities and generating the much
needed jobs in our country. This should be coupled with easier access to credit for
productive enterprises - especially micro, small and medium-sized enterprises (MSMEs) -
and reforms to foster technological change and productive diversification in line with the
changing structure of the global economy.
In the above recognition and its continued quest to contribute to unleashing the potential of
local MSMEs, the Bank of Zambia hosted a strategic forum on the role of finance in this area,
in June this year. As a follow-up, the Government is working closely with stakeholders and
the cooperating partners in improving availability of financial resources to MSMEs. Further,
some provision has been included in the 2013 Budget.
Distinguished participants
MSMEs could play an important role in creating employment and spurring growth. However,
their competitiveness is undermined by inadequate infrastructure, limited access to financial
and business services.
Stakeholders can help small firms to integrate in, and reap more benefits from local and
international value chains, by facilitating the provision of business services, among which
continuous skills development is paramount.
An important policy question is how to address the constraints which affect the capacity to
grow and generate earnings of MSMEs, very often informal that operate in traditional sectors
and account for the bulk of jobs in our country. This feat, ladies and gentlemen, can only be
achieved gradually, as the drivers of informality are usually multiple and deeply rooted in
long-standing development gaps and weaknesses.
Dear participants,
We recognised the efforts made by the Government aimed at enhancing a broad spectrum of
skills in the country through such institutions as TEVETA.
What is required is a more Targeted intervention in order to improve labour market
opportunities for individuals by helping them obtain necessary skills and facilitating labour
market transitions.
Countries that have been most successful in skills development did so by sustaining
implementation of coordinated policies linking education systems, skills formation,
employment and decent work. These countries include India, Costa Rica, and South Korea.
They made quality education broadly available and introduced mechanisms to match supply
to the current demand for skills, often by means of linking training providers and employers at
sector and local levels.
They helped workers and enterprises adjust to change and used skills strategically as a core
element of industrial, technology and trade policies to move from lower to higher productivity
activities and facilitate investment in new industries.
Involving workers and the private sector was a main feature of this approach. Zambia can
learn a lot from some of these countries.
Effective training systems in conjunction with the private sector should facilitate
demand-driven training in sectors and locations with high job growth potential, avoiding
bottlenecks and improving employability.
Expanding accessibility to quality training is a powerful instrument for empowerment and
inclusion of the youth and disadvantaged groups: women, rural dwellers and persons with
disabilities. In some cases, apprenticeships in the informal economy can offer many young
people an opportunity to learn a trade and enter the world of work.
Skills development is a necessary response to the challenge of youth unemployment.
Effective programmes should involve packages of training-cum-labour-market-services.
These should include: providing advisory services and career guidance, vocational
counselling, job-search assistance and job placement, as well as access to different types of
training, including combinations of learning and earning through apprenticeships or
subsidized employment in return for on-the-job training. Successful entrepreneurship
programmes should also involve providing basic business skills and linking would-be
entrepreneurs to mentoring, finance and market opportunities. These integrated approaches
are needed to assist young people in their transition from school to work and to tackle the
multiple constraints they face on the labour market.
The need for effective certification cannot be overemphasised.
In conclusion, skills development can make a critical contribution to youth employment
promotion and income generation through MSMEs. Coordinated policies linking education,
skills formation, and employment are required.
Well-designed active labour market policies linked with technical and vocational education,
on-the-job training and apprenticeships - both formal and informal - are essential for skills
development, employment and entrepreneurship and can help alleviate unemployment and
underemployment.
Connecting training providers and employers can be especially effective at sector and local
levels. Further, involving the private sector is essential to employment creation.
Furthermore, special attention should be paid to supporting MSMEs as the most dynamic
sources of employment. Financial institutions should provide easy access to funds to reduce
cost of doing business. The multiple drivers of informality should be tackled through
integrated policy packages that promote a gradual transition to formal activities.
Ladies and gentlemen, this is the challenge I give all stakeholders that are involved in skills
development, youth empowerment and development of MSMEs.
Thank you.