South Africa Ripe for Helping Disadvantaged Youth Find Jobs

When The Rockefeller Foundation launched Digital Jobs Africa in 2013, we focused on six countries— Egypt, Ghana, Kenya, Morocco, Nigeria, and South Africa, where we have since worked with partners in both skills development and job placement.

Since inception, the initiative centered on the following model: Encouraging favorable business environments for the creation of new digital jobs in diverse sectors; Engaging the private sector to prioritize inclusive hiring of youth for these jobs, through “impact sourcing” and working with employers to support demand driven training to ensure youth are equipped with the skills needed to take on these opportunities. These jobs are with local and global organizations across sectors including financial services, hospitality, the technology sector and Business Process Outsourcing (BPO), which is the is a subset of outsourcing that involves contracting business operations to a third-party service provider.

To date, using this approach, we have placed approximately 17, 000 youth into jobs and trained approximately 50, 000 with relevant skills related to the digital economy.

Notably, we have seen the greatest traction in South Africa, where we have placed approximately 80 percent of our high potential but disadvantaged youth (HPDYs). As a result of these successes, we believe there is an opportunity to engage even further in South Africa in our effort to achieve our goals, while continuing to support ongoing work across Africa.

We believe that this model has met with great success in South Africa due to a combination of two significant factors that differentiate South Africa.

1. South Africa has legislation that mandates companies to hire disadvantaged youth as part of the Code of Conduct of ‘Broad Based Black Economic Empowerment’. Further, tax breaks are provided for BPOs’ set up in South Africa, an attractive carrot for multinational companies that are considering African locations for their outsourcing businesses.
2. South Africa is a labor-constrained market, with an estimated 500, 000 entry level digital jobs available from the private sector.

These unique characteristics provide a significant opportunity for further impact in South Africa since legislation and incentives provide the pressure for corporates to hire disadvantaged youth. Often, companies without these incentives are traditionally risk-averse, and continue to hire a small segment of the population, only the most educated, most experienced and often the most elite. Additionally, the current labor structure of markets outside South Africa is such that the private sector often does not have jobs in large numbers to avail to youth.

BPO Industry in South Africa. The Rockefeller Foundation has so far focused training and job placement primarily in South Africa’s BPO sector. It has been able to grow (35 percent annual growth over the past three years; projected to be sustained in the next five years) due to key features of the South African market that lend themselves well to outsourcing—reduced rates of mobile telephony, good infrastructure for the setup of operations and a strong cultural and language affinity and time zone proximity with the UK (in addition to the tax breaks mentioned above).

Working with other sectors. In order to connect even more HPDY to jobs we engaged with consultants FSG to understand where the bulk of entry level opportunities are for South Africa’s youth. This research and analyzes have shown that these are in the financial, hospitality and retail sectors. From this year, we will engage with these sectors and find win-win opportunities to facilitate our training providers’ efforts to equip the youth with relevant skills. We will work closely with companies in these sectors to promote inclusive hiring practices such that these become standard procedures that are key to their business and operational success.

Influence. Our success going forward relies heavily on our ability to influence corporates, training providers, sector associations, and governments to institute impact sourcing practices, which are key to scaling and sustaining our shared efforts. Specifically, we plan to link closely with government-coordinated efforts such as the $600 million job fund and integrate impact sourcing in their approach. In 2015, we collaborated successfully the Jobs Fund, sharing knowledge on innovation trends, which they subsequently incorporated in their request for proposal design and requirements. We look forward to continuing our collaboration with them.

Globally, The Rockefeller Foundation now leads a coalition for impact sourcing comprising the leading BPO players, coordinating their efforts to institute hiring of HPDY globally, and, galvanizing their efforts to set up their operations in African countries, thus providing employment opportunities for talented youth. In the coming years ahead we will focus on the right corporate, training provider and government partnerships, providing a robust formula, we believe, to effect systemic change in South Africa.

Youth unemployment is estimated at 62 percent in South Africa, the highest in Africa. If youth do not find ways to make a living, serve as productive members of society and look after their families and communities, and that of their families, their situation will become untenable. Yet, the opportunity is great, given the national attention to youth, the availability of private sector jobs and the abundance of relevant training and youth building institutions. We are in a great position to catalyze youth development and employment, building from our successes to date. There is no better time for Digital Jobs Africa in South Africa than now and we continue to be motivated by our ability to provide youth with relevant skills and place them on a positive path that will transform their lives and that of their families and communities.