Why it is vital to sustaining the livelihoods of communities with right investments, made in right ways and places
COMMENT | KUDA MUKOVA | Despite the immense developmental gains that sub-Saharan Africa has seen over the past few decades, there is no doubt that much work remains to be done. According to the 2023 Multidimensional Poverty Index (MPI) released by the United Nations Development Programme (UNDP) and the Oxford Poverty and Human Development Initiative (OPHI) at the University of Oxford, some 534 million people live in poverty across the region.
We still fall behind on other developmental indices too. Data from the World Bank shows that nearly half the region’s population does not have access to electricity and, according to the World Economic Forum, just 39% of people in the region have water connected to their homes. Mobile internet connectivity rates are similarly low, at 40%, according to GMSA. While it’s important that governments and private sector partners across the region work to address those infrastructural challenges, additional action is required too.
It’s equally critical that people, particularly in low-income communities, are given the skills they need to build sustainable jobs and livelihoods. Doing so is crucial not only to lifting people out of poverty but also to the long-term future of these communities.
A sustainable path out of poverty
The absolute key word, when it comes to building livelihoods that help people escape poverty, is sustainability. While initiatives like public works programmes can help provide income boosts, particularly in poorer areas, the work is often temporary. That means that, once a road is repaired, trees are planted, or a park is cleaned up, the work goes away until the next project comes up.
In many cases, these programmes also do not come with skills development components. That, in turn, means that people are left dependent on these programmes, rather than being able to build sustainable livelihoods for themselves.
Fortunately, it does not have to be that way. The right investments, made in the right ways and the right places, can help create sustainable jobs and develop skills that offer people a sustainable path out of poverty.
In fact, companies across the region are desperate for skilled workers. While more current statistics are difficult to find, it’s telling that a majority of private African companies, according to Statista, reported losing out on revenue because of skills shortages in 2019.
These skills shortages are keenly felt even in the region’s most industrialised economies. In South Africa, for example, the Mail & Guardian reported that there were more than 77,000 jobs available but which could not be filled due to a skills shortage. That’s in addition to the 300,000 jobs that have been outsourced to people who live overseas.
It’s critical, therefore, that investors in the region look at ways of building skills development into their investments.
Inclusive empowerment
It’s also important to note, however, that it’s also critical to empower and upskill people across the region from an entrepreneurial perspective.
Take East Africa’s boda-boda drivers for example. Along with their motorbikes, these drivers fulfil numerous roles, from acting as single-person taxis to delivery services. From the urban centres in Uganda to the most remote villages, boda bodas are quick, inexpensive, and readily available to get the people where they need to be. They also provide a huge boost to small business owners who make substantial savings while using boda bodas to transport goods across the country.
For many people struggling to earn a sustainable livelihood, the boda boda business has enabled them to become entrepreneurs and indirectly offers employment opportunities to many others. With properly structured loan investments, these drivers can grow their businesses, and boost their income. Over time, they may even be able to employ other drivers, which not only aids with job creation but also in boosting local economies.
We at Norsad Capital have witnessed how powerful the right credit-based approach can be with our own portfolio company Watu Credit. To date, Watu has created over 3,000 direct jobs and has provided over 600,000 loans across seven countries, which have positively impacted the lives of more than 3.6 million people.
Norsad Capital is an impact investor and private credit provider offering tailor-made debt solutions to profitable growth-stage companies that deliver desirable social and environmental impact. With a track record spanning over 33 years, Norsad Capital has invested over US$700 million in more than 170 companies across the continent.
Unleashing Africa’s full potential
Ultimately, what these examples show is how powerful the right approach to African investment can be. By focusing on long-term sustainable job creation and skills development, many more people will be pulled out of poverty, to the benefit of both themselves and the communities they live and work in. And given the immense potential waiting to be unleashed across the continent, it’s an investment approach that could deliver seriously rich dividends.
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Kuda Mukova is Head of Impact and Sustainability Norsad Capital
