Brown bag lunch presentation on employment promotion in Malawi through private sector approaches, including:
1. Employment trends in Malawi - Andrés Mella, DA MIERA Program
2. BMZ/GIZ approaches to employment creation through private sector development - Valeska Grob, Jr.TA Sector Project Private Sector Cooperation
3. MIERA and GIAE approaches to employment creation - Andrés Mella, DA MIERA and Tymon Mphaka, PO GIAE
Presented at GIZ MW Country Office on the 25th June 2018
Employment creation through Private Sector Development GIZ Malawi
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Implemented by
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Answer the question: What percentage of the Malawian
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Implemented by
Brown Bag Lunch:
Employment
creation through
private sector
development
GIZ Malawi CO - 25 June 2018
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Agenda
Agenda
1. Employment trends in Malawi - Andrés Mella, DA MIERA Program
2. BMZ/GIZ approaches to employment creation through private
sector development - Valeska Grob, Jr.TA Sector Project Private
Sector Cooperation
3. GIAE and MIERA approaches to employment creation - Tymon
Mphaka, PO GIAE and Andrés Mella, DA MIERA
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Implemented by
81%
19%
EXPORT EARNINGS
Agriculture Others
42%
58%
GDP
Agriculture Others
Provides direct employment in cultivation
and harvesting in
• plantations,
• commercial estates,
• horticulture and
• primary agricultural processing,
Including small-holder farming, where
there are significant amounts of unpaid
family labour as well as highly irregular
casual labour (ganyu)
The Agriculture Sector
1. Employment trends in Malawi
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Workforce distribution by sector in Malawi (2017)
Agriculture (84.78%)
Manufacturing (7.74%)
Wholesale (2.74%)
Education (1.38%)
Services (1.23%)
Construction (0.62%)
Public Admin. (0.50%)
Transportation (0.38%)
Human Health (0.32%)
Others (0.31%)
1. Employment trends in Malawi
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1. Employment trends in Malawi
Implemented by
Lack of Structural Change
Inter-sectoral change is obtained by the better
allocation of resources between sectors.
Intra-sectoral growth is obtained by better
allocation of resources (such as labour and
capital) among given sectors.
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Has this always been the same? ….
…. Will it be the same the same in the coming
years?
Gap minder graph
1. Employment trends in Malawi
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1. Employment trends in Malawi
Implemented by
Gender Distribution of Workforce in the agriculture sector
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Employment and working conditions in Malawi
1. Employment trends in Malawi
Relatively low
unemployment: 6-
7%
Increasing youth
unemployment:
9%
Very low
productivity -
Underemployment
High informality Child labour
Forced/bonded
labour
Low skills
development and
increasing skills
mismatch
Gender inequality
–Sexual
harrassment
Occupational
Health and Safety
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Private Sector is indispensable to achieve the SDGs
2. BMZ/GIZ approaches to employment creation through private sector development
„Promote sustained, inclusive and sustainable economic growth,
full and productive employment and decent work for all“
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The German answer: A Marshall Plan with Africa
2. BMZ/GIZ approaches to employment creation through private sector development
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Employment effects of PSP instruments
2. BMZ/GIZ approaches to employment creation through private sector development
Increase
labour
productivity
Access to non-
financial
business
services
Development
of clusters and
VCs
Local and
regional
economic
development
Promotion of
innovation and
technology
Promotion of
economic
organisations
Promotion of
start-ups
Improved
climate for
business and
investment
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Implemented by
3. MIERA and GIAE approaches to employment creation
Implemented by
More Income and Employment in Rural
Areas (KULIMA - MIERA)
• Funded by EU-KULIMA component and BMZ
• Budget 17 Million EUR (10M BMZ and 7M EU)
• Funding Period 02/2015 – 01/2019 (extension foreseen)
• Funded by European Union KULIMA component and BMZ
(German Government)
• Attached to the Ministry of Industry, Trade and Tourism
• Aligned to the National Export Strategy
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Implemented byImplemented by
The MIERA Approach on Job Creation
The MIERA programme seeks to
increase employment and accelerate structural change
through a value chain approach within the agricultural sector as
well as in two non-agricultural value chains (tourism and eco-
friendly construction materials) focusing on the promotion of
inclusive business models.
3. MIERA and GIAE approaches to employment creation
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Strengthening inclusive
business models and service
provision
Farmer
Organisation
(club, association,
cooperative…)
Agro-industrial
Company
(value addition,
marketing)
Export
Markets
Domestic
Markets
MSME
farmer
Strengthening of
farmer organisations
and MSME
FBS
FO
CYCLE
farmer
MSME
Loop
Marketing
opportunities
Extension
messages
Access to
inputs
Contract
Farming
Rural Service
Providers
(warehousing,
marketing)
farmer
The MIERA Approach to job creation
3. MIERA and GIAE approaches to employment creation
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Implemented by
• Budget 10,5 Mio. EUR
• Funding Period is 11/2014 – 09/2021
• Part of the special initiative ‘One World, No Hunger’ of the German
Federal Ministry for Economic Cooperation and Development
(BMZ).
• Funded by BMZ with Co-Funding from EU for KULIMA component.
• Attached to the Ministry of Industry, Trade and Tourism
• Aligned to National Agriculture Policy, National Export Strategy
“Green Innovation Centres for the Agriculture and
Food Sector (GIAE)
3. MIERA and GIAE approaches to employment creation
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Implemented by
GIAE Approach
Enabling smallholder
farms
Enabling upstream and
downstream enterprises
Strengthening the
advocacy groups
Strengthening
transnational exchange
between value-chain
stakeholders
Income and
Employment
3. MIERA and GIAE approaches to employment creation
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GIAE Objectives
Disseminate demand-oriented innovations to sustainably:
Smallholder Farmers (45.000) MSMEs
Increase Gross Margins Create 600 Jobs
Increase Productivity Increase Revenues
Enhance Food Security
3. MIERA and GIAE approaches to employment creation
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Implemented byImplemented by
Main Instruments and Approaches Used by GIZ
for Capacity Development
Type of Business/ Organization Instruments
Smallholders 1. FBS (Farmer Business School)
Farmer Organizations 2. FO Cycle (Farmer Organization
Business Training and Coaching
Loop)
Micro, Small and Medium Enterprises
(MSME)
3. MSME Loop (Business Training
and Coaching Loop for MSME)
3. MIERA and GIAE approaches to employment creation
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Implemented by
MSME Business Loop
Assessment
& Selection
First
Training
Coaching 1
Second
Training
Coaching 2
Access
to
Finance
SME
Loop
Graduation
Ceremony
(Coaching 3)
1) Assessment & Selection
2) First Training (3 days)
3) Coaching Phase 1 (2 months)
4) Second Training (3 days)
5) Coaching Phase 2 (3 months)
6) Graduation Ceremony (1 day)
7) Coaching Phase 3 (4 coaching
vouchers)
The time span for the implementation of one SME Loop cycle amounts to six-nine months
3. MIERA and GIAE approaches to employment creation
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Value Chains Supported:
Tourism
Eco-friendly
construction
Groundnut
Sunflower
Soybean
Cassava
Rice
Chillies
Paprika
Macadamia
More Income and Employment in
Rural Areas of Malawi (MIERA)
Green Innovation Centres for the
Agriculture and Food Sector
(GIAE)
Groundnut
Soybean
Cassava
Input
suppliers
Producers Traders Processors Retailers
3. MIERA and GIAE approaches to employment creation
The agriculture sector currently represents about 42 percent of GDP and 81 percent of export earnings in Malawi. Agriculture provides direct employment in cultivation and harvesting in plantations, commercial estates, horticulture and primary agricultural processing, as distinct from small-holder farming, where there are significant amounts of unpaid family labour as well as highly irregular casual labour (ganyu http://www.fao.org/docrep/005/y4632e/y4632e0n.htm
In 2017, agriculture, forestry and fishing together accounted for around 6.4 million (part time and full time) jobs constituting an estimated 84.7 percent of total employment in the country (7.5 M)
Source: ILO (2017), ILOSTAT, nov 2017 projections.
Figure 1: Workforce distribution by sector in Malawi (2017)
Past and current projections of employment growth reveal that the distribution of employment between sectors has effectively not changed. Structural change theory describes how economic growth can be achieved through two phenomena: intra-sectoral change and inter-sectoral change.
Intra-sectoral growth is obtained by better allocation of resources (such as labour and capital) among given sectors,
Inter-sectoral change is obtained by the better allocation of resources between sectors.
The Malawian economy has grown through intra-sectoral gains, but not through inter-sectoral change.
Often overlooked, female employment constitutes approximately half of the workforce in the agriculture sector at 50.3 percent.
This is slightly higher than the country average of 47.5 percent.
Women perform most of the most strenuous and hard tasks linked to production, while men take part in activities with higher value addition, such as processing, trading and marketing of the produce.
The majority of women are in irregular and casual forms of employment, and often face discrimination and harassment.
Strong growth: >5%
Dependent on a narrow range of resource-based activities
High population growth is threat to Malawian development
Land pressure and demand jor jobs in rural and urban areas is increasing
Casual wage workers : Ganyus
It is now broadly accepted that the private sector has a critical role to play in achieving the SDGs. It is an engine of economic growth and job creation in developing countries.
The world requires over US$1 trillion annually to meet the 17 SDGs by 2030. The private sector, has a key role to play in mobilizing resources. (https://www.scidev.net/asia-pacific/funding/news/private-sector-key-to-sustainable-development-goals.html)
Productive employment and decent work are essential elements of sustainable development. This fact is
reflected in Goal 8 of the Sustainable Development Goals (SDGs) of Agenda 2030: “Promote sustained,
inclusive and sustainable economic growth, full and productive employment and decent work for all.”
The private sector will thus have a major influence on the implementation of SDG 8 on “decent work and economic growth”.
The United Nations Conference on Trade and Development (UNCTAD) says achieving the Sustainable Development Goals (SDGs) will take between US$5 to $7 trillion, with an investment gap in developing countries of about $2.5 trillion. At the same time, the most recent OECD DAC report shows that in 2016 the total official development assistance reached a peak of $142.6 billion, which is one order of magnitude smaller than the needs.
The Marshall Plan is supposed to initiate a change in paradigm in german development coperation. These are the main targets of the Marshall Plan with Africa (published in january 2017) :
- Improving framework conditions for a good investment climate
- Promote foreign economy
- Strengthening fair trade
- Improving european and international cooperation for Africa
Put more emphasis on vocational training
More than 50 million young people have a precarious employment. Youth unemployment reaches up to 50 percent. (Quelle: OECD, 2016). Africa needs about 20 million jobs every year (Quelle: IWF, 2016).
How can PSP contribute to master these challenges?
AFRICA
GERMANY
INTERNATIONAL
Marshall Plan should serve as an impulse for discussion and it‘s a new dimension of collaboration
3 pillars: private sector, peace and security, democracy/rule of law
Core idea of the Marshall Plan: promote political reforms, leverage investments, fair global regulatory framework
Afrika is not just a continent in crises, but also of market and workforce potential.
Development cooperation is not only alleviating poverty, but rather promoting economic development. From subsidy to investment!
- Employment creation plays a significant role for the first pillar.
After the german elections in Sept. 2017 and the new (partly old) government taking over, the BMZ has been reorganised. The aim was to reflect the current political development strategy in the organisation of the ministry. In the framework of this reorganisation, the Marshall Plan with Africa and subsequently „employment promotion“ gained a lot of importance. Different units were put together in a new subdivision named „Economy, Employment and Trade“.
New initiatives for job creation are planned e.g. 1 million jobs should be created through job partnerships in selected countries in Africa
Integrated approach of German development cooperation on employment promotion: In order to increase the employment effectiveness of German TC, measures of Private Sector Development, active labor market policy and and vocational education and training should be meaningfully integrated. Thus labor supply and labor demand side as well as consultation and mediation can complement each other meaningfully.
Private sector promotion:
More formal jobs
Rise in productivity in traditional sectors
Public employment programs
The German government through BMZ has commissioned GIZ to implement a bilateral project in the new focal area ‘Private Sector Development in Rural Areas’: More Income and Employment in Rural Areas (MIERA) in Malawi.
It’s a Bilateral program with cofunding.
The MIERA approach
-The MIERA programme seeks to increase employment and accelerate structural change through a value chain approach within the agricultural sector as well as in two non-agricultural value chains (tourism and eco-friendly construction materials) focusing on the promotion of inclusive business models.
-Specifically, MIERA intends to incorporate smallholder farmers and MSMEs into more formalised and direct business relationships with the private sector supporting models such as contract farming and structured trade, while at the same time improving the service package for farmers and MSMEs and directly empowering the target groups as business partners through training them in farm economics, financial literacy and business planning and management. Deeper integration into value chains can in turn help farmers and MSMEs obtain higher profits and participate in better downstream value addition activities, thus improving their income and eventually their livelihoods.
The three intervention areas of the MIERA program are highly interrelated and tackle identified challenges from various angles with the aim of ensuring more integrated and inclusive value chains.
The program works both “top-down”, departing from lead companies (promoting stronger cooperation, business linkages, structured markets and IBM between stakeholders, and “bottom up”, strengthening producers and MSMEs as business entities in the value chains. It also promotes the improvement in the service package for MSME and smallholders in the selected value chains.
Directly empowering the target groups as business partners through training them in
farm economics,
financial literacy
business planning and management
-Specifically, MIERA intends to incorporate smallholder farmers and MSMEs into more formalised and direct business relationships with the private sector supporting models such as contract farming and structured trade, while at the same time improving the service package for farmers and MSMEs and directly empowering the target groups as business partners through training them in farm economics, financial literacy and business planning and management. Deeper integration into value chains can in turn help farmers and MSMEs obtain higher profits and participate in better downstream value addition activities, thus improving their income and eventually their livelihoods.
