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SDG Empowerment Fund

Thursday, 28 February 2019 10:13 Written by 
  • Location(s): Swaziland
  • Type(s): Solution
  • Theme(s): Climate Change, Natural Resources, Poverty Reduction
  • SDG(s): 1. No poverty, 6. Clean Water and Sanitation, 7. Affordable and Clean Energy
  • Locations in Africa: Swaziland
  • Types in Africa: Solution
  • Themes in Africa: Climate Change, Natural Resources Management, Poverty Reduction
  • SDGs in Africa: 1. No poverty, 6. Clean Water and Sanitation, 7. Affordable and Clean Energy
  • Types of ComSec Solutions: Solution

Summary

The intervention supports youth and women entrepreneurs creating meaningful progress towards achieving the SDGs through sustainable and smart business solutions. It provides a platform for the development of innovative solutions to address development challenges faced by the country as well as the implementation of SDGs in the areas of Renewable Energy and Waste Management.

Challenge

In Eswatini (Swaziland), two of the primary barriers to successfully establishing new entrepreneurship start-ups, especially by youth and women, is lack of access to capital as well as lack of guidance and coaching that facilitates knowledge transfer from a more experienced generation to the younger generation. Economic growth has remained very low. The results of the country's sluggish growth are high unemployment (51.6% among the youth), underdeveloped labour markets, poor industrial performance, and low entrepreneurial activity. While the global community is gaining momentous strides on the use of innovative approaches to drive sustainable development and create opportunities for economic growth and employment, the country is challenged with establishing linkages applied innovation practices for poverty alleviation, addressing unemployment, ensuring sustainable livelihoods and improved wellbeing. This is compounded by an ineffective science, technology and innovative investments leading to low innovation capacities, and inadequate infrastructure in general. The country is among the least innovative countries in the SADC Region, with a low technological readiness and industrial competitiveness amongst the countries in the region. Strengthening technical skills, for both young men and women, and developing 'brain gain' approaches are absolute prerequisites for the country given the significant youth population dividend, making up 79% of the country's population.

Renewable energy is a sector that has been prioritised by the government, and significant work has been undertaken to create a conducive legislative and policy environment that would promote interventions that increase the share of renewable energy in the national energy mix. A wide range of research and policy papers have highlighted the high potential of the country in terms of solar power due to high solar radiation coefficients almost uniformly across the country. As the country only produces 16% of its energy domestically, the expansion of the use of solar energy also serves as a strategic diversification of the energy supply and reduces the need for imports of this critical commodity. The promotion of solar energy also fits well with the focus of the government and UNDP on Climate Change related interventions, where there is scope to expand climate change mitigation related interventions by promoting new technology and innovation in this sector. Waste management is in its infancy in the country, with only rudimentary waste collection systems in place. Waste separation is very limited, and the logistics of collection and reprocessing have proven to be a challenge. There is scope for knowledge sharing and exchange of waste management solutions across the globe, which will enhance the country's ability to develop and implement a sustainable domestic system.

Young people today are faced with various challenges and in Eswatini (Swaziland) one of the biggest challenges is unemployment. Despite strengths such as favourable location and climate, good infrastructure, diversified production base and skilled labour force, investment in research, applied technology for development solutions remain low in the country. The country still needs to consider developing employment and entrepreneurship policies to integrate the youth into the labour market.

Lack of readily available credit facilities limits the ability of the integration of innovation solutions progression into mainstream business applications. Although in general relatively well educated, young entrepreneurs and women especially lack access to financial resources. With 63% of the population living below the poverty line this problem is further amplified as most of the potential users of credit having limited to no access to collateral often required for loans.

Lack of information and experience form a barrier to develop and position their business proposals well, with a clearly defined place in the supply chain governing renewable energy and waste management. Private sector, including commercial banks, has indicated an interest to invest in these innovative sectors and in young start-up businesses provided they can position themselves clearly with a clear value-added proposition, e.g. how they add value to the supply chain driving the Eswatini (Swaziland) economy in general and the existing industry. There is low uptake for technology and lower progression of start-ups into matured and applied business solutions. This is exacerbated by the lack of public awareness on available facilities and opportunities which could be enabled through communication and robust advocacy actions for establishment of partnerships and networks.

Solution

The SDG Empowerment Fund and the range of services provided under the fund provide a catalytic environment to address a range of development challenges in line with the national priorities, and in areas where there is demonstrable need and interest. By targeting renewable energy and energy efficiency and waste management, the Fund provides critical support to supporting the development of a sector that has demonstrated potential, but that is held back by limited access to knowledge and experience from a business perspective and access to financial resources. By prioritising youth and women, the project aims to contribute to creating employment and income generation for two of the most vulnerable groups in the country. As the Fund does not "just" provide money but also provides coaching and guidance to participants and enhances the chances that the capital provided provides return in investment in terms of economic and social dividend. Entrepreneurs, youth, women and communities can submit proposals in support of renewable energy and waste management solutions to the Fund through a partner commercial bank, Standard Bank Eswatini. UNDP used part of the funds to set up a Loan Guarantee Scheme within Standard Bank to enable the bank to issue collateral free loans for the youth and women enterprises. In addition, Standard Bank increased the value the fund by issuing loans double the guarantee funds available.

UNDP has also partnered with the GOS Royal Science and Technology Park (RSTP)to provide capacity building and business advisory services for candidates qualifying for the loans. RSTP is a public enterprise established as a hub for stimulating the knowledge-based economy.

The Fund is composed of following components:

  1. Fund management: Entrepreneurs, youth, women and communities submit proposals in support of renewable energy and waste management solutions to a partner commercial bank. Recipients will pay back the loan based on revenue generated from the new enterprise or from cost avoidance generated by the new technology (in the case of solar). UNDP provides security for the loans and will only pay out in case of defaults.
  2. Using youth-targeted advocacy and communication the project promotes information sharing to create awareness on the need for adoption of science and technology careers and use for innovative approaches to socio-economic growth.
  3. Capacity building is provided for the youth's greater interaction for skills development. This is provided for corporate governance skills development; organizational and systems development; business management; access to credit and credit management; partnership building for mentorship, coaching and job shadowing; and incubation of ideas. The mentoring and coaching space is facilitated by RSTP through a pool of seasoned and experienced entrepreneurs and executives.
  4. Networking and partnerships is promoted to enable further engagement the private sector. This is expected to establish a demand for the innovation solutions for improved efficiency and business profits. Solutions for small enterprises are also promoted for implementation in local governments and rural communities. An increased demand for the services is expected leading to increased financing for such enterprises by commercial banks and other financiers.
  5. Knowledge Creation, Exchange and Management (South-South Triangular Cooperation) is promoted at national and regional levels to expose the youth to information and knowledge which is expected to 'spark' socio-economic solutions leading to entrepreneurship and business entity development.

Results achieved among others include agreement with Standard Bank to double the available funds when issuing loans to the youth and women enterprises.

Providing Country: UNDP Swaziland

Beneficiary Country: (Eswatini) Swaziland

Supported by: UNDP Country Investment Facility

Implementing Agency: UNDP Eswatini, Ministry of Information and Communications Technology (MICT), Royal Science and Technology Park (RSTP), Eswatini Environment Authority (EEA), Innovation Association of Eswatini (IAS)

Project Status: On-going

Project Period: 2018-2019

Contact person: Gugulethu Dlamini,
Programme Analyst,
UNDP Eswatini (Swaziland)
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