EXECUTIVE SUMMARY

PROFILES OF OAS TECHNICAL COOPERATION ON YOUTH EMPLOYMENT AND MICROENTERPRISE

2.1 Through its contribution to the integration of economic and social policies, the OAS has worked with Member States for 15 years to develop pilot and small-scale regional and national programs aimed at young persons who are out of school and already in the labor market. The countries themselves have developed many innovative methodologies aimed at increasing employment opportunities for young people through coordinated strategies of education, skills training and credit for young entrepreneurs. This proposed project will build on that experience and work in a cost-effective manner to improve the management capabilities of existing national young entrepreneur programs.

2.2 This project is consistent with the development priorities and country strategies of the Member States of the region. Governments of the Hemisphere have consistently, over the past 15 years, identified youth employment and youth enterprise as key policy areas and priorities for sustainable development. This project is also linked to national plans for overcoming poverty and integrating the work of other international and national agencies. In addition, Member States, through the Inter- American Project to Combat Poverty, have given high priority to youth employment and to networking among social investment funds. Member States have also completed a survey of existing programs and needs assessment in relation to youth enterprise/employment, and are prepared to develop comprehensive national plans (see Annex II).

2.3 The potential exists for a strong, efficient network, without the need to create new organizations. The Member States need to reach more young people, expand enterprise and employment development, and increase financial resources to support small entrepreneurial loans for youths wanting to start or expand small businesses. The majority of funding for these activities has been based in public sector institutions using public funds. While the private sector has been generally supportive, there remains a clear need to increase business involvement in the financial and operational support of these projects.

2.4 Youth enterprise projects are tied into overall efforts at positive youth development. Youth enterprise programs include methodologies to increase youth skills through personal development, motivation, and community service as a starting point. National award schemes and other community-based projects in a number of instances have proven to be successful at this initial stage of youth development. Services to specifically support youth enterprise development include Junior Achievement, short-term entrepreneurial skills training, and follow-up advisory services. In addition to encouraging youth entrepreneurship, these services also benefit the broader business community. They help young people who may not become entrepreneurs develop a deep understanding of the business world. These young people will thus become more effective employees.

2.5 In the Eastern Caribbean, notable success was achieved in an OAS/USAID-sponsored project through labor market assessments that identified viable employment opportunities prior to training and placement. Training was conducted in the workplace and used instructors from businesses. Due to the limited absorptive capacity of the small labor markets of these countries, the training also focused on microenterprise development to better prepare young people for opportunities that may exist in the nonformal sector.

2.6 Training alone is insufficient to create sustainable youth-run businesses. These businesses face greater risks due to the inexperience of young entrepreneurs, absence of market research, and lack of adequate startup capital. Moreover, banks are reluctant to take on these challenges or risks. There are a variety of models for financing such ventures. These efforts include government-led initiatives, national development foundations, and more recently, specific funds, such as the Barbados Youth Business Trust and the Commonwealth Youth Credit Initiative, targeted to youth enterprises. Individual community groups, such as the Pinelands Creative Workshop in Barbados, are also developing credit facilities. Long term success has been limited and more must be done to strengthen these alternative start-up financing models.

2.7 Developing young entrepreneurs requires a long-term strategy, evolving from educational institutions and motivational programs, linking skills training and follow-up, and finally providing access to startup capital. Many policy statements have been issued in support of youth enterprise and employment, and an operational plan is needed to put these policies in place. The CDB conducted a series of policy analyses that can provide a statistical and analytical foundation for developing this plan.

A primary purpose of the OAS Unit for Social Development and Education is to work with Member States to identify how countries can better learn from each other's experiences through high level political dialogue on policy issues, technical exchanges, internships, training workshops, and meetings of practitioners as well as policy-makers. The OAS Inter-American Council for Integral Development (CIDI)has allocated funds in 1997 for this purpose and plans to contribute additional funding in 1998. Joint funding with other donors is needed to complement the relatively modest level of OAS resources. Counterpart agencies in the Member States have years of proven experience and continue to demonstrate the capacity to expand the scope and scale of these efforts, if given sufficient financial and technical support.