Grant project helps youths find jobs
Under the two-year pilot scheme, 100 unemployed technical college graduates have got a monthly grant of R2 000 since October 2022
Adevelopmental pilot project that aims to uplift unemployed people by testing the concept of a basic income grant has led to the birth of several micro businesses and the emergence of a culture of saving among beneficiaries.
The Cash Transfer Project, initiated by the German Catholic Bishops’ Organisation for Development Cooperation, Misereor, and implemented in South Africa by the Pietermaritzburg Economic Justice and Dignity Group, and the Southern African Catholic Bishops’ Conference, gave 100 unemployed technical and vocational education and training (TVET) graduates an “unconditional” monthly grant of R2 000 for 24 months.
The youths all had some work experience derived from their training in skills, such as motor mechanical, plumbing and electrical, that could be used to open a small business, and had to attend focus groups.
The Pietermaritzburg Economic Justice and Dignity Group, which developed the widely cited household affordability index that monitors grocery prices nationally, had for some time argued that the social security system needed to change to confront high unemployment and low economic growth, its programme co-ordinator Mervyn Abrahams said.
The unemployment rate stands at 32.1% and is even higher, at 44.3%, among the youth, representing 4.7 million people.
“We need to rethink our social security system beyond merely survival to one that can act as an economic stimulus for people to create their own livelihoods rather than wait for jobs in the formal economy,” Abrahams said.
“Such livelihoods could also stimulate greater economic activity in townships and local economic development. However, for that to take place, the social security grants must be set at a rand value that will provide for basic human needs plus a portion that could be invested into a livelihood.”
It should be sufficient to cover basic needs, such as food and electricity, while allowing recipients to invest a portion to create their own livelihood or strengthen an existing one, he said.
When Misereor approached the organisation to pilot cash transfers as a tool for economic development it was an opportunity to test the idea of helping young people create a livelihood or find a way into the formal labour market.
“One of the constant challenges is that young people need money to search for a job and, in situations of high unemployment, their families cannot assist them with the money needed to look for jobs, let alone to bring a livelihoods idea into reality,” Abrahams said.
Participants in the programme were selected along a gender split of 60 women and 40 men.
The Southern Africa Catholic Bishops’ Conference joined as an administrator to disperse the money to recipients and the participants received their first cash transfer in October 2022.
The Pietermaritzburg Economic Justice and Dignity Group’s research aimed to determine whether an unconditional cash transfer of R2 000 provided to unemployed youths would help them to create a
livelihood for themselves or increase their chances of entering the labour market.
“We had expected that most of the cash transfer participants would spend their income on household needs … but they soon started to save and the saving culture that has emerged means they had a plan in their mind before the cash transfer project arrived,” Abrahams said.
“One of the most surprising findings is how soon the participants started saving. Each month they told us they were saving for some tool or asset or uniforms.
“This is also connected to the fact that they knew from the outset that the project is for 24 months, and that the money will end by October 2024. This could be a major factor in focussing their minds.”
By the midpoint of the two-year project, in October last year, 27% of the participants had started some form of income-generating activity.
“Some of these livelihoods created were selling perfumes and beauty products; opening a motor mechanic workshop; a gardening service; buying and selling vegetables and opening a piggery,” Abrahams said.
“From an economic perspective, these livelihood projects are still fragile and incomes derived therefrom are small.
“Going forward we will track the level of sustainability of these projects and their ability to provide a decent income to the participants.”
Technical college graduate Nqobile Zuma, 29, of Impendle in rural Kwazulu-natal, was one of the participants who started a business.
Having struggled to find work before joining the pilot project, she now employs one worker and her family helps in her business.
“I qualified with my N5 in electrical and motor mechanics but I could not find work at the time when I joined the project.
“There are seven of us at home, including my brothers and sisters and my children, who I need to support,” said Zuma, relating how she first started an IT coding business to teach children how to code but closed it because the parents were not paying her.
“Now, I am doing agriculture — cabbage and spinach — which I grow on my family’s land and sell to my community. My prices are cheaper than supermarkets and I am working to find a market where I can sell.
“My business is going to survive,” she said.
Zuma said she had used her cash transfer under the project to buy seedlings, a water tank and pipes for a sprinkler system.
Apart from igniting entrepreneurship, 29% of participants had obtained full-time or part-time work by October, with the cash transfers enabling them to buy phone data for job searches, print their CVS and pay for transport to attend interviews.
A quarter of the 29% hold parttime jobs, which gives them some work experience while they search for more permanent employment.
“Participants report that the cash transfers have acted as a catalyst in either starting an income-generating activity or gaining employment,” Abrahams said.
“Eighty-nine percent of those who are in some form of employment and 42% of those who started an incomegenerating activity indicated they used the cash transfer.
“It was used to purchase items for increased employability or livelihoods or for saving towards purchasing items for increased employability or livelihoods.”
Misereor regional director Desire Nzisabira said the organisation had long asked the question: “If a sizeable portion of unemployed youth and active adults would receive an unconditional amount of money that can ensure that their basic needs are guaranteed, would this not trigger their self-consciousness and certain behaviours that may lead to their employment or themselves creating their own businesses?”
“For this pilot project, Misereor used its own private funds. If the project is successful, it is our intention to lobby our back donor, namely the German federal government, to consider funding similar projects.
“In the event this lobby work is successful, a replication of this project in other parts of South Africa cannot be ruled out,” Nzisabira said.
He said the Pietermaritzburg Economic Justice and Dignity Group would also advocate for universal access to an unconditional grant for unemployed people.
“We are not intending to replace other developmental approaches that have proven to be effective but we believe cash transfers could be a very important addition to the arsenal of tools aimed at ending endemic human poverty,” Nzisabira said.