POST REVIEW- YOUTH EMPLOYMENT NOTE Samik Adhikari Shreya Chatterjee Hannah Buya Kamara Abu Kargbo Steisianasari Mileiva Acknowledgements: This note was prepared by a joint HAWS3 team comprised of Samik Adhikari (Economist), Shreya Chatterjee (Consultant), Steisianasari Milieva (Social Protection Specialist), Hannah Buya Kamara (Consultant), and Abu Kargbo (Senior Social Protection Specialist) under the overall guidance of Iffath Sharif (Practice Manager) and Gayle Martin (Country Manager for Sierra Leone). Junko Onishi (Senior Social Protection Specialist) and Thomas Vaughn Bowen (Social Protection Specialist) provided invaluable inputs throughout the preparation of the note. The report also received technical inputs and comments from Dr. Sao-Kpato H.I. Max-Kyne (Commissioner, NaCSA), Idris Turay (Director, Social Protection Secretariat, NACSA), Ngolo Katta (Commissioner, National Youth Commission), Marlon Bockarie-Konteh (Director of Research, Planning & Knowledge Management, Ministry of Youth Affairs), Munyaradzi Hove ( Officer in Charge for Sierra Leone, ILO), and the Directors of the Social Protection Technical Committee from the various Ministries, Departments and Agencies. The authors would like to thank the peer reviewers – Dhushyanth Raju, Syud Amer Ahmed, Namita Datta, and Michael Weber for invaluable suggestions that has helped improved this note in great proportions. The team wishes to recognize the generous award of a grant from the World Bank’s Rapid Social Response and Adaptive and Dynamic Social Protection Trust Fund Umbrella Program, which is supported by the Russian Federation, United Kingdom, Norway, Sweden, Australia, Denmark, and Bill & Melinda Gates Foundation, without which this technical assistance activity would not have been possible. This note is one of the deliverables under the Advisory Services and Analytics (ASA) Sierra Leone: Youth Employment through Social Innovations and Productive Inclusion (P170904). 1 Table of Contents 1. EXECUTIVE SUMMARY ........................................................................................................................................6 2. INTRODUCTION ................................................................................................................................................. 18 MACROECONOMIC CONTEXT ......................................................................................................................................... 18 LABOR MARKET CONTEXT .............................................................................................................................................. 22 YOUTH IN SIERRA LEONE............................................................................................................................................... 24 Demographic Composition ................................................................................................................................. 24 Education Status ................................................................................................................................................ 25 Disability ............................................................................................................................................................. 26 Migration to Urban Areas .................................................................................................................................. 27 EMPLOYMENT OUTLOOK AMIDST COVID-19 .................................................................................................................. 27 3. LABOR MARKET OUTCOMES OF YOUTH ........................................................................................................... 29 EMPLOYMENT IN THE WORKING-AGE POPULATION ............................................................................................................ 29 GENERAL PATTERNS OF EMPLOYMENT AMONG YOUTH ....................................................................................................... 32 YOUTH UNEMPLOYMENT .............................................................................................................................................. 37 YOUTH UNDEREMPLOYMENT......................................................................................................................................... 38 YOUTH NOT IN EDUCATION, EMPLOYMENT OR TRAINING................................................................................................... 39 4. DEMAND-SIDE CONSTRAINTS TO ADVANCING YOUTH EMPLOYMENT ........................................................... 41 LACK OF DIVERSIFICATION ............................................................................................................................................. 41 DIFFICULT BUSINESS ENVIRONMENT ............................................................................................................................... 42 POOR ACCESS TO CREDIT .............................................................................................................................................. 43 5. SUPPLY-SIDE CONSTRAINTS TO ADVANCING YOUTH EMPLOYMENT.............................................................. 46 UNEQUAL ACCESS TO TERTIARY AND VOCATIONAL EDUCATION ............................................................................................. 46 POOR QUALITY OF TVET INFRASTRUCTURE ...................................................................................................................... 47 EXCLUSION OF MARGINALIZED GROUPS ........................................................................................................................... 47 6. OPPORTUNITIES IN SIERRA LEONE’S LABOR MARKET ..................................................................................... 50 GOVERNMENT PRIORITIES............................................................................................................................................. 50 LEVERAGING DIGITAL TECHNOLOGIES............................................................................................................................... 51 7. REVIEW OF CURRENT YOUTH EMPLOYMENT PROGRAMS .............................................................................. 52 KEY FINDINGS ............................................................................................................................................................. 53 KEY GAPS .................................................................................................................................................................. 55 8. AREAS FOR POLICY CONSIDERATIONS .............................................................................................................. 57 9. CONCLUSION ..................................................................................................................................................... 65 REFERENCES: ............................................................................................................................................................... 66 ANNEX 1: SLIHS DATA DESCRIPTION .......................................................................................................................... 69 ANNEX 2: INFORMATION ON SIERRA LEONE’S YOUTH EMPLOYMENT PROGRAMS ................................................ 71 2 List of Figures FIGURE 2. 1: SIERRA LEONE'S GDP PER CAPITA GROWTH HAS BEEN MORE VOLATILE COMPARED TO REGIONAL PEERS OVER THE LAST TWO DECADES ............................................................................................................................................................... 19 FIGURE 2. 2: AGRICULTURE AND SERVICES MAKE UP A LARGE SHARE IN SIERRA LEONE'S GDP AND EMPLOYMENT COMPOSITIONS.......... 20 FIGURE 2. 3: SIERRA LEONE'S SHARE OF EMPLOYMENT IN INDUSTRY IS LOWER COMPARED TO REGIONAL PEERS .................................. 21 FIGURE 2. 4: SIERRA LEONE HAS EXPERIENCE RAPID URBANIZATION OVER TIME, BUT ITS INCOME LEVEL REMAINS BELOW THE RATE PREDICTED BY URBANIZATION .................................................................................................................................... 22 FIGURE 2. 5: SIERRA LEONE'S YOUTH LABOR FORCE PARTICIPATION IS LOW AND DECLINING, AND THE OVERALL LABOR FORCE PARTICIPATION IS LOWER THAN MANY REGIONAL PEERS .................................................................................................. 23 FIGURE 2. 6: YOUTH IN SIERRA LEONE ARE MORE CONCENTRATED IN URBAN AREAS ...................................................................... 25 FIGURE 2. 7: YOUTH IN SIERRA LEONE ARE RELATIVELY MORE LITERATE COMPARED TO THE ADULT WORKING AGE POPULATION ............. 26 FIGURE 3. 1: EMPLOYMENT LEVELS DECREASE AND PATTERN OF EMPLOYMENT TYPE SHIFTS FROM SELF TO WAGE EMPLOYMENT IN HIGHER CONSUMPTION QUINTILES ......................................................................................................................................... 31 FIGURE 3. 2: EMPLOYMENT LEVELS DECLINE FOR YOUTH IN HIGHER CONSUMPTION QUINTILE AND PREVALENCE OF WAGE EMPLOYMENT INCREASES ............................................................................................................................................................. 33 FIGURE 3. 3: PREVALENCE OF SELF-EMPLOYMENT IN AGRICULTURE DECLINES IN HIGHER CONSUMPTION QUINTILES FOR MALE AND FEMALE YOUTH .................................................................................................................................................................. 35 FIGURE 3. 4: YOUTH AND FEMALE-OWNED ENTERPRISES HAVE LOWER REVENUES ......................................................................... 36 FIGURE 3. 5: YOUTH UNEMPLOYMENT RATES IN SIERRA LEONE ARE MUCH HIGHER IN URBAN AREAS ................................................. 37 FIGURE 3. 6: NEET RATES ARE MUCH HIGHER FOR YOUTH IN URBAN AREAS ................................................................................. 39 FIGURE 3. 7: IN CONTRAST TO UNEMPLOYMENT AND UNDEREMPLOYMENT, HIGH NEET RATES ARE PREVALENT IN YOUTH ACROSS THE CONSUMPTION DISTRIBUTION .................................................................................................................................... 40 FIGURE 4. 1: 42 PERCENT OF SIERRA LEONE'S EXPORTS ARE CONCENTRATED IN METAL ORES........................................................... 41 FIGURE 4. 2: GROSS FIXED CAPITAL FORMATION IN SIERRA LEONE ROSE IN 2011-2014 BUT COLLAPSED FOLLOWING DROP IN IRON ORE PRICES................................................................................................................................................................... 42 FIGURE 4. 3: SIERRA LEONE'S SHARE OF DOMESTIC CREDIT TO GDP IS LOWER THAN MOST REGIONAL PEERS ...................................... 44 FIGURE 5. 1: SKILLS GAPS ARE REPORTED BY FORMAL FIRMS ACROSS THE SECTORS OF AGRICULTURE, TOURISM, AND MINING, AND ACROSS ALL WORKER LEVELS ................................................................................................................................................. 47 FIGURE 5. 2: CLOSE TO 30 PERCENT OF PWD YOUTH ARE NOT IN EMPLOYMENT OR TRAINING ........................................................ 48 FIGURE 7. 1: MOST OF THE CURRENT PROGRAMS SUPPORTING YOUTH EMPLOYMENT ARE FOCUSED IN THE WESTERN AREAS ................ 54 FIGURE 8. 1: THREE SETS OF CONSTRAINTS FACING YOUTH IN SIERRA LEONE ................................................................................ 57 List of Tables TABLE 3. 1: MAJORITY OF SIERRA LEONEANS ARE EMPLOYED IN AGRICULTURE AND SERVICES .......................................................... 30 3 TABLE 3. 2: WAGE PAYING JOBS ARE CONCENTRATED AMONG SECONDARY EDUCATION GRADUATES WHILE THOSE WITHOUT FORMAL SCHOOLING AND CONCENTRATED IN THE AGRICULTURAL SECTOR....................................................................................... 31 TABLE 3. 3: YOUTH EMPLOYMENT PATTERNS ARE SIMILAR TO THE WORKING AGE POPULATION WITH CONSIDERABLY LOWER EMPLOYMENT LEVELS IN URBAN AREAS............................................................................................................................................ 32 TABLE 3. 4: YOUTH WITH NO FORMAL SCHOOLING AND OVERWHELMINGLY MORE LIKELY TO BE EMPLOYED AND EMPLOYED IN AGRICULTURE COMPARED TO YOUTH WITH PRIMARY OR SECONDARY EDUCATION .................................................................................... 34 TABLE 3. 5: UNDEREMPLOYMENT RATES ARE HIGHER ACROSS BETTER EDUCATED GROUPS OF YOUTH IN URBAN AREAS ......................... 38 TABLE 4. 1: ACCOUNT OWNERSHIP IN FORMAL FINANCIAL INSTITUTIONS OR MOBILE MONEY PROVIDERS IS MUCH LOWER IN SIERRA LEONE COMPARED TO REGIONAL PEERS ................................................................................................................................. 45 TABLE 4. 2: ACCOUNT OWNERSHIP IS LOWER AMONG FEMALES, POOR, AND THOSE WITH LOW LEVELS OF EDUCATION ......................... 45 TABLE 5. 1: TVET INSTITUTIONS ARE CONCENTRATED IN URBAN CENTERS AND FREETOWN ............................................................. 46 TABLE 8. 1: PROGRAMMATIC RECOMMENDATIONS FOR IMPROVING YOUTH LABOR MARKET OUTCOMES IN SIERRA LEONE .................... 63 4 Abbreviations and Acronyms ATM Automated Teller Machines BECE Basic Education Certificate Examination CIMS COVID-19 Impact Monitoring Surveys COVID-19 Coronavirus disease 2019 DFS Digital Financial Services ECOWAS Economic Community of West African States GDP Gross domestic product GSM Global System for Mobile Communications IMF International Monetary Fund ILO International Labor Organization LFPR Labor Force Participation Rate NDP National Development Plan NEET Not in Employment, Education or Training PWD Person with Disability SCD Systematic Country Diagnostic SLIHS Sierra Leone Integrated Household Survey SSA Sub-Saharan Africa TVET Technical and Vocational Education and Training UNDP United Nations Development Program UNIDO United Nations Industrial Development Organization WASSCE West African Standardized Secondary Examination 5 1. Executive Summary Since the turn of the 21st century, Sierra Leone’s economy has suffered from episodes of volatility and lack of diversification. This challenge is intensified by the economic impacts of COVID-19. Since the country’s civil war ended in 2002, Sierra Leone’s GDP grew at a rate of 7.6 percent per annum between 2003 and 2014. In 2014, however, the onset of the Ebola epidemic and the global drop in iron ore prices caused the GDP to fall by 21 percent, with sharp job losses and decline in activities in agriculture and manufacturing.1 In 2020, prior to the onset of COVID- 19 globally, Sierra Leone’s economy was projected to grow at a rate of 5.4 percent, the highest since 2016. However, with COVID-19 shock, the economy is instead expected to contract by 2.3 percent.2 The economic growth between 2003 and 2014 added few jobs in Sierra Leone’s economy. Figure 1 shows the sectoral and employment composition of Sierra Leone’s GDP from 2002 to 2020. It clearly shows that while the share of industry in the Sierra Leone’s overall GDP peaked between 2010 and 2015, the share of employment in industry remained relatively constant (figure 1, panel b). The country is yet to adequately experience structural transformation and continues to be predominantly rely on the agriculture and services sector for employment. 56 percent of the employed labor force work in agriculture, with only 8 percent of the employed labor force working in manufacturing, and 38 percent employed in services in 2017. Figure 1: Sectoral and employment composition of GDP in Sierra Leone, 2002-2020 1 Gonzalez, Alvaro S.; Michel Gutierrez, Veronica. 2017. Sierra Leone: Jobs Diagnostic. Job Series, no.11; World Bank, Washington, DC. 2 World Bank. 2020. Sierra Leone Economic Update, June 2020: The Power of Investing in Girls. World Bank, Washington, DC. 6 The population of Sierra Leone is overwhelmingly young providing the country with the one- time opportunity to experience rapid economic development, as the largest cohort of working age population enters the labor market. 75 percent of Sierra Leoneans are below the age of 35. Sierra Leone had five elderly persons aged 65 or over and 77 children below the age of 15 for every 100 in the working-age population (15-64). Children below 15 make up the largest sub- group of population in rural areas whereas youth of working age (15-35) outnumber other subgroups in urban areas. This age structure allows Sierra Leone an opportunity to reap the “demographic dividend� as the largest cohort of youth enter the la bor market. But in order to realize this, the youth need to be well-equipped with proper education and skills, and opportunities need to exist in the labor market to absorb the youth bulge. The youth (15-35) in Sierra Leone are relatively better educated compared to the adult working age population (36-64), but females perform worse than their male counterparts and the country fares poorly on secondary schooling indicators compared to regional benchmarking. 72 percent of Sierra Leonean youth have attended school compared to 38 percent of those aged between 36 and 65. Among youth, 66 percent have completed primary schooling. The secondary school completion rate is much lower at 12 percent. The secondary school enrollment rate in Sierra Leone of 42 percent is lower than overall secondary school enrollment rate in sub-Saharan Africa (43 percent).3 There is also a distinct gender gap across learning indicators. For example, figure 2 shows that only 50 percent of female youth can read and write in English compared to 70 percent of male youth. Similarly, less than 60 percent of females can do a simple match calculation compared to more than 75 percent of males, in the youth category. Figure 2: Comparison of youth (15-35) and adult (36-65) working age population on reading, writing, and math skills 56 percent of the youth in Sierra Leone are employed compared to 66 percent of the overall working age population, with considerable disparities across rural and urban areas. Table 1 3 World Development Indicators 7 summarizes employment indicators across employment type and sector of employment for male, female, rural, and urban youth. While employment levels are relatively similar for males and females, rural youth are more likely to participate in the labor market (77 percent) compared to urban youth (40 percent). 83 percent of rural youth are employed in agriculture whereas 60 percent of urban youth are self-employed in non-farm enterprises. 39 percent of female youth are self-employed outside of agriculture. In terms of sector of employment, male youth are 10 percentage points more likely to be employed in manufacturing whereas female youth are 7 percentage point more likely to be employed in services. Table 1: Employment Indicators for Youth (15-35) in Sierra Leone All Men Women Rural Urban Employment rate 56.0 55.0 56.7 77.4 40.4 Employment Type (% of employed) Wage, private 9.8 18.3 3.2 3.3 18.9 Wage, public 3.0 4.7 1.7 0.7 6.3 Self-employed, agriculture 54.3 52.5 55.6 83.0 14.8 Self-employed, non-agriculture 32.9 24.5 39.4 13.1 60.1 Sector of Employment (% of employed) Agriculture 55.0 53.8 56.0 83.7 15.4 Manufacturing 7.8 13.0 3.7 4.4 12.5 Services 37.2 33.2 40.3 11.9 72.1 Source: SLIHS 2018 Household-level welfare plays a central role in determining employment levels and types for youth in Sierra Leone. Youth in the poorest 20 percentile of the household consumption distribution are significantly more likely to be employed than the youth who come from top 20 percentile (figure 3). The type of employment also differs by household consumption, with those from the relatively poorer households less likely to be engaged in wage paying jobs. Moreover, 95 percent of the employed youth from the poorest households are self-employed, while 70 percent of those from the top 20 percentile of the household consumption distribution are self- employed. 8 Figure 3: Employment level and type for youth across the household consumption distribution in Sierra leone In rural areas, the agriculture sector employs the vast majority of the youth, while in urban areas youth are self-employed in micro non-farm enterprises. 83 percent of rural youth and 72 percent of youth with no formal level of education are employed in agriculture. Most youth employed in agriculture produce staple crops such as rice and cassava with only 5 percent of youth engaged in agriculture growing cash crops such as cotton. 60 percent of urban youth, on the other hand are self-employed in non-farm enterprises. 77 percent of youth owned firms are single-person enterprises, while 75 percent of are informal (unregistered) enterprises. 25 percent of urban youth and 33 percent of youth with secondary school education are employed in wage paying jobs. Among youth with wage-paying jobs, 33 percent are employed in the public sector. Similar to other low-income countries, Sierra Leone exhibits low levels of youth unemployment, but there is variation across rural and urban areas . The overall youth unemployment rate is 4 percent, rising up to 10 percent for urban male youth and 6 percent for urban female youth.4 Unemployment rates for youth in rural areas are below 1 percent, perhaps alluding to the fact that youths in rural areas cannot afford to stay unemployed. Within urban areas, the youth with relatively high levels of education and from relatively better-off households are more likely to be unemployed. Urban youth who have completed secondary education experience the highest rate of unemployment (13 percent). Similarly, 8 percent of youth from the top 20 percentile of the household consumption distribution are unemployed compared to 1.6 percent in the bottom 20 percentile. The unemployed youth largely rely on informal networks to look for jobs. 43 percent of the unemployed youth reported seeking assistance from family and friends to look for jobs. Only 3 percent report registering with a public or private employment service provider to look for jobs. 4 Unemployment rate is calculated as the percentage of people in the labor force who are not currently unemployed and looking for employment, following international (ILO) definition 9 Figure 4: Youth unemployment rates in rural and urban areas and across males and females, 2018 Similar to unemployment rate, underemployment rates are higher in urban areas and concentrated among the more educated, better-off, those employed in wage paying jobs or self-employed in non-farm enterprises. Overall 11 percent of youth in Sierra Leone are underemployed.5 In urban areas, 16 percent of youth are underemployed. This rises to 19 percent for youth in Freetown. Similar to the pattern observed for unemployment rates, underemployment rate is much higher among educated youth. 23 percent of youth who have completed secondary education are underemployed compared to 11 percent of youth with no formal schooling. Across the household consumption distribution, 18 percent of youth in the top 20 percentile are underemployed compared to 10 percent in the bottom 20 percentile. Across sectors, the prevalence of underemployment is high in wage-paying jobs and self-employment in non-farm enterprises, even though the average weekly hours worked by youth in Sierra Leone is the lowest in agriculture (39 hours) compared to manufacturing (50 hours) or services (47 hours). This suggests that youth employed in agriculture do not wish to work more hours than they already do. Underemployed youth identify lack of opportunities and financial resources as primary constraints to finding more work Compared to relatively low unemployment and underemployment levels, Sierra Leone has a high prevalence of youth who are NEET, with urban female youth facing the highest NEET rates. Overall 18 percent of Sierra Leonean youth are NEET. The incidence of NEET is generally high among urban youth and particularly high among female urban youth and youth in Freetown, where the NEET rate rises to 27 percent. Nearly one-fourth of youths with a secondary education and above are NEET, compared to 15 percent without a formal education. However, this pattern 5Underemployment rate is calculated as the percentage of people in the labor force who are employed but work less than 40 hours a week and have expressed the desire to work more hours 10 is different in urban areas where 29 percent of youth without formal schooling are NEET compared to 27 percent of those with secondary education or above. In contrast to unemployment and underemployment rates, the correlation between household consumption and NEET rates are not strong, with male youth facing high NEET rates in the bottom quintile whereas female youth facing slightly higher rates in the top quintile of the consumption distribution. Figure 5: Youth NEET rates in rural and urban areas and across males and females, 2018 Women are disproportionately more likely to be NEET irrespective of geographical location or education levels due to domestic responsibilities and lack of financial resources to start their own business. Women account for 58 percent of NEET youth in urban areas and 68 percent of NEET youth in rural areas. For female youth, staying out of the labor market and the educational system can be closely linked with domestic and childbearing responsibilities. 41 percent of rural female youth and 33 percent of urban female youth cite domestic responsibilities and taking care of children as a reason for not engaging with the labor market. Across rural and urban areas, 38 percent of women have been pregnant or given birth in the last 12 months are NEET, compared to 28 percent of women who are active in the labor force. Similarly, another constraint identified by women for staying out of the labor force is lack of financial resources to start a business. 30 percent of urban female youth who are NEET point to lack of access to finance as the biggest obstacle to participating in the labor market. For rural male youth, lack of financial resources and disability are key issues for being NEET – 8.2 percent of the rural male youth who are NEET identify as Persons with Disability (PWD) compared to 3.5 percent of the rural male youth who are employed, or 4.1 percent of the urban male youth who are NEET. Sierra Leone’s growth episodes have not been accompanied by an increase in diversification or an expansion of employment opportunities, with access to finance a critical binding constraint. 11 86 percent of the growth in real GDP per capita in Sierra Leone between 2003 and 2014 came from an increase in labor productivity and these gains were concentrated in the industry sector, driven by sharp increases in commodity prices between 2011 and 2014.6 Access to credit is a critical challenge for firms looking to expand their operations and for prospective entrepreneurs. In the 2020 World Bank Doing Business Indicators, Sierra Leone was ranked 165 out of 190 countries in terms of access to credit.7 Self-employed individuals, including the youth, largely rely on informal financing sources for loans. Figure 6 shows that the domestic access to credit in the private sector have been consistently low over time in Sierra Leone, even during high growth episodes and is lower than regional peers, Liberia and Guinea. 55 percent of the loans taken by those self-employed in agriculture or non-farm enterprises are taken from family, friends and relatives, followed by 20 percent of the loans coming from traders. Low access to credit also stems from limited channels for formal financing. There are 2.7 bank branches and 0.36 ATMs per 100,000 adults in Sierra Leone, which is lower than regional peers Liberia, Guinea and Ghana.8 As a result, lack of access to finance does not allow even the most profitable formal or informal firms to grow and general employment. In 2018, only 7 percent of the informal firms generating the most revenue in Sierra Leone had a paid employee outside the household. Figure 6: Access to credit in the private sector, Sierra Leone and regional peers On the supply side, unequal access to secondary, and tertiary education, poor quality of the vocational education system, and marginalization of certain segments of youth hampers the prospect of youth in the labor market. Sierra Leone suffers from low secondary school completion rate among youth (12 percent). Technical and Vocational Education and Training 6 Gonzalez, Alvaro S.; Michel Gutierrez, Veronica. 2017. Sierra Leone: Jobs Diagnostic. Job Series, no.11; World Bank, Washington, DC. 7 World Bank Group. 2020. Doing Business – Economy Profile: Sierra Leone. World Bank, Washington, DC. © World Bank. Retrieved from: https://www.doingbusiness.org/content/dam/doingBusiness/country/s/sierra-leone/SLE.pdf 8 World Bank, World Development Indicators 12 (TVET) institutions offer valuable avenues for upskilling youth, but these institutions are largely inaccessible to youth in rural areas. 52 percent of the TVET institutions were in Freetown (Western Area) and the rest in urban areas of Kenema, Bombali, Bo and Port Loko.9 The TVET system is poorly funded, with only 3 percent of the education budget allocated to the TVET sector in 2019 and is mostly utilized for paying salaries of trainers. There are poor linkages between the labor market and training institutions, with outdated training and equipment and poor quality of training. Most tertiary education institutions are also concentrated in urban areas. Additionally, there are poor linkages between the skills worker have and the skills that firms in the country need. In a 2012 skills gap analysis of representative formal firms conducted by the African Development Bank in the agriculture, mining and tourism sectors, skill gaps were found across the board in the managerial, professional and worker levels.10 Finally, women and youth who are PWDs face systematic challenges that need to be addressed. Women are economically marginalized and burdened disproportionately with domestic duties whereas 30 percent of youth who are PWDs are NEET. Among the PWDs, youth affected by the civil war face psychosocial challenges that constrain productive engagement with the labor market and need support through behavioral interventions.11 The Government of Sierra Leone through the Medium-Term National Development Plan (NDP)12, recognizes the need to generate critical and sustainable jobs for youth and identifies several key areas for driving economic growth. Among prioritized areas for propelling economic growth and creating jobs are: (i) improving agricultural productivity by encouraging commercial farming and upgrading agricultural value chains; (ii) modernizing fisheries production by introducing new technology; (ii) upskilling in the tourism and hospitality sector to increase the contribution of services to GDP from 36 to 45 percent; (iv) upgrading industrial production outside the mining sector by creating special economic and export processing zones; and (v) investing in renewable energy to harness abundant hydropower, solar, and wind energy from within the country. A 2014 report13 from the Ministry of Youth Affairs titled “A Blueprint for Youth Development� identifies several constraints to providing better livelihood options for youth in the country. These constraints include: 9 Sierra Leone Ministry of Education, Science and Technology. April 2015. Situational Analysis Study of Technical Vocational Education and Training (TVET) in Sierra Leone. Islamic Development Bank. Retrieved from: https://nctva.org/wp- content/uploads/2018/09/TVET_Situation_Analysis_Report_Draft1_2015_IDB.pdf 10 Mannah, Emanuel. Gibril, Yvonne. November 2012. A Skill Gap Analysis for Private Sector Development in Sierra Leone. African Development Bank. Retrieved from: https://nctva.org/wp- content/uploads/2018/09/Skills_Gap_Analysis_2012_AfDB.pdf 11 Betancourt, T.S., McBain, Newnham,E, J. et al. A behavioural intervention for war-affected youth in Sierra Leone: a randomized controlled trial. J Am Acad Child Adolescent Psychiatry. 2014 Dec;53(12):1288-97. doi: 10.1016/j.jaac.2014.09.011. 2014 Oct 2. 12 Government of Sierra Leone. 2019, “Sierra Leone’s Medium Term - National Development Plan 2019-2023, Volume 1�, IMF Country Report 19/218, International Monetary Fund, Washington DC. Retrieved from: https://www.imf.org/en/Publications/CR/Issues/2019/07/09/Sierra-Leone-Economic-Development-Documents-National- Development-Plan-2019-23-47099 13 Sierra Leone, Ministry of Youth Affairs (2014): A Blueprint for Youth Development 13 • Teenage pregnancies, gender based violence (GBV), and barriers to land ownership for rural females; • Insecure mining work and being trapped in subsistence agriculture for rural males; • Lack of access to capital, few opportunities for skills training, and lack of access to markets for all rural youth; • Low access to capital, lack of experience, lack of management and business skills, and corruption for urban and educated youth; and • Poor financial literacy and lack of opportunities for urban and uneducated youth. Agriculture and fisheries sectors are earmarked with the potential for generating most sustainable jobs for youth in the near term, but the blueprint mentions that this requires significant policy reform, political will, and practical action. Besides the objectives identified in the NDP and the Youth Development Blueprint, the growth in access to digital technologies, especially mobile phones, presents an opportunity to leverage digital platforms to provide active labor market support to youth in the country. In 2019, Sierra Leone had 86 mobile subscriptions per 100 people, at par with the regional power-house Nigeria (88 subscribers per 100 people). This increasing digital footprint of the youth in Sierra Leone can have key positive externalities for the youth and their employment prospects. It can help the self- employed in rural and urban areas tap into a growing online marketplace, and the unemployed access better information about job and skills training opportunities. Another area where digital technology can play a critical role is in expanding Digital Financial Services (DFS). DFS through increasing mobile phone subscriptions can be seen as a way to extend financial services to Sierra Leoneans that do not have access to formal financial services. In Sierra Leone, more than 85% of the population is considered “unbanked�.14 Access and utilization of DFS has the potential to help youth start businesses and increase their savings and investments. Taking stock of the labor market indicators for youth, three key considerations emerge that future programs should consider in advancing the youth employment agenda in Sierra Leone. First, youth are constrained by both demand side challenges such as lack of access to finance as well as supply side challenges such as lack of access to quality vocational training. Following global evidence, interventions that combine training and access to finance or credit are likely to have the most success in improving employment outcomes for youth. Second, it is clear that along many dimensions rural and urban youth suffer from different set of constraints. Rural youth are mostly employed in low-productivity subsistence agriculture where job quality seems to be the most binding constraint whereas urban youth are more likely to be unemployed, underemployed or NEET where job access seems to be the binding constraint. Tailoring programs and interventions that improve job quality in rural areas and job access in urban areas is likely to improve labor market indicators for youth in those respective settings. Third, it is clear that marginalized groups such as women, PWDs, and youth with mental health issues suffer worse labor market outcomes that precludes them from productively contributing to the economy. 14International Growth Center (IGC): You can pay me through my cell phone: Mobile money in Sierra Leone. Available at: https://www.theigc.org/blog/you-can-pay-me-through-my-cell-phone-mobile-money-in-sierra-leone/ 14 Making programmatic adjustments for those marginalized groups can help youth to productively contribute to their societies. A review of 23 government and donor funded youth employment programs in the country shows promising avenues to build future programming, but gaps remain . 13 out of the 23 programs supporting youth employment provided integrated package of services to youth, combining training and grants to promote self-employment Additionally, 16 programs focused on supply side interventions such as providing skills development support through internships and apprenticeship schemes, and life skills training. 11 programs focused on demand side issues supporting businesses through subsidies, tax cuts, and incubation. Majority of the programs, however, were implemented in Western Area followed by Koinadugu, Kono, Kenema and Bombali. Only four out of the 23 programs directly targeted women and PWDs and five explicitly provided grants or credits to expand access to finance. Private sector participation in terms of placements or internships were markedly absent from majority of the programs, and only six out of the 23 programs reached more than 10,000 youth, suggesting considerable room for expansion among programs that are successful. The total funding of the programs was US$ 103 millions of which only US$1.3 million was from the Government. The Government funded projects were very small in magnitude, scope and coverage with limited documentation on impact. Despite successes of some of the past programs, Sierra Leone needs a much more comprehensive jobs related strategy that takes into account the need of its diverse groups to productively employ its growing youth population. Even before the COVID-19 pandemic, Sierra Leone needed to create around 70,000 jobs every year to maintain current employment rates with the current level of population growth. With COVID-19 further suppressing domestic demand and worsening business conditions, Sierra Leone needs to invest in programs that directly addresses the constraints faced by different sub-group of youth. Table 2 outlines a comprehensive support strategy to advance the youth employment agenda in the country, starting with identifying the specific constraint that youth face in the labor market; linking the constraint to the segment of the youth based on geography skills, and income profile; and offering both broader category of support to alleviate the constraint as well as providing examples of existing programs (from the mapping exercise) that are already supporting the targeted segment of the population. Table 2: Programmatic recommendations for improving youth labor market outcomes in Sierra Leone NDP Priority Subgroups Broader Policy Specific Category of Programs to Existing Examples Areas Amenable of Youth Objectives Alleviate Existing Constraints to Interventions 15 Demand side: • Opportunity • Continued access to safety Salone nets through cash, cash plus, • Youth in and public works programs Agriculture • Funding and training to • Youth in interested youth on cultivating Fisheries Rural, more productive crops, • Promoting Youth • Improving poor Improving including by leveraging Employment agriculture youth with productivity in technology such as through through Local productivity low agriculture existing agricultural extension Economic • Modernizing education services Development fisheries outcomes Supply side: (EPP III) – • Safety nets interventions that Agricultural combine cash transfers with Value Chain basic numeracy and literacy • Sierra Leone training to help support Social Safety Nets fundamental skills Program (WB) Demand Side: • Productive inclusion grants to incubate youth owned firms that move up agricultural Rural, Supporting value chains and help connect non-poor movement of their enterprises to urban • Investing in youth with youth from • EPP III- Facility markets renewable some level agriculture to for Innovation Supply Side: energy of non-farm • Grants combined with financial education enterprises literacy and training on performing basic business functions Demand Side: • Self-targeted public work programs that focus on the Enabling access needs in urban areas (for • The Masada Urban, to income- example, waste management, • Upskilling in Waste poor earning street and drainage cleaning the tourism Transformers youth with opportunities, and environmental and Program low especially for upgradation of cities). hospitality • Sierra Leone Skills education youth who are Supply Side: sectors Development outcomes inactive in the • Apprenticeship schemes in the Project (WB) labor market informal sector that allows on- the-job training and opportunity to earn a stipend Supporting Demand Side: • Sierra Leone • Upskilling in Urban, unemployed • Integrated programs providing Youth the tourism non-poor and grants/credit along with Employment and youth with underemployed training to self-employed Support (YES) hospitality high youth to deploy youth on setting up or program’s Skill sectors education their human expanding non-farm Development and • Investing in outcomes capital more enterprises, particularly to Employment renewable productively female youth support energy 16 • Industry internship and • Gender and apprenticeship programs in Entrepreneurship close ties with private sector Together (GET) to connect youth to jobs in Ahead demand • Graduate Supply Side: Internship • Employment services, Program administered on virtual • Youth Skills platforms where youth can Development register their profiles, learn along the simple skills, view Bandajuma- comprehensive job listings and Liberia reach out to potential • Youth employers. Provide special assistance to connect women Entrepreneurshi and PWDs. p and Employment Project • Youth in Car Wash In terms of future programming to support the youth employment agenda, adopting an integrated approach that addresses both labor demand and supply constraints in the economy and the diverse challenges of different subgroups of youth in urban and rural areas is critical. In rural areas, and depending on the subgroup of youth, the provision of funding and training to improve agriculture productivity and to encourage the transition towards furthering agricultural value chains through non-farm employment is recommended. In urban areas, providing funding, training and incubation services to self-employed youth with a focus on non-farm enterprises could help lower unemployment and underemployment. For inactive youth, the deployment of training in partnership with the private sector and intermediation services leveraging digital platforms that provide access to information and job placements could facilitate re-entry into the labor market. Finally, it is important to design programs at scale and to support these programs to be inclusive of women, PWDs and those with psychosocial challenges. 17 2. Introduction As Sierra Leone’s overwhelmingly young population comes of age and enters the labor market, the country has a one-time opportunity to experience rapid and inclusive economic development.15 However, the pace of job creation in the country has not kept up with the number of youths entering the labor market every year. Moreover, high rates of inactivity and low levels of educational attainment among youth hampers their prospect in the labor market. This note uses data from the most recent Sierra Leone Integrated Household Survey (SLIHS) and other secondary sources to shed light on the labor market outcomes and challenges faced by youth in the country. The quantitative analysis is supplemented using existing literature and qualitative review of policies and programs that aim to support the agenda of youth employment. This section takes stock of the larger macroeconomic trends related to the labor market in Sierra Leone and describes the demographic, educational, and social characteristics of the youth, ending with the outlook for labor market amidst COVID-19. Section 3 discusses employment, unemployment, and underemployment indicators by socio-economic characteristics of youth and the broader working-age population. Section 4 discusses demand side factors constraining labor market outcomes for youth and Section 5 discusses supply side factors. Section 6 charts out opportunities in Sierra Leone’s labor market.16 Section 7 reviews current youth employment programs and Section 8 offers areas for policy considerations and future directions for improving the labor market outcomes for youth. This note tries to build upon two existing World Bank reports on the jobs challenge in Sierra Leone (Margolis et. Al (2016) and Gonzalez and Gutierrez (2017)) and provides two specific value-adds: (i) it uses the latest household survey data from 2018 to update the analysis in the two preceding reports; and (ii) it zooms in on the youth (15-34) population to distinguish the labor market outcomes of youth from the general population. Macroeconomic context Sierra leone’s advantageous geography, abundant mineral and agricultural resources, and burgeoning youth population provide a unique potential for economic development.17 The end of the civil war in 2002 marked an era of sustained economic growth in the country (Figure 2.1). However, the onset of the 2014 Ebola epidemic and the fall in iron ore prices reversed the trend of sustained economic growth with government revenues collapsing due to the fall in export of iron ore and other minerals. With the onset of the COVID-19 epidemic in 2020, the economy is 15 Sierra Leoneans aged between 15 and 35 is set to increase from 2.8 million in 2020 to 4.5 million in 2050 as the largest cohort of Sierra Leoneans under the age of 14 enter the working-age population in the next 30 years. 16 Section 8 is a review of the analysis of youth employment challenges as discussed in section 3, 4 and 5 17 World Bank; International Finance Corporation; Multilateral Investment Guarantee Agency. 2020. Country Partnership Framework for the Republic of Sierra Leone for the Period FY21 - FY26. World Bank, Washington, DC. © World Bank. https://openknowledge.worldbank.org/handle/10986/33871 License: CC BY 3.0 IGO 18 likely to experience further setbacks associated with the collapse of global and domestic supply chains. The economic gains made since the Ebola outbreak are at the risk of being reversed again. Figure 2. 1: Sierra Leone's GDP per capita growth has been more volatile compared to regional peers over the last two decades Sierra Leone Economy has experienced high levels of economic volatility. Since the country’s civil war ended in 2002, the real gross domestic product grew at a rate of 7.6 percent per annum between 2003 and 2014, driven largely by the mining sector, specifically the export of iron ore. In 2014, the onset of the Ebola epidemic and the global drop in the price of iron ore caused the GDP to fall by 21 percent, with sharp job losses and decline in activities in agriculture and manufacturing.18 In 2020, prior to the onset of COVID-19 globally, Sierra Leone was projected to grow at a rate of 5.4 percent, the highest since 2016. However, with COVID-19, the economy is expected to contract by 2.3 percent instead.19 The share of agriculture and services in Sierra Leone’s GDP has increased since the collapse in the iron ore prices in 2014. In terms of the sectoral composition of GDP, the share of industry peaked in 2013 and 2014 before collapsing to pre-2010 levels (Figure 2.2; panel (a)) since 2015. The share of agriculture and services in the GDP has increased considerably since 2015. 18 Gonzalez, Alvaro S.; Michel Gutierrez, Veronica. 2017. Sierra Leone : Jobs Diagnostic. Job series,no.11;; Jobs Series; No. 11. World Bank, Washington, DC. © World Bank. https://openknowledge.worldbank.org/handle/10986/29028 License: CC BY 3.0 IGO. 19 World Bank. 2020. Sierra Leone Economic Update, June 2020: The Power of Investing in Girls. World Bank, Washington, DC. © World Bank. https://openknowledge.worldbank.org/handle/10986/34313 License: CC BY 3.0 IGO 19 This sectoral composition, however, has remained fairly consistent since the 2000s, notwithstanding the 2011-2015 industry boom, suggesting that Sierra Leone is yet to undergo a serious trajectory of structural transformation (Figure 2.2; panel (b)). Despite the growth in the industry sector between 2010 and 2015, it added few new jobs in the Sierra Leone economy. Sierra Leone is yet to adequately experience structural transformation and continues to be predominantly rely on the agriculture and services sector for employment. 56 percent of the employed labor force work in agriculture, with only 8 percent of the employed labor force working in industry, and 38 percent employed in services in 2017. Figure 2. 2: Agriculture and services make up a large share in Sierra Leone's GDP and Employment compositions While Sierra Leone’s employment in services and agriculture is roughly in line with its income level, it has fewer jobs in the manufacturing sector compared to peer countries. Comparator countries such as Liberia, Togo, Gambia and Burkina Faso, with similar income levels have a significantly higher share of workers in the manufacturing sector compared to Sierra Leone. (Figure 2.3). 20 Figure 2. 3: Sierra Leone's share of employment in industry is lower compared to regional peers Sierra Leone has experienced rapid urbanization in the last 50 years but has not experienced proportional levels of increases in income over time. 40 percent of Sierra Leone is urban and the share of population living in urban areas has grown at an average rate of 3.6 percent every year since 1960. Until the early 2000s, most of the urban growth was experienced in Freetown in the Western Area Urban. However, other districts in the country have slowly increased the share of urban population since the end of the civil war (Figure 2.4 (a)). Given its urbanization level, Sierra Leone should typically exhibit a higher level of income. As of 2016, Sierra Leone has urbanized in-line with the trend of countries in 2010 but does not have the income level its rate of urbanization would predict. The increasing urbanization has not been accompanied by structural transformation, where in the labor force consistently shifts from agriculture to services and industries. Moreover, given that increasing urbanization has been accompanied by increasing employment in low skill services instead of industry, Sierra Leone’s income level as predicted by its urbanization rate is lower than peer countries (Figure 2.4(b)). 21 Figure 2. 4: Sierra Leone has experience rapid urbanization over time, but its income level remains below the rate predicted by urbanization Labor market context Despite a decade of sustained economic growth before the twin crisis of 2014, poverty and vulnerability levels remain high in Sierra Leone. The estimated poverty headcount in 2018 was 56.9 percent based on the national poverty line. While poverty reduced by 12.6 percentage points between 2003 and 2011, the reduction in poverty was only 3.8 percentage points between 2011 and 2018.20 More worryingly, food poverty increased by 12.7 percentage points between 2011 and 2018. Despite the absence of conflict, the vulnerability to multi-dimensional epidemic, economic and climatic shocks, weak institutions, and lack of gainful employment opportunities for the growing number of youths are of concern to policymakers in the country. Poverty remains high because Sierra Leoneans have limited opportunities for adequate, productive and gainful employment. The country has been consistently urbanizing over time, but it has come without the industrialization or structural transformation of the economy. 86 percent of the labor force is self-employed and 5 in 10 young people are self-employed in agriculture. Formal-sector jobs represent a small fraction of the overall available jobs in the country and are not accessible for the average youth. While the youth is better educated than the older working age population, only 12 percent of the youth have completed secondary education. More than 20World Bank; International Finance Corporation; Multilateral Investment Guarantee Agency. 2020. Country Partnership Framework for the Republic of Sierra Leone for the Period FY21 - FY26. World Bank, Washington, DC. © World Bank. https://openknowledge.worldbank.org/handle/10986/33871 License: CC BY 3.0 IGO 22 half of the working age-population in Sierra Leone cannot read or write. More worryingly, 17 percent of the youth labor force is not in employment, education or training. Only 28 percent of the youth population between 15-24 years in Sierra Leone actively participate in the labor market, as per modeled ILO estimates. While 68 percent of the working age population is active in the labor force, the labor force participation rate is low and declining for youth. The labor force participation rate for both youth between 15 and 24 years, and the working age population in general has declined since 2005. (Figure 2.5, panel (a)), based on modeled ILO estimates. Sierra Leone’s labor force participation rate is lower than what is predicted by its income level. Neighboring countries such as Liberia and Gambia with similar levels of income have similar levels of labor force participation, while countries such as Niger and Togo report relatively higher levels of labor force participation rate (Figure 2.5, panel (b)). The youth labor force participation rate is lower and declining in Sierra Leone, compared to neighboring countries of Ghana and Guinea. Figure 2. 5: Sierra Leone's youth labor force participation is low and declining, and the overall labor force participation is lower than many regional peers 74 percent of the population of Sierra Leone is below the age of 35, providing the country with the one-time opportunity to experience rapid economic development, as the largest cohort of working age population enters the labor market. To do so, it is critical for the country to invest in the human capital and create productive labor market opportunities for its youth. The demographic dividend, therefore, is not a given in itself: to realize its potential, the youth in Sierra 23 Leone must enter the labor market with better skills and fewer constraints to working productively and gainfully outside their home. Box 1: Key Definitions • Working age population: Those above the age of 14 and below the age of 65 who could potentially be employed in the labor market. • Labor Force Population: The labor force comprises all persons of working age who furnish the supply of labor for the production of goods and services during a specified time- reference period. It refers to the sum of all persons of working age who are employed and those who are unemployed. • Youth: Nationally defined as those above the age of 14 and below the age of 36 who could potentially be employed in the labor market. In Section 1, data is available for the 15-24 age-group and not for the 15-35 cohort for which the analysis is presented in the rest of the chapter. • Adult working-age population: Those above the age of 35 but below the age of 56 who could potentially be employed in the labor market. • Employed: Those in the labor force who have engaged in market-oriented work or work for home consumption for at least an hour in a week. • Unemployed: Those people in the labor force who are not currently employed but looking for employment at present. • Underemployed: Those people in the labor force who are employed but work less than 40 hours a week and have expressed the desire to work more hours. Youth in Sierra Leone Demographic Composition Sierra Leone has an overwhelmingly young population. 75 percent of the population in the country is below the age of 35, across both rural and urban areas, and across males and females. Urban areas boast a higher proportion of working age youth population, between the ages of 15 and 35, whereas rural areas have a relatively higher proportion of children below the age of 15. Across rural and urban areas, female youth outnumber male youth (Figure 2.6). 24 The youth in Sierra Leone are more concentrated in a few key districts. 38 percent of the urban youth reside in Western Area Urban, followed by Western Area Rural, Kenema and Bo. The rural youth are more evenly distributed, with the largest population of youth in Kailahun, Kono, Port Loko, Bo and Kenema. 19 percent of the male youth and 17 percent of the female youth reside in Freetown as per the Census in 2015. Figure 2. 6: Youth in Sierra Leone are more concentrated in urban areas Female youth are more likely to be married and have children and less likely to identify as household heads. According to SLIHS 2018, 33 percent of the youth in Sierra Leone are married, with female youth 14 percentage points more likely to be married compared to male youth. 40 percent of female youth report having given birth their first child before the age of 20. Only 13 percent of the youth identify as heads of households, compared to 51 percent of adults between the ages of 36 and 55. However, among those who do, men are disproportionately more likely, at 17 percentage points higher, to be identified as the head decision-maker in the household. Education Status The youth are relatively better educated compared to the rest of the working age population and are more likely to have completed primary and secondary schooling. 72 percent of the youth have attended some form of formal schooling according to SLIHS 2018 compared to 38 percent of the population aged 36-65. 66 percent of the youth had completed primary school while only 12 percent had completed secondary school. 58 percent of the youth can read and write in English and 42 percent can do a simple mathematical calculation. On average, males are 25 marginally more likely to be able to read and write English. The youth, across gender, are more likely to outperform the adult labor force population in terms of basic learning outcomes (Figure 2.7). Figure 2. 7: Youth in Sierra Leone are relatively more literate compared to the adult working age population Forty six percent of the youth report drop out of school with rural females significantly more likely to drop out. Among various sub-groups, rural females were the most likely to drop out of school whereas urban males were the least likely to drop out and most likely to pursue higher education. Those who never attain any formal schooling report doing so because their parents found education to be prohibitively expensive. Disability Around four percent of the working-age population and two percent of the youth population suffer from some form disability in Sierra Leone. The prevalence of disability is higher among men than women in the overall working age population and similar among male and female youth. The youth in rural areas are marginally more likely than the youth in urban areas to be Persons with Disability (PWD). Those living in extreme poverty are marginally more likely to be PWD. The most common type of disability associated with youth is physical disability, followed by vision impairment and the limited movement of arms or hands. The causes of disability among the youth, are largely congenital or due to disease or illness and accidents. The youth are also at a high risk of experiencing psychosocial challenges. Approximately 3 in 4 youth in Sierra Leone today lived through the civil war between 1991 and 2002, and all youth have lived through the consequences of the Ebola epidemic, along with the regular economic 26 shocks the country has suffered. During the war, it is estimated that roughly 10,000 to 14,000 children were deployed as soldiers.21 A seventeen-year Longitudinal Study of War-Affected Youth (LSWAY) in Sierra Leone investigating the impact of the civil war and post-conflict experiences and found persistent mental health problems among former child soldiers – lower levels of prosocial behavior were associated with those who had killed or injured others during wartime and experienced postwar social stigma along with heightened anxiety and depression.22 Migration to Urban Areas Migration constitutes an important part of the trajectory that youth take in their lifetime. Sierra Leone has experienced significant increase in urbanization since 1960, with majority of the growth in Freetown and a slowly rising migration to other urban areas. The youth constitute an important fraction of those migrating – 50 percent of those who had migrated in 2018 were young. 56 percent of the youth that had migrated were women. Those who migrate are relatively better-off, educated and tend to migrate to urban areas. 87 percent of those who are young and migrate are in the top 60 percentile of the consumption distribution (SLIHS 2018). In terms of education, male urban migrants are relatively more educated compared to non-migrants. Male urban migrants are 38 percentage points less likely to have no formal schooling; 58 percentage points less likely to have stopped at a primary education; and 6 percentage points more likely to have had at least a secondary level education. However, both male and female migrants are 5 percentage points less likely to have tertiary education, compared to non-migrants in urban areas – indicating that those who get to pursue a tertiary education in urban areas may have lived there for several generations. Men and women move to urban areas for different reasons. Male youth largely move to pursue employment opportunities or to complete education. 48 percent of the male migrants move to pursue education and training, compared to 32 percent women. Female youth move to urban areas either to get married or with their families – 51 percent of the female youth migrating, do so for marriage, while only 22 percent of the male migrants move due to marriage. Around 33 percent of the migrating youth move to rural areas. These youth are relatively more likely to have had no formal schooling. 80 percent of the female youth who migrate to rural areas do so for marriage. Employment Outlook amidst COVID-19 With the onset of the COVID pandemic, Sierra Leone risks losing the little gains made since 2014. According to the IMF, assuming limited spread of the disease, the economy is projected to contract by 2.3 percent in 2020, while the contraction is estimated to be 3.5 percent assuming unmitigated spread of the disease. There are both direct and indirect channels of projected 21A. B. Zack�Williams (2001) Child soldiers in the civil war in Sierra Leone, Review of African Political Economy, 28:87, 73-82 22Betancourt, T.S., Keegan, K., Farrar, J. et al. The intergenerational impact of war on mental health and psychosocial wellbeing: lessons from the longitudinal study of war-affected youth in Sierra Leone. Confl Health 14, 62 (2020). https://doi.org/10.1186/s13031-020-00308-7 27 impacts: in the event of a protracted domestic lockdown, the economy would experience a deep contraction in production across all sectors. Even in the absence of a domestic lockdown, the global disruption of supply and value chains is set to impact the trade and financial flows.23 The economy as a whole, is experiencing a slowdown, with services the hardest hit sector. The growth rate of the agriculture value added is projected to slow from 4.2 percent pre-COVID to 3.4 percent in 2020 but expected to rebound to the average growth of 4.3 percent between 2021- 2022. This slowdown is driven by social distancing and lockdowns disrupting the cropping calendar and land preparation, along with the disruptions in the supply chain of inputs and the inability of producers to reach markets due to transport restrictions. The industry growth rate is estimated to reduce from 7.6 percent to 4.5 percent in 2020, due to the fall in global demand for commodities, and expected to rebound post 2020 by an average growth rate of 1.6 percent annually due to the capital-intensive nature of industrial activity. The services sector is expected to contract by 16 percent in 2020 due to the direct impact of social distancing, lockdowns and travel restrictions on the trade and tourism sectors. Early estimates suggest that, in 2021-2022, the services sector is expected to rebound to a growth rate of 5.1 percent, through government initiatives in the tourism, transport, communication and banking sectors. The gross fixed capital formation is expected to contract by 30 percent, shrinking the economy and suppressing job creation, putting the existing jobs at risk.24 Youth already grappling with limited opportunities will be further hard pressed to find employment opportunities under the current environment. Temporary slowdown in agriculture, services and industry will further decelerate the pace of job creation, which was already suffering from macroeconomic volatility, and low investments pre-COVID. Unemployed and underemployed youth, and youth who are NEET, will continue to face difficulties as the Sierra Leone economy struggles to absorb them, which could lead to more unemployed youth being discouraged to look for work and dropping out of the labor force. However, as Sierra Leone recovers from the economic and social impacts of COVID-19, and with government-led efforts to enable private sector growth and diversification of the economy beyond mining, the creation of resultant jobs could offer respite for the inactive youth. Box 2: The Impact of COVID-19 on Labor Market Outcomes – Insights from CIMS Table B.1 uses data from the first round of the COVID-19 Impact Monitoring Survey (CIMS) collected in June 2020 and shows the distribution of the impact of COVID-19 on agriculture, businesses, and wage- paying jobs across geography and gender. Some of the early findings from the survey are summarized below: • 54 percent of the households whose main income comes from farming reported a decrease in their income, while 2 percent reported it stopping altogether. • 73 percent of those engaged in businesses report reduced income while 3 percent report income stopping altogether since last June. • 38 23 percent World Sierra in of those Bank. 2020. wage Leone paying Economic jobsJune Update, reported a decrease 2020 : The in their Power of Investing income, in Girls. World while 7 percent Bank, Washington, reported DC. © World Bank. https://openknowledge.worldbank.org/handle/10986/34313 the job stopping altogether. License: CC BY 3.0 IGO.� 24 Ibid 28 Urban areas, especially Freetown, have a higher proportion of wage paying individuals who report decreased levels of income. Table B.1: Impact of COVID-19 on income related metric in agriculture, business, and wage-paying job 3. Labor Market Outcomes of Youth Employment in the working-age population Majority of Sierra Leoneans are self-employed in agriculture and in services. 66 percent of the working age population is employed, with considerable differences between urban and rural areas. 83 percent of rural Sierra Leoneans of working age are employed compared to 52 percent in rural areas. Table 3.1 presents a snapshot of employment indicators for the overall working age population in Sierra Leone in 2018 by employment type and sector of employment. 29 Men are significantly more likely than women to be employed in wage paying jobs, while women are relatively more likely to be self-employed in non-farm enterprises. Wage paying jobs are concentrated in urban areas, where 28 percent of the employed working age population engaged in wage jobs compared to 4 percent in rural areas. Self-employment in agriculture is the most prominent form of employment in rural areas where 83 percent of the employed working age population are engaged in farming enterprises, while in urban areas, 58 percent of the employed working age population are self-employed in non-farm enterprises. Sierra Leone’s labor force is still mainly agrarian. 54 percent of the employed working age population are employed in agriculture, followed by services with a minority of 7 percent engaged in manufacturing. In urban areas, 70 percent of the employed working age population are employed in services, while in rural areas, 80 percent of the employed working age population are employed in agriculture. Men are more likely to be employed in manufacturing, while women dominate the services sector Table 3. 1: Majority of Sierra Leoneans are employed in agriculture and services Employment Indicators (%) All Men Women Rural Urban Employment rate 66.3 68.0 64.9 82.6 52.0 Employment Type % of employed Wage, private 9.5 16.8 2.9 3.1 18.4 Wage, public 4.9 7.4 2.7 1.3 9.8 Self-employed, agriculture 53.9 52.2 55.5 82.7 14.2 Self- employed, non-agriculture 31.7 23.6 38.9 12.9 57.5 Sector of Employment % of employed Agriculture 54.7 53.6 55.8 83.5 14.9 Manufacturing 7.9 12.9 3.4 4.1 13.2 Services 37.4 33.5 40.8 12.4 71.9 Household consumption is negatively correlated with employment levels. Those in the working age population from the poorest 20 percent of households are more likely than those from the top 20 percent to be employed and the levels decrease with higher consumption quintiles. The employed working age population from the poorest 20 percent are also significantly more likely to be self-employed in agriculture or non-farm enterprises, compared to the top 20 percent. Those in the top 20 percent of the household income distribution are more likely to be employed in wage-paying jobs in the public and private sector compared to those in the bottom 20 percent. 30 Figure 3. 1: Employment levels decrease and pattern of employment type shifts from self to wage employment in higher consumption quintiles Education is negatively correlated with employment levels, with the highly educated possibly holding out for limited wage sector jobs. Those with a secondary education or more dominate public and private wage paying jobs. Those without any formal education are found to be self- employed, largely in agriculture, with a small minority self-employed in non-farm enterprises. As expected, the agricultural sector absorbs 72 percent of those without any formal schooling, while the service sector absorbs 82 percent of those with secondary education and above (Table 3.2). Compared to the employed working age population where 37 percent are employed in services, 56 percent of the migrant employed working age population are employed in services, suggesting the migration is mostly a rural to urban phenomenon in Sierra Leone. Table 3. 2: Wage paying jobs are concentrated among secondary education graduates while those without formal schooling and concentrated in the agricultural sector Employment Indicators (%) No Formal Schooling Only Primary Secondary Education Education Employment Rate 84 52 46 Employment Type % of employed Wage, private 4 16 25 wage, public 0 11 26 Self-employed, agriculture 71 32 9 31 Self-employed, non-agriculture 25 40 40 Sector of Employment % of employed Agriculture 72 34 10 Manufacturing 6 10 8 Services 21 56 82 General patterns of employment among youth As observed with the overall working age population, the lower rate of employment in urban areas is more pronounced among the youth, at 40 percent compared to the rural areas where 77 percent of the youth are employed. 54 percent of the employed youth are self-employed in agriculture, with the majority of them residing in rural areas. In urban areas, 60 percent of the employed youth are self-employed in non-farm enterprises. Wage paying jobs, both in public and private sector concentrate in urban areas and among male youth. 56 percent of the youth in Sierra Leone are employed compared to 66 percent of the overall working age population, with considerable disparities across rural and urban areas. Table 3.3 summarizes employment indicators across employment type and sector of employment for male, female, rural, and urban youth. While employment levels are relatively similar for males and females, rural youth are more likely to participate in the labor market (77 percent) compared to urban youth (40 percent). 83 percent of rural youth are employed in agriculture whereas 60 percent of urban youth are self-employed in non-farm enterprises. 39 percent of female youth are self-employed outside of agriculture. In terms of sector of employment, male youth are 10 percentage points more likely to be employed in manufacturing whereas female youth are 7 percentage point more likely to be employed in services. Table 3. 3: Youth employment patterns are similar to the working age population with considerably lower employment levels in urban areas Employment Indicators (%) All Men Women Rural Urban Employment rate 56.0 55.0 56.7 77.4 40.4 Employment Type (% of employed) Wage, private 9.8 18.3 3.2 3.3 18.9 Wage, public 3.0 4.7 1.7 0.7 6.3 Self-employed, agriculture 54.3 52.5 55.6 83.0 14.8 Self-employed, non-agriculture 32.9 24.5 39.4 13.1 60.1 Sector of Employment (% of employed) Agriculture 55.0 53.8 56.0 83.7 15.4 Manufacturing 7.8 13.0 3.7 4.4 12.5 32 Services 37.2 33.2 40.3 11.9 72.1 Youth employment is negatively correlated with household consumption, with those in the top 20 percentile of the consumption distribution least likely to be working, possibly because they can afford to do so and spend time in education or at home instead. Those in the poorest 20 percent are significantly more likely to be employed than the youth who come from the better-off households in the consumption distribution. The type of employment also differs by household consumption, with those from the relatively poorer households less likely to be engaged in wage paying jobs. Moreover, 95 percent of the employed youth form the poorest households are self-employed, compared to 70 percent of those from the top 20 percent of the household consumption distribution. (Figure 3.2). Figure 3. 2: Employment levels decline for youth in higher consumption quintile and prevalence of wage employment increases Similar to the working age population, youth employment levels are negatively correlated with educational attainment, presumably as most of the highly educated youth can possibly afford to stay unemployed to look for ideal jobs. Among the employed youth, the most educated dominate wage paying jobs, while those with no formal schooling are largely self-employed in agriculture or non-farm enterprises (Table 3.4). Close of half of the youth migrant population is employed. Migrants are overwhelmingly involved in services irrespective of gender. Male migrants are more likely than females to be working in manufacturing. 33 Table 3. 4: Youth with no formal schooling and overwhelmingly more likely to be employed and employed in agriculture compared to youth with primary or secondary education Employment Indicators (%) No Formal Only Primary Secondary Schooling Education Education Employed 82 44 42 Employment Type % of employed Wage, private 4 15 26 Wage, public 0 6 21 Self-employed, agriculture 72 39 10 Self-employed, non-agriculture 24 41 44 Sector % of employed Agriculture 72 40 11 Manufacturing 6 9 7 Services 21 51 82 The likelihood of youth being self-employed in agriculture is negatively correlated to household income. Among male youth, those in the poorest 20 percent of the households are overwhelmingly more likely to be self-employed in agriculture (83 percent), compared to those in the top 20 percent of the household income distribution, where only 17 percent are self- employed in agriculture (Figure 3.3). Prevalence of self-employment in non-farm enterprises is higher for female youth across the consumption distribution. Youth who are self-employed in agricultural enterprises do not produce value high value commodities. The agricultural businesses primarily center around the production of staple crops such as rice and cassava and vegetables, while only 5 percent of the self-employed young produce cash crops such as cocoa, palm oil and coffee. 34 Figure 3. 3: Prevalence of self-employment in agriculture declines in higher consumption quintiles for male and female youth The likelihood of youth being self-employed in non-farm enterprises is positively correlated to household income. 7 percent of male youth in the poorest 20 percent of households are self- employed in non-farm enterprises, while among those in the top 20 percent, 38 percent of the employed youth are self-employed in non-farm enterprises. Among female youth, this difference is starker – 15 percent of the female youth from the poorest households were self-employed in non-farm enterprises, compared to 65 percent of the employed youth in the top 20 percentile. The non-farm enterprises owned by youth are largely in retail trade with 68 percent of all youth owned firms in retail trade in stalls or markets. Women are more likely to own retail trade enterprises, with 8 out of 10 self-employed women in urban areas self-employed in retail trade. Interestingly, in rural areas, only 28 percent of the men have retail trade businesses, compared to 80 percent of the self-employed women. 77 percent of the youth-owned non-farm businesses are in urban areas. 39 percent of these businesses are in Freetown, followed by urban areas of Western Area Rural, Bombali, Port Loko and Kenema. Enterprises operated by youth are largely informal, especially in rural areas and among female-owned enterprises. 75 percent of the youth owned firms are not registered with any official government entity and 16 percent are registered with the city council or district local council. Women owned firms, both across rural and urban areas are less likely to be registered, while women in urban areas are more likely to be registered than those in rural areas. Male- owned enterprises are more likely to be registered in both urban and rural areas. 35 77 percent of the non-farm enterprises owned by youth were single-person enterprises while 95 percent of the enterprises had no paid employee apart from family members from their households. 94 percent of youth owned enterprises had no apprentices working in the business in the last month. Youth and female owned firms are more likely to have smaller revenues, compared to those run by self-employed males in the adult working-age population (Figure 3.4) Figure 3. 4: Youth and female-owned enterprises have lower revenues The self-employed youth largely source initial capital for their enterprises through informal sources of finance. 82 percent source initial capital from personal or household savings. Only 4.5 percent of youth owned enterprises source their seed capital from formal sources such as microfinance institutions, commercial banks or financial service associations. Interestingly, the lack of use of formal finances is uniformly experienced by men and women, across rural and urban areas. Majority of the youth who hold wage employment are employed by private farm enterprises or cooperatives, followed by the national government. 28 percent of the wage employed youth work as regular employees for the national government. In urban and rural areas, the national and local governments are significant employers of female youth who are employed in wage- paying jobs. 70 percent of youth employed in wage-paying jobs report having signed a written contract for their jobs, and 50 percent pay into NASSIT or any private pension fund. Only 39 percent report having access to paid sick leave and 27 percent work in wage-paying jobs that provide health insurance. 36 Youth Unemployment While Sierra Leone typically has low levels of unemployment, its youth unemployment levels have been rising and are predominantly an urban phenomenon. Within urban areas, the youth with relatively high levels of education and from relatively richer households in the income distribution are more likely to be unemployed. Youth unemployment has the potential to be a key source of political and social fragility in an economy where job creation is not keeping face with population growth. Similar to other low-income countries, Sierra Leone exhibits low levels of youth unemployment rate, but there is variation across rural and urban areas. The overall youth unemployment rate is 4 percent, rising up to 10 percent for urban male youth and 6 percent for urban female youth. Unemployment rates for youth in rural areas are below 1 percent, perhaps alluding to the fact that youths in rural areas are poorer and cannot afford to stay unemployed. Figure 3. 5: Youth unemployment rates in Sierra Leone are much higher in urban areas Within urban areas, the youth with relatively high levels of education and from relatively better-off households in the income distribution are more likely to be unemployed. Urban youth who have completed secondary education experience the highest rate of unemployment (13 percent). Similarly, 8 percent of youth from the top 20 percentile of the household consumption distribution are unemployed compared to 1.6 percent in the bottom 20 percentile. 37 The unemployed youth largely rely on informal networks to look for jobs. 43 percent of the unemployed youth reported seeking assistance from family and friends to look for jobs. Only 3 percent report registering with a public or private employment service provider to look for jobs. Youth Underemployment On average, 40 percent of employed workers work fewer than 35 hours per week in low- and middle-income countries while a third of the working population work more than 45 hours, indicating low productivity25. Underemployment, where people work fewer than regular number of hours and desire to work more, has been documented to be a pressing challenge among youth in low- and middle-income countries. Similar to unemployment rate, underemployment rates in Sierra Leone are higher in urban areas and concentrated among the more educated, better-off and those employed in wage paying jobs or self-employed in non-farm enterprises. Overall 11 percent of youth in Sierra Leone are underemployed. In urban areas, 16 percent of youth are underemployed. This rises to 19 percent for youth in Freetown. Similar to the pattern observed for unemployment rates, underemployment rate is much higher among educated youth. 23 percent of youth who have completed secondary education are underemployed compared to 11 percent of youth with no formal schooling. Across the household consumption distribution, 18 percent of youth in the top 20 percentile are underemployed compared to 10 percent in the bottom 20 percentile. Across sectors, the prevalence of underemployment is high in wage-paying jobs and in self-employment in non-farm enterprises, even though the average weekly hours worked by youth in Sierra Leone is the lowest in agriculture (39 hours) compared to manufacturing (50 hours) or services (47 hours). This suggests that youth employed in agriculture do not wish to work more hours than they already do. Underemployed youth identify lack of opportunities and financial resources as primary constraints to finding more work. Within the urban youth, 1 in 4 female youth with a secondary education report being under- employed. In rural areas, while the incidence of underemployment is relatively lower than urban areas, 1 in 5 male youth with a secondary education report underemployment. This specific high incidence of underemployment among those relatively better skilled indicates a gap in the utilization of skilled labor, even when employed, in the Sierra Leonean labor market. Table 3. 5: Underemployment rates are higher across better educated groups of youth in urban areas Geography Group No Formal Only Primary Only Secondary Schooling Education Education All Age 15-64 11 14 21 25“Merotto, Dino; Weber, Michael; Aterido, Reyes. 2018. Pathways to Better Jobs in IDA Countries : Findings from Jobs Diagnostics. Jobs Series; No. 14. World Bank, Washington, DC. © World Bank. https://openknowledge.worldbank.org/handle/10986/30594 License: CC BY 3.0 IGO.� 38 All Age 15-35 11 12 21 Urban Youth 14 15 23 Female Youth 15 16 24 Male Youth 13 15 21 Rural Youth 11 8 14 Female Youth 10 7 0 Male Youth 13 8 20 Youth Not in Education, Employment or Training Compared to relatively low unemployment and underemployment levels, Sierra Leone has a high prevalence of youth who are Not in Employment, Education or Training (NEET), with urban female youth facing the highest NEET rates. Overall 18 percent of Sierra Leonean youth are NEET. The incidence of NEET is generally high among urban youth and particularly high among female urban youth and youth in Freetown, where the NEET rate rises to 27 percent. Figure 3. 6: NEET rates are much higher for youth in urban areas Nearly one-fourth of youths with a secondary education and above are NEET, compared to 15 percent without a formal education. However, this pattern is different in urban areas where 29 percent of youth without formal schooling are NEET compared to 27 percent of those with secondary education or above. In contrast to unemployment and underemployment rates, the correlation between household consumption and NEET rates are not strong, with male youth facing high NEET rates in the bottom quintile whereas female youth facing higher rates in the top quintile of the consumption distribution (Figure 3.7). 39 Figure 3. 7: In contrast to unemployment and underemployment, high NEET rates are prevalent in youth across the consumption distribution Women are disproportionately more likely to be NEET irrespective of geographical location or education levels due to domestic responsibilities and lack of financial resources to start their own business. Women account for 58 percent of NEET youth in urban areas and 68 percent of NEET youth in rural areas. For female youth, staying out of the labor market and the educational system can be closely linked with domestic and childbearing responsibilities. 41 percent of rural female youth and 33 percent of urban female youth cite domestic responsibilities and taking care of children as a reason for not engaging with the labor market. Across rural and urban areas, 38 percent of NEET women have been pregnant or given birth in the last 12 months, compared to 28 percent of women who are active in the labor force. Similarly, another constraint identified by women for staying out of the labor force is lack of financial resources to start a business. 30 percent of urban female youth who are NEET point to lack of access to finance as the biggest obstacle to participating in the labor market. For rural male youth, lack of financial resources and disability are key issues for being NEET – 8.2 percent of the rural male youth who are NEET identify as being PWD compared to 3.5 percent of the rural male youth who are employed, or 4.1 percent of the urban male youth who are NEET. 40 4. Demand-side constraints to advancing youth employment Lack of diversification Sierra Leone’s growth episodes have not been accompanied by an increase in diversification or an expansion of employment opportunities. 86 percent of the growth in real GDP per capita in Sierra Leone between 2003 and 2014 came from an increase in labor productivity and these gains were concentrated in the industry sector, driven by sharp increases in commodity prices between 2011 and 2014. At the same time, labor productivity in agriculture just improved by 1.4 percentage points every year and remained stagnant in services. Post conflict in 2002 and up until 2008, 70 percent of the economic growth in Sierra Leone was driven by growth in agricultural activities. Starting in 2009, there was a spell of growth driven by growth in industrial activities, where until 2014, 78 percent of economic growth came from industry. Most of this growth came from the mining industry, in particular from iron ore, which made up majority of Sierra Leone’s exports, and made the country vulnerable to global commodity prices.26 As of 2018, even with the eventual phasing out of iron ore as global prices fell, 42 percent of Sierra Leone’s exports are still comprised of titanium, aluminum, iron and zirconium ores (Figure 4.1). Figure 4. 1: 42 percent of Sierra Leone's exports are concentrated in metal ores The volatility in Sierra Leone’s economy suppressed job creation through limited investment. The high levels of economic volatility contributed to a lack of consistent investment to promote sustainable structural transformation. The gross fixed capital formation was generally low 26Gonzalez, Alvaro S.; Michel Gutierrez, Veronica. 2017. Sierra Leone : Jobs Diagnostic. Job series,no.11;; Jobs Series; No. 11. World Bank, Washington, DC. © World Bank. https://openknowledge.worldbank.org/handle/10986/29028 License: CC BY 3.0 IGO. 41 compared to regional peers, momentarily showing increases during the 2011 to 2014 period when iron ore prices were high but plummeting after that (Figure 4.2). Figure 4. 2: Gross fixed capital formation in Sierra Leone rose in 2011-2014 but collapsed following drop in iron ore prices Difficult Business Environment Sierra Leone has a difficult business environment, owing both to the consistent economic volatility and institutional deficits. The high level of volatility in the economy makes investing in businesses in Sierra Leone riskier. Given that investing in sustainable businesses requires the investment in both capital and labor, which only yield consistent returns over time, investing in an environment where the economy has been recovering from the damages of frequent economic setbacks is uncertain. Institutionally, Sierra Leone’s business environment shows deficiencies that hinder the country’s ability to generate productive jobs at scale. In 2020, the Doing Business report ranked Sierra Leone 163rd out of 190 countries on the Ease of Doing Business indicators, further sliding from its ranking of 147 out of 190 countries in 2016.27 In 2018, the country implemented reforms to combine multiple registration procedures that made starting a formal business faster. However, it is harder to set up businesses which operate at scale – given the difficulty in getting constant electricity, dealing with construction permits, getting credit, enforcing contracts and resolving insolvency issues. For example, getting 27World Bank Group. 2020. Doing Business – Economy Profile: Sierra Leone. World Bank, Washington, DC. © World Bank. Retrieved from: https://www.doingbusiness.org/content/dam/doingBusiness/country/s/sierra-leone/SLE.pdf 42 electricity for a business costs 5057.2 percent of income per capita, compared to the rest of Sub- Saharan Africa where it costs 3187.5 percent of income per capita on average.28 The Sierra Leonean economy is primarily composed of small firms that do not grow over time. 91 percent of firms in 2016 were micro-sized, with less than 10 employees.29 The proportion of firms that had operated between 10 and 19 increased from 8.2 percent in 2005 to 26 percent in 2016. However, firms continue to stay small as they age and even the high revenue firms do not create enough jobs. In 2016, the top 1 percentile of firms comprised of 74.4 percent of all sales and employed only 15.3 percent of the workforce. Firms are relatively less productive in Sierra Leone compared to other countries in the region. Productivity, defined as output per worker, is the highest for the oldest and the largest firms and with little observed differences in productivity between micro, small and medium firms. Manufacturing has the lowest output per worker at a sectoral level. The World Bank Economic Diversification report30 identified that firms in Sierra Leone were constrained by within-firm determinants of productivity compared to benchmark countries, that have similar environments but fare better in terms of firm productivity. These involve the difficulty of firms growing over time, the low usage of technology, and poor performance on management quality indicators. Access to finance, access to land and electricity, incidence of high tax rates, and corruption were described as the biggest obstacles faced by formal firms, according to the World Bank Enterprise Surveys. Access to finance is listed as a larger obstacle among small firms with 5-19 employees compared to large firms, among domestically funded firms compared to those with foreign funding and experienced at a greater intensity by firms in manufacturing compared to services. Corruption and access to electricity is disproportionally reported as an obstacle by large firms and those that are 10 percent or more foreign owned. Firms that generate revenues in the top 20 percent of the revenue distribution among non- farm enterprises, are more likely to have paid employees outside the household. However informal firms have a significantly lower proportion of firms in the top 20 percent of the revenue distribution that have paid employees outside the household, compared to formal non-farm enterprises. According to SLIHS 2018, 98 percent of informal non-farm enterprises were either single person or entirely run by household members, with no workers outside the household. 77 percent of informal non-farm enterprises were in small retail trades. Poor Access to Credit Access to credit is a critical challenge for firms looking to expand their operations and for prospective entrepreneurs. At a macro level, credit provided to the formal private sector is low 28 Ibid 29 Gonzalez, Alvaro S.; Michel Gutierrez, Veronica. 2017. Sierra Leone : Jobs Diagnostic. Job series,no.11;; Jobs Series; No. 11. World Bank, Washington, DC. © World Bank. https://openknowledge.worldbank.org/handle/10986/29028 License: CC BY 3.0 IGO. 30 Kiendrebeogo, Youssouf; Mansaray, Kemoh. 2019. Sierra Leone Economic Diversification Study. P162720. World Bank, Washington, DC. © World Bank. 43 compared to Sierra Leone’s peers. In 2019, domestic credit to the private sector stood at 6.4 percent of GDP, which was significantly lower than the Sub-Saharan African average of 45.2 percent of GDP, excluding high income countries. The levels of domestic credit in Sierra Leone have been consistently low over time, even during high growth episodes and is similar to its low- income neighbors, Liberia and Guinea. In the 2020 World Bank Doing Business Indicators, Sierra Leone was ranked 165 out of 190 countries in terms of access to credit.31 Two-thirds of the loan and investment portfolios of commercial banks are with the government, which has large borrowing needs, disincentivising banks from lending to small and medium businesses.32 The government crowds out lending to the private sector. Figure 4. 3: Sierra Leone's share of domestic credit to GDP is lower than most regional peers Low access to credit also stems from limited channels for formal financing. There are 2.7 bank branches and 0.36 ATMs per 100,000 adults in Sierra Leone, which is lower than regional peers Liberia, Guinea and Ghana33. In order to access credit from formal channels, individuals and firms need to be first integrated into the formal financial ecosystem, whether through bank accounts or mobile money accounts. In 2017, 20 percent of those above the age of 15 had an account in a financial institution or with a mobile-money service provider. This is not only significantly lower than the average in Sub Saharan Africa (excluding high income countries) but also lower than regional peers Libera and Guinea (Table 4.1). 31 World Bank Group. 2020. Doing Business – Economy Profile: Sierra Leone. World Bank, Washington, DC. © World Bank. Retrieved from : https://www.doingbusiness.org/content/dam/doingBusiness/country/s/sierra-leone/SLE.pdf 32 International Monetary Fund African Department. July 2019. Article IV. Sierra Leone: First Review Under the Extended Credit Facility Arrangement, Request for Waiver for Nonobservance of Performance Criterion, and Financing Assurances Review-Press Release; Staff Report; and Statement by the Executive Director for Sierra Leone. Country Report 19/217. International Monetary Fund. Washington DC 33 World Bank Data 44 Table 4. 1: Account ownership in formal financial institutions or mobile money providers is much lower in Sierra Leone compared to regional peers Country /Region Account Ownership (% of Population) Sierra Leone 20 Ghana 58 Nigeria 40 Liberia 36 Guinea 23 SSA (Excluding High Income) 43 The access to formal financial services also differs based on gender, income and education levels. Men are 10 percentage points more likely to have a formal bank account compared to women, while those in the richest 60 percent of the population are twice as likely as those in the poorest 40 percent to have a bank or mobile money account. People with secondary education are the most likely to have a formal financial account, while only 12 percent of those with a primary education or less have any account at a financial institution (Table 4.2). Table 4. 2: Account ownership is lower among females, poor, and those with low levels of education Sub-group Account ownership at financial institution (% of sub-group population) 15 years and above 20 15-24 population 19 Female 15 Male 25 Richest 60% 25 Poorest 40 % 13 Primary Education or less 13 Secondary Education and more 44 Self-employed individuals, including youth, largely rely on informal financing sources for loans. 55 percent of the loans taken by those self-employed in agriculture or non-farm enterprises are taken from family, friends and relatives, followed by 20 percent of the loans coming from traders. 11 percent of the loans are used for agricultural inputs and equipment, while 18 percent are used for business expansion. The youth taking loans were more likely to be self-employed in non-farm enterprises, compared to the adult working age population, and less likely to be self-employed in agriculture. 45 5. Supply-side constraints to advancing youth employment Unequal access to tertiary and vocational education The youth and the working age population have low levels of secondary education in the country. Only 12 percent of the youth have completed secondary education or more. Only 6 percent of those with a secondary education have a bachelor’s degree or higher. Men are more likely than women to be enrolled in tertiary institutions, with the male enrollment in 2011/2012 roughly double of the female enrollment. Similarly, only 1.4 percent of those with a secondary education undergo vocational training. In 2008, when the last survey of was conducted, there were 370 Technical and Vocational Education and Training (TVET) institutions registered with the Ministry of Education (MOE) with a total enrolment of 27,055 students.34 The infrastructure for tertiary education is yet to be fully developed beyond Freetown and a few urban centers. There are eight public tertiary institutions in Sierra Leone, comprising universities, polytechnics and teachers’ colleges, with the two universities with campuses in Freetown, Moyamba and Bo. Apart from the public institutions, the Tertiary Education Commission had 23 private colleges or technical institutes registered in 2012, all of which were in the Western Area Urban, with 3 associated campuses spread across the North, South and East regions.35 Vocational training institutions offer valuable avenues of upskilling poorly educated workers but are only easily accessible in the Western region and in urban areas. 52 percent of the TVET institutions were in Freetown (Western Area) and the rest in urban areas of Kenema, Bombali, Bo and Port Loko (Table 5.236). Unlike tertiary institutions where men are more likely to enroll compared to women, vocational institutions enroll more women. 42 percent of all TVET institutions are privately funded, 18 percent are funded by faith-based organizations, and only 8 percent are funded and operated by the government. Table 5. 1: TVET institutions are concentrated in urban centers and Freetown Region District Institutions % of Institutions East Kenema 15 12% North Bombali 5 4% North Port Loko 3 2% South Bo 37 29% Western Area Western Area Urban and Rural 66 52% 34 Sierra Leone Ministry of Education ,Science and Technology. April 2015. Situational Analysis Study of Technical Vocational Education and Training(TVET) in Sierra Leone. Islamic Development Bank. Retrieved from: https://nctva.org/wp- content/uploads/2018/09/TVET_Situation_Analysis_Report_Draft1_2015_IDB.pdf 35 Sierra Leone Ministry of Education, Science and Technology. 2017. Education Plan 2018-2020. Freetown. Government of Sierra Leone. Retrieved from: https://www.globalpartnership.org/sites/default/files/2018-10-sierra-leone-esp.pdf 36 Ibid 46 Source: Derived from – Situation Analysis Study of Technical Vocational Education and Training (TVET) in Sierra Leone Poor quality of TVET infrastructure The TVET system in Sierra Leone is poorly funded, with only 3 percent of the education budget allocated to the TVET sector in 2019, which is mostly utilized for paying salaries of trainers. There are poor linkages between the labor market and training institutions, with outdated training and equipment and poor quality of training. The TVET sector in general suffers from poor reputation and as a channel adopted by those who are unable to qualify for higher education in universities and technical institutes. However, with a majority youth population, increasing enrolment of children in primary schools, high political and administrative will to strengthen the TVET system, and a supportive coalition of partners through the TVET Coalition Sierra Leone, there is potential for an overhaul of the TVET sector. As a consequence of poor quality of technical education, there are critical mismatches between the skills workers have and the skills that firms in the country demand. In a 2012 skills gap analysis conducted by the African Development Bank of representative formal firms in agriculture, mining and tourism sectors, severe skill gaps were found across sectors in the managerial, professional and worker levels (Figure 5.2). Among agricultural firms, 61 percent found it difficult to fill vacancies due to the lack of skilled labor. 70 percent of mining firms were unable to fill vacancies of skilled labor and would have preferred to hire skilled foreign labor. The skills gap is widening over time as the country has since diversified more into services.37 Figure 5. 1: Skills gaps are reported by formal firms across the sectors of agriculture, tourism, and mining, and across all worker levels Sector Level Skill Gaps ( AfDB 2012) 60% 44% 40% 34% 38% 37% 40% 32% 29% 30% 34% 28% 24% 24% 20% 0% Agriculture Mining Tourism Total Manager Professional Workers Source: Data from Skills Gap Analysis 2012, African Development Bank Exclusion of marginalized groups While women are as likely to be part of the labor force as men in Sierra Leone, they face systematic discrimination in the labor market. In the World Bank report, “Women, Business and 37Mannah, Emanuel. Gibril, Yvonne. November 2012. A Skill Gap Analysis For Private Sector Development in Sierra Leone . African Development Bank. Retrieved from : https://nctva.org/wp- content/uploads/2018/09/Skills_Gap_Analysis_2012_AfDB.pdf 47 the Law�, Sierra leone scored 63.1 points, scoring below the global and regional average for Sub - Saharan Africa (69.9) and outperformed by all West African economies, with the exception of Mali and Niger. Women are legally restricted from industries such as mining, construction, manufacturing and transportation, under section 48 of the Employers and Employed Act. In terms of access to workplaces, removing such restrictions could improve the labor market opportunities available to women and improve growth prospects.38 As female youth continue to get educated and participate in the labor force, it is critical to examine the costs of gender discrimination and gender-based violence and how it curtails the labor market opportunities available to women. Similarly, youth who are PWDs struggle to integrate in the labor market. While the PWD youth have similar levels of employment compared to overall population, they are more likely to be NEET. 30 percent of youth with disability are NEET, which is significantly higher than the non- disabled youth (Figure 5.2). PWD youth are also less likely to have attended primary or secondary education compared youth who are not PWDs. Enabling channels of productive education and employment of youth with PWDs can be a critical way of improving their contribution in the labor market. Figure 5. 2: Close to 30 percent of PWD youth are not in employment or training The psychosocial challenges experienced by youth can also constrain productive engagement with the labor market. Persistent issues of anxiety, depression and anti-social behaviors can influence how sustainably and fruitfully the youth engage with the labor market and make it difficult for afflicted youth to complete skill related programming. An impact evaluation study of a psychosocial intervention for employed youth in Sierra Leone found that there was a severe need of increased levels of support and psychosocial interventions targeting vulnerable youth. 38World Bank. 2020. Women, Business and the Law 2020. Women, Business and the Law. Washington, DC: World Bank. doi:10.1596/978-1-4648-1532-4. License: Creative Commons Attribution CC BY 3.0 IGO 48 The provision of mental health services has the potential of improving the prospects of troubled youth – a randomized control trial testing the effectiveness of a 10 session cognitive behavioral therapy based group mental health intervention for multisymptomatic war-affected youth found significant positive impacts on emotion regulation, prosocial attitudes, social support, reduced functional impairment, and significant follow-up effects on school enrollment, school attendance, and classroom behavior.39 39Betancourt, T.S., McBain, Newnham,E, J. et al. A behavioural intervention for war-affected youth in Sierra Leone: a randomized controlled trial. J Am Acad Child Adolescent Psychiatry. 2014 Dec;53(12):1288-97. doi: 10.1016/j.jaac.2014.09.011. 2014 Oct 2. 49 6. Opportunities in Sierra Leone’s Labor Market Government Priorities The Government of Sierra Leone’s Medium-Term National Development Plan40 (NDP) (2019- 23) recognizes the importance of empowering new drivers of growth in the economy through diversification and reducing the country’s dependence on subsistence agriculture and mining. If implemented, the priorities highlighted in the NDP has the potential to generate sustainable jobs for the youth in the country. Among prioritized areas for propelling economic growth and creating jobs are: (i) improving agricultural productivity by encouraging commercial farming and upgrading agricultural value chains; (ii) modernizing fisheries production by introducing new technology; (ii) upskilling in the tourism and hospitality sector to increase the contribution of services to GDP from 36 to 45 percent; (iv) upgrading industrial production outside the mining sector by creating special economic and export processing zones; and (v) investing in renewable energy to harness abundant hydropower, solar, and wind energy from within the country. These areas identified by the government are also designed to propel the economy of Sierra Leone towards a path of structural transformation with shift from low-value subsistence agriculture to high value manufacturing and services. • Improving agriculture productivity: The NDP focuses on the importance of improving productivity and commercialization of the agriculture sector and identifies the strategic objective of moving up value chain to industrial agricultural activities, by improving competitiveness of the agriculture sector and capturing the value chain of key crops. It identifies targeting the value chain for at least two agricultural products by 2023. • Upgrading fisheries production: The NDP recognizes the importance of the fisheries sector in Sierra Leone, which contributes to 12 percent of the GDP and employs 500,000 people directly and indirectly. While the country’s fisheries production is below the level of Nigeria and Ghana, it has consistently produced more compared to neighboring Guinea and Liberia. • Upskilling in tourism and hospitality: The NDP sets the target of increasing the contribution of services to GDP from 36 percent to 45 percent by 2023. The tourism sector grew by 28.6 percent annually between 2003 and 2013, followed by an abrupt halt in 2014, and a quick rebound after the country was declared Ebola free in 2016 with a 300 percent rise in international travelers. Post COVID-19, the country’s tourism revenues have fallen again critically. While the government objectives to support local entrepreneurs to promote tourism-based activities that link with the rural economy provide a critical road for employing more of the youth sustainably in the medium-term, a prolonged COVID-19 40Government of Sierra Leone. 2019, “ Sierra Leone’s Medium Term- National Development Plan 2019-2023, Volume 1�, IMF Country Report 19/218, International Monetary Fund, Washington DC. Retrieved from: https://www.imf.org/en/Publications/CR/Issues/2019/07/09/Sierra-Leone-Economic-Development-Documents-National- Development-Plan-2019-23-47099 50 crisis globally may force the government to think of interim measures to support youth employed in the tourism and hospitality sectors. • Upgrading industry production: The NDP aims to increase the contribution of manufacturing to GDP to 5 percent by 2023 and identifies the creation of special economic zones and export processing zones. While Sierra Leone was found to have fewer opportunities for diversification in the recent Economic Diversification Report (2019)41, the report identified several key industries as having the potential to be upgraded. • Investing in renewable energy: The NDP highlights increasing the country’s capacity for renewable energy to 65 percent by 2023 as a key target and increasing investment in low- cost renewable energy production and distribution as a key policy action. A 2016 study by the International Renewable Energy Agency (IRENA) found that the utilization of renewable energy technology has a higher labor intensity, creating more jobs per energy unit compared to coal and natural gas – with clean energy sector creating 16.7 jobs per US$ 1 million compared to 5.3 jobs per Million in coal and natural gas. Solar energy is also identified as providing the greatest job engagement employing 3.09 million people globally, providing an average 0.87 job-years per GWh generated, compared to biomass which provides 0.21 job-years and wind energy which provides 0.17 job-years per GWh42. A 2014 report43 from the Ministry of Youth Affairs titled “A Blueprint for Youth Development� identifies several constraints to providing better livelihood options for youth in the country. These constraints include: • Teenage pregnancies, gender based violence (GBV) and barriers to land ownership for rural females; • Insecure mining work and being trapped in subsistence agriculture for rural males; • Lack of access to capital, few opportunities for skills training, and lack of access to markets for all rural youth; • Low access to capital, lack of experience, lack of management and business skills, and corruption for urban and educated youth; and • Poor financial literacy and lack of opportunities for urban and uneducated youth. Agriculture and fisheries sectors are earmarked with the potential for generating most sustainable jobs for youth in the near term, but the blueprint mentions that this requires significant policy reform, political will, and practical action. Leveraging digital technologies 41 World Bank, 2020. Sierra Leone, Economic Diversification Study: http://documents1.worldbank.org/curated/pt/354291578288053592/pdf/Sierra-Leone-Economic-Diversification-Study.pdf 42 Ochs, A, Gioutsos, D (2017). “The Employment Effects of Renewable Energy Development Assistance�. International Renewable Energy Agency, European Union. Retrieved from: https://www.researchgate.net/publication/321398329_The_Employment_Effects_of_Renewable_Energy_Development_Assist ance 43 Sierra Leone, Ministry of Youth Affairs (2014): A Blueprint for Youth Development 51 Besides the objectives identified in the NDP, the growth in access to digital technologies, especially mobile phones, presents an opportunity to leverage digital platforms to provide active labor market support to youth in the country. In 2019, Sierra Leone had 86 mobile subscriptions per 100 people, at par with the regional power-house Nigeria (88 subscribers per 100 people). This increasing digital footprint of the youth in Sierra Leone can have key positive externalities for the youth and their employment prospects. It can help the self-employed in rural and urban areas tap into a growing online marketplace, and the unemployed access better information about job and skills training opportunities. In September 2020, Facebook had 817900 users from Sierra Leone, comprising 10 percent of the population and 67 percent of these users were between the ages of 18 and 34. 40 percent of the users were women.44 Platforms such as WhatsApp are increasingly used in urban areas, with users in Sierra Leone doubling since 2017, in line with the increased take-up of the messaging platform in Africa45. Another area where digital technology can play a critical role is in expanding Digital Financial Services (DFS). DFS through increasing mobile phone subscriptions can be seen as a way to extend financial services to Sierra Leoneans that do not have access to formal financial services. In Sierra Leone, more than 85% of the population is considered “unbanked�.46 Access and utilization of DFS has the potential to help youth start businesses and increase their savings and investments. Integrating digital financial services into the provision of social protection and employment services will be key in reaching scale and generating impact. 7. Review of Current Youth Employment Programs The Government of Sierra Leone increasingly acknowledges that providing and improving jobs for youth is central to the country's economic development. The 2013-2018 Poverty Reduction Strategy Paper (PRSP) and the 2019-2023 Sierra Leone Medium Term National Development Plan (MTNDP) both highlight the “marginalization and exclusion of Sierra Leone’s burgeoning youth population from fully participating in the economy of the state� under the 44 NapoleanCat.com. Social Media users in Sierra Leone. Retrieved from: https://napoleoncat.com/stats/social-media-users-in- sierra_leone 45 Dahir, Abdi. February 2018. WhatsApp is the Most Popular Messaging App in Africa. Quartz Africa. Retrieved from : https://qz.com/africa/1206935/whatsapp-is-the-most-popular-messaging-app-in-africa/ 46 International Growth Center (IGC): You can pay me through my cell phone: Mobile money in Sierra Leone. Available at: https://www.theigc.org/blog/you-can-pay-me-through-my-cell-phone-mobile-money-in-sierra-leone/ 52 policy cluster on diversifying the economy and promoting economic growth. Aligned with the challenges facing the youth in Sierra Leone, the National Youth Policy identifies 15 intervention areas including, decent youth employment, agriculture, education and skills training and entrepreneurship development with implementation through various actors and sectors 47. In general, youth policies are enacted through various sectors and cut across different policy fields for which effective coordination amongst various governmental and non-governmental stakeholders is pertinent. National youth affairs are mainly handled by the Ministry of Youth Affairs (MOYA) and the National Youth Commission (NAYCOM). The objectives of MOYA are to “provide appropriate policies and programs that will empower young people and create employment opportunities�. The National Youth Commission is the implementing entity to MOYA and is responsible for implementing programs aligned with the youth policy. The commission develops multi-year strategies aligned with the national development plan, for implementation. The most recent, NAYCOM Strategic Plan 2019-2023, outlines key gaps in the youth environment such as low investment in TVET and inadequate training for the job market. With the objective of taking stock of the current youth employment, productive inclusion, and social innovation programs in the country, and to highlight emerging lessons and gaps to inform future youth programming, a review of 24 government and donor funded youth employment programs was conducted – drawing on desk research, review of online resources and accessible project documents and evaluation reports. A mapping template was also provided to the National Youth Commission (NAYCOM) to complete with information of the various youth programs implemented by the Commission. Annex 2 catalogues the 24 programs and provides information on implementing agency, project duration, coverage, funding amount, and funding sources. Key Findings • Geographically, Western Area Urban (WAU) and Western Area Rural (WAR) had the highest concentration of programs implemented in the five years reviewed, followed by Koinadugu, Kono, Kenema and Bombali (10 each). WAU also has the largest proportion (17.61%) of the youth population in the country. Given that youth unemployment is more prevalent in urban areas and 38 percent of the urban youth reside in WAU, this points to evidence that programs target districts with higher youth unemployment. The lowest amount of interventions were found in Falaba and Karene which are relatively newly established districts. 47 Sierra Leone National Youth Policy, 2012 53 Figure 7. 1: Most of the current programs supporting youth employment are focused in the Western Areas • Considering that an intervention can have multiple areas of focus, 16 out of the 24 programs focused on supply-side driven activities and provided skills development and labor market training to beneficiaries. This included apprenticeship schemes in the formal and informal sectors, internship schemes, Technical and Vocational Education and Training, core employability skills and other life skills training. Eleven programs focused on demand side issues supporting businesses through subsidies, tax cuts, and incubation. Thirteen out of the 24 programs supporting youth employment provided integrated package of services to youth, combining training and grants to promote self-employment addressing both demand and supply. • The mapping shows that only 5 of the interventions specifically targeted vulnerable youth groups including women or PWDs. These groups are some of the most vulnerable to unemployment and underemployment. Most of the programs in the mapping target both males and females and there was limited information on the proportion of beneficiaries that were female. For programs with this information (12), aside from the four programs that specifically targeted women, the proportion of female participants ranged from 20 to 60 percent. Only 2 of the programs described a focus on youths who were PWDs, and information on proportion of beneficiaries with disabilities was lacking. • Some of the programs identified in this mapping exercise implemented activities that included collaboration with the private sector such as the Graduate Internship Program, and the Youth Skills Development along the Bandajuma-Liberia Border in attempts to strengthen the links with employer needs and match sector requirements for recruiting young people. 54 • Government, multilateral organizations, and donor country agencies are the major financiers of the youth employment interventions included in this mapping exercise. From the available information the total amount of funding received from donor partners was US$103.4 million. Limited information was available on government share of the funding. • 22 out of 24 programs reported the number of targeted beneficiaries or actual beneficiaries. The programs were expected to directly reach a total of 214,162 youth beneficiaries. Programs exclusively funded by donor partners reached a total of 110,967 beneficiaries (52 percent of total beneficiaries reached), whilst 103,195 direct beneficiaries were reached by programs that had a share of government funding. Key Gaps • Majority of the programs were implemented in Western Area (13 out of 24) followed by Koinadugu, Kono, Kenema and Bombali. Preceding analysis shows that while urban areas tend to have higher unemployment and underemployment, the rural areas still suffer from low quality jobs and high NEET rates, particularly among male youth. Expanding the focus of youth employment programs to cover these areas and sub-groups of the population is a gap that future programs can fill. • The mapping shows that only 5 of the interventions specifically targeted vulnerable youth groups including women or PWDs. These groups suffer from high unemployment and NEET rates. Future programs should consider explicitly including interventions that target more vulnerable segment of the population. • Only five programs explicitly provided grants or credits to expand access to finance. Analysis in the last section showed that youth rank access to finance as a critical constraint to productively contributing in the labor market. This is especially true for female youth who are more likely to engage in non-farm employment in the service sector. While investing in education and training is equally important, there is often a mismatch between skills/education (supply) of youth and the labor market needs (demand). • Private sector participation in terms of placements or internships were markedly absent from majority of the programs. This constrains efforts in strengthening demand-led skills development interventions, hence limiting opportunities for youth to be absorbed in the private sector after completing training or education. • Only six out of the 24 programs reached more than 10,000 youth, suggesting considerable room for expansion among programs that are successful. Part of this is due to the limited number of programs (2 out of 24) that collected data on the impact of the program. Without rigorous data to measure the impact of programs on youth labor market outcomes, programs are likely to remain small in scale. 55 • The total funding of the programs was $103m of which only $1.3m was from Government, which raises the issue of fiscal sustainability of youth programs. The largest programs based on funding amount and beneficiaries reached, were funded by donor partners indicating that funding for youth programming is heavily dependent on external donors. • Many programs included planned activities that were not completed. Several reasons were highlighted, including the constrained coordination capacity of NAYCOM and policy incoherence in promoting and implementing youth interventions. For youth policies to be enacted and translated into impactful programs, a coordinated, mainstream approach is essential. Therefore, there needs to be further efforts to develop a system that enables coordination and drives synergy in youth interventions. 56 8. Areas for Policy Considerations Taking stock of the labor market indicators for youth, three key considerations emerge that future programs should consider in advancing the youth employment agenda in Sierra Leone. First, youth are constrained by both demand side challenges such as lack of access to finance as well as supply side challenges such as lack of access to quality vocational training. Following global evidence, interventions that combine training and access to finance or credit are likely to have the most success in improving employment outcomes for youth. Second, it is clear that along many dimensions rural and urban youth suffer from different set of constraints. Rural youth are mostly employed in low-productivity subsistence agriculture where job quality seems to be the most binding constraint whereas urban youth are more likely to be unemployed, underemployed or NEET where job access seems to be the binding constraint. Tailoring programs and interventions that improve job quality in rural and access in urban areas is likely to improve labor market indicators for youth in those respective settings. Third, it is clear that marginalized groups such as women and PWDs suffer worse labor market outcomes that precludes them from productively contributing to the economy. Making programmatic adjustments for those marginalized groups can help youth to productively contribute to their society. Figure 10.1 visualizes these constraints through a schematic and provides a guiding framework for policy considerations. Figure 8. 1: Three sets of constraints facing youth in Sierra Leone 57 Despite successes of some of the past programs, Sierra Leone needs a much more comprehensive jobs related strategy that takes into account the need of its diverse groups to productively employ its growing and young population. Even before the COVID-19 pandemic, Sierra Leone needed to create around 70,000 jobs every year to maintain current employment rates at the level of population growth it is experiencing. With COVID-19 further suppressing domestic demand and worsening business conditions, Sierra Leone needs to invest in programs that directly addresses the constraints faced by different sub-group of youth. Table 9.1 outlines a comprehensive support strategy to advance the youth employment agenda in the country, linking the labor market constraint to the segment of the youth based on geography skills, and income profile; and offering both broader and specific category of support to alleviate the constraint as well as providing examples of existing programs (from the mapping exercise) that are already supporting the targeted segment of the population. Along the lines of the guiding framework provided by Figure 10.1, support to address demand-side constraints faced by youth in the labor market can be tailored to particular groups of youth based on where they live (rural/urban), what skills they have (low/high education), and where they fall along the income spectrum. Rural poor youth with little or no education: Continued access to safety nets combined with activities to improve agricultural productivity offers potential for future income-earning opportunities for this group of youth. Preceding analysis shows that more than 80 percent of youth in the bottom income quintile are self-employed in agriculture. As such, majority of youth in this sub-group are most likely to stay in agriculture due to lack of capital and/or skills to move to non-farm enterprises or to urban areas. Global evidence suggests that using technology such as agricultural extension services to offer advice to farmers could increase agricultural yield and profits.48 Another promising option to support this group of youth is through the use of public work programs to maintain and upgrade rural infrastructure. A Public Works program implemented by NaCSA between 2016-2020 was complemented with the rehabilitation of cocoa and coffee plantations as well as inland valley swamp rice fields to support the livelihoods of farmers. An impact evaluation of the program found that the program had important welfare impacts on poor households – beyond the direct program effects of receiving an infusion of cash.49 Households receiving cash invested in their own productive potential by participating in informal savings group, invested more in their existing businesses and were four times more likely than control households to set up new enterprises. 48 Fabregas, R., Kremer, M., & Schilbach, F. (2019). Realizing the potential of digital development: The case of agricultural advice. Science, 366(6471) 49 Rosas, N., & Sabarwal, S. (2016). Public works as a productive safety net in a post-conflict setting: evidence from a randomized evaluation in Sierra Leone. The World Bank. 58 To help support fundamental literacy and numeracy skills among youth in this subgroup, programs can be augmented with basic literacy, numeracy, and life-skills training. For example, the cash transfers provided through the Social Safety Nets (SSN) programs are accompanied by a behavioral change workshop on payment days every quarter which provides beneficiaries with basic literacy and numeracy training, information on good health and hygiene practices, and illustrates the importance of investing in human capital of their children through education. Rural youth with some education For this segment of the youth population, programs that help youth to move out of self- employment in agriculture and into non-farm enterprises can help them diversify into more productive areas in the economy. There is a growing body of evidence showing that integrated interventions that provide youth with a range of services (including entrepreneurship training, life skills, coaching, access to savings, and small-sized grants), often referred to as “graduation� or productive inclusion programs, generate lasting improvements in earnings and well-being. An evaluation of the graduation approach in six countries showed statistically significant impacts on key outcomes, including consumption, savings, assets, revenues, and hours worked.50 Despite the noted success of these programs, the recently released State of the Economic Inclusion Report (2021) does not identify a single qualifying program in Sierra Leone, that has been implemented using this “big push� approach of combining cash or in-kind transfers, skills training or coaching, access to finance, and links to market support.51 In terms of existing programs in Sierra Leone, the closest example demonstrating this approach is the EPP III- Facility for Innovation, which looked at developing 100 business ideas into matured business concepts within sectors like agribusiness, fisheries, ICT, transport in 3 rural districts, reaching 175 youth. Programs like this can encourage self-employed youth in agriculture to transit to non-farm enterprises that build productive value chains in rural areas and establish valuable linkages with the urban economy. Similar to most safety net programs; these programs can be augmented to improve basic literacy and numeracy as well as intermediate level business planning and financial literacy training to support youth to run their enterprises. Urban poor youth with little or no education Youth in urban areas in Sierra Leone suffer from relatively high unemployment and underemployment rates compared to youth in rural areas. Both male and female urban youth from the poorest income quintile have NEET rates that are higher than 20 percent which not only 50Banerji et al (2015), A multifaceted program causes lasting progress for the very poor: Evidence from six countries 51Andrews, Colin; de Montesquiou, Aude; Arevalo Sanchez, Ines; Dutta, Puja Vasudeva; Paul, Boban Varghese; Samaranayake, Sadna; Heisey, Janet; Clay, Timothy; Chaudhary, Sarang. 2021. The State of Economic Inclusion Report 2021 : The Potential to Scale. Washington, DC: World Bank. 59 leaves them outside of employment but also discouraged to look for any work in the labor market. As such, programmatic priorities for this group of youth must include new ways to provide them with income-earning opportunities and to facilitate their re-entry into the labor market. Possible examples could include designing and implementing apprenticeship schemes in the informal sector where vast majority of the youth are employed. Given the poor quality and unequal reach of formal TVET institutions in Sierra Leone, these apprenticeship schemes have the potential to be demand driven. Another potential area of opportunity for this group of youth lends itself due to the repeated natural disasters facing Sierra Leone’s capital city – Freetown. Since 2017, the floods and mudslides in surrounding areas have led to much degradation of Freetown’s urban infrastructure. Programs that focus on waste management, street and drainage cleaning and environmental upgradation of Freetown and surrounding areas could not only help youth with low levels of education find employment opportunities but also enable them to contribute to the upgradation of critical environmental and sanitary infrastructure in the city. The Masada Waste Transformers, a joint venture between Sierra Leonean firm Masada and the Dutch company The Waste Transformers was launched in 2013 and has since been successful in converting Freetown’s organic waste into renewable energy in the form of electricity, compost, an d heat, while engaging youth groups in the city’s waste management process.52 Urban youth with some level of education Building strong linkages with the private sector by providing training for areas with demonstrated shortages in priority sectors such as tourism, fisheries, energy, and manufacturing, especially among women and unemployed youth, could address key skill gaps and provide productive employment to youth in this category. At present, there are small scale initiatives that provide internships and apprenticeships to graduates, which could be expanded to other sectors. Programs such as Youth in Car Wash, and Youth in Commercial Transportation are focused on improving opportunities, funding and training for youth in specific occupations which have the potential to be replicated in different industries and scaled up. This will require sustained and deep engagement with the private sector, especially in the design of training programs to make them industry relevant. Similarly, investing in leveraging digital platforms to provide employment services for the unemployed and inactive youth, and access to information on the job market could help youth find right opportunities in the labor market. The increasing uptake of mobile networks, internet and social media can be leveraged to reach the urban youth. There is a marked absence of government provided employment services, with significant scope to partner with interested 52 Ariana Diaries, 2019 60 private firms. Similar platforms such as Lynk in Kenya and Jobberman in Nigeria have been established to connect employers with jobseekers in other sub-Saharan African countries. While designing and scaling up programs for both rural and urban areas, special attention will have to be paid to make provisions for inclusion of women and disabled youth, when they are not explicitly targeted. Moreover, participating youth in skill training programs should have the option of accessing mental health services that can help improve their psychosocial well-being, particularly for youth who are affected by war and conflict in their early years. As such, improving the productivity of existing agricultural enterprises through better inputs, increased funding and more training and information dissemination regarding productive agricultural practices and crops. It is equally critical to combine some of the small programs into one large program and designate a focal agency such as the National Youth Commission or the National Commission for Social Action to reduce program fragmentation. Data Gaps Youth programming in Sierra Leone is constrained by regular collection and dissemination of data on the labor market. The country’s first Labor Force Survey (LFS) was conducted in 1984. There was a 30-year gap between the first LFS and the second LFS which was conducted in 2014. While this report uses data from a nationally representative household survey conducted in 2018 to gain insights on labor market indicators, it does not say anything on how those indicators have changed in recent years due to lack of regular, disaggregated data on the labor market. This prevents policymakers from understanding the dynamics of the labor market and forecasting potential areas of challenges and opportunities. Similarly, most youth employment programs in the country reviewed through this note lack reliable data on program performance and impact. Only 2 out of 24 youth employment programs reviewed collected data on the impact of the program. Without rigorous data to measure the impact of programs on youth labor market outcomes, programs are likely to remain small in scale and unlikely to respond to the changing needs of the labor market. Finally, firm-level data is severely limited and irregular. Given that 90 percent of Sierra Leoneans work in the informal labor market53, it is of paramount importance to understand the challenges and constraints faced by informal firms with respect to their hiring needs and decisions. While the household survey data provides some insights on non-farm enterprises run by households, the scope of indicators that can be collected through a household survey is limited. These data gaps can be filled with potential partnerships between the Bank, the Government (primarily Statistics Sierra Leone) and relevant NGOs working in the areas of youth employment 53 https://www.theigc.org/wp-content/uploads/2018/04/Presentation-at-SL-Policy-Forum.pdf 61 in the country. As highlighted in Annex Table 2, donor partners such as the ILO and GIZ have been actively working on supporting the government in designing and implementing youth employment programs in Sierra Leone. Additionally, non-governmental organizations such as the International Growth Center (IGC), the Innovations for Poverty Action (IPA) and BRAC Sierra Leone have been supporting the government on various youth related programs and policies. To inform future youth programming, it is important to take stock of current data initiatives under various organizations and coordinate efforts that will help close the data gaps. 62 Table 8. 1: Programmatic recommendations for improving youth labor market outcomes in Sierra Leone NDP Priority Areas Subgroups of Broader Policy Specific Category of Programs to Alleviate Existing Existing Examples Amenable to Youth Objectives Constraints Interventions Demand side: • Continued access to safety nets through cash, cash • Opportunity Salone plus, and public works programs • Youth in Agriculture • Funding and training to interested youth on • Youth in Fisheries • Improving Rural, poor youth Improving cultivating more productive crops, including by • Promoting Youth Employment agriculture with low productivity in leveraging technology such as through existing through Local Economic productivity education agriculture agricultural extension services Development (EPP III) – • Modernizing outcomes Supply side: Agricultural Value Chain fisheries • Safety nets interventions that combine cash • Sierra Leone Social Safety Nets transfers with basic numeracy and literacy training Program (WB) to help support fundamental skills Demand Side: Supporting • Productive inclusion grants to incubate youth owned movement of firms that move up agricultural value chains and help Rural, non-poor • Investing in youth from connect their enterprises to urban markets youth with some • EPP III- Facility for Innovation renewable agriculture to Supply Side: level of education energy non-farm • Grants combined with financial literacy and training enterprises on performing basic business functions Demand Side: Enabling access • Self-targeted public work programs that focus on the to income- needs in urban areas (for example, waste • Upskilling in Urban, poor youth earning management, street and drainage cleaning and • The Masada Waste Transformers the tourism with low opportunities, environmental upgradation of cities). Program and hospitality education especially for Supply Side: • Sierra Leone Skills Development outcomes youth who are • Apprenticeship schemes in the informal sector that Project (WB) sectors inactive in the allows on-the-job training and opportunity to earn a labor market stipend Urban, non-poor Supporting • Sierra Leone Youth Employment • Upskilling in Demand Side: youth with high unemployed and Support (YES) program’s Skill the tourism education underemployed • Integrated programs providing grants/credit along Development and Employment and hospitality outcomes youth to deploy with training to self-employed youth on setting up or support sectors their human expanding non-farm enterprises, particularly to • Gender and Entrepreneurship • Investing in capital more female youth Together (GET) Ahead renewable productively • Industry internship and apprenticeship programs in • Graduate Internship Program energy close ties with private sector to connect youth to • Youth Skills Development along jobs in demand the Bandajuma-Liberia Supply Side: • Youth Entrepreneurship and • Employment services, administered on virtual Employment Project platforms where youth can register their profiles, • Youth in Car Wash learn simple skills, view comprehensive job listings and reach out to potential employers. Provide special assistance to connect women and PWDs. 64 9. Conclusion Majority of the youth in Sierra Leone struggle to productively engage with the labor market. The youth in urban areas face high levels of economic inactivity. Youth in rural areas, while more actively involved in the labor market, are largely engaged in less productive agricultural enterprises. The youth are constrained by an economic context of high volatility and uncertainty; low levels of diversification and lack of investment in sectors outside mining; further hampered by a difficult business environment. The onset of the COVID-19 pandemic has only worsened these issues, undoing any economic progress since the negative shocks experienced by the economy in 2014. The youth workforce struggles with low levels of secondary education, the lack of industry and business specific skills and training opportunities, and the marginalization of female and PWD youth. In terms of future programming to support the youth employment agenda, adopting an integrated approach that addresses both labor demand and supply constraints in the economy and the diverse challenges of different subgroups of youth in urban and rural areas is critical. In rural areas, and depending on the subgroup of youth, the provision of funding and training to improve agriculture productivity and to encourage the transition towards furthering agricultural value chains through non-farm employment is recommended. In urban areas, providing funding, training and incubation services to self-employed youth with a focus on non-farm enterprises could help lower unemployment and underemployment. For inactive youth, the deployment of training in partnership with the private sector and intermediation services leveraging digital platforms that provide access to information and job placements could facilitate re-entry into the labor market. In summary, Sierra Leone needs a much more comprehensive jobs related strategy that takes into account the need of its diverse groups to productively employ its growing and young population. Even before the COVID-19 pandemic, Sierra Leone needed to create around 70,000 jobs every year to maintain current employment rates at the level of population growth it is experiencing. With COVID-19 further suppressing domestic demand and worsening business conditions, Sierra Leone needs to invest in programs that directly addresses the constraints faced by different sub-group of youth. But like every other crisis, this crisis presents an opportunity to set in motion programs and policies that will enable Sierra Leone’s youth to positively contribute towards growth and prosperity in the country. References: Andrews, Colin; de Montesquiou, Aude; Arevalo Sanchez, Ines; Dutta, Puja Vasudeva; Paul, Boban Varghese; Samaranayake, Sadna; Heisey, Janet; Clay, Timothy; Chaudhary, Sarang. 2021. 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Retrieved from: https://www.doingbusiness.org/content/dam/doingBusiness/country/s/sierra-leone/SLE.pdf 68 Annex 1: SLIHS Data Description Indicator Q# SLIHS 2018 Question used for calculation Indicator Sample Size Formula /Used For level Age A4 How old was (NAME) at last birthday? Individual 40608 To calculate working age, youth, and adult working population Gender A2 What is (NAME)'s sex? Individual 40608 N/A Per adult equivalent Derived from HH consumption information Household 6810 N/A total consumption/expendi ture; annual, real Location Derived from HH location Household 6810 N/A Disability D25 Do you (Does Name) have any form of disability? Individual 39166 N/A Education level B5 When you [NAME] went to school, what was the Individual 21667 To calculate those with no formal education, last class/form that you [he/she] completed? primary education and secondary education B6 After this, did you [he/she] do any further Individual 21662 education? B7a What was the highest level completed? Individual 1874 Migrant status J1 Were you [was NAME] born in this town or Individual 27755 To identify those who had migrated to chiefdom? current location Employment Rate H4 Did the person do any market-orientated work Individual 27,768 % 𝑜𝑓 𝑖𝑛𝑑𝑖𝑣𝑖𝑑𝑢𝑎𝑙𝑠 𝑤ℎ𝑜 𝑎𝑟𝑒 𝑖𝑛 𝑚𝑎𝑟𝑘𝑒𝑡 (any or any farm work where at least half the 𝑜𝑟𝑖𝑒𝑛𝑡𝑒𝑑 𝑤𝑜𝑟𝑘 + produce is intended for sale) for at least 1 hour? 𝑓𝑎𝑟𝑚𝑖𝑛𝑔 𝑓𝑜𝑟 ℎ𝑜𝑚𝑒 �𝑜𝑛𝑠𝑢𝑚�𝑡𝑖𝑜𝑛 𝑊𝑜𝑟𝑘𝑖𝑛𝑔 𝑎𝑔𝑒 �𝑜�𝑢𝑙𝑎𝑡𝑖𝑜𝑛 Type of Employment H15 What is your employment status in this Individual 16454 To identify those in wage employment in job/activity? private or public organizations, self- employment in agriculture, self-employment in non-farm businesses H17 Who was your employer in this work? Individual 2109 Unemployment Rate H4 Did the person do any market-orientated work Individual 27,768 (any or any farm work where at least half the % 𝑜𝑓 𝑖𝑛𝑑𝑖𝑣𝑖𝑑𝑢𝑎𝑙𝑠 𝑤ℎ𝑜 𝑎𝑟𝑒 𝑛𝑜𝑡 𝑤𝑜𝑟𝑘𝑖𝑛𝑔 + produce is intended for sale) for at least 1 hour? 𝐴�𝑡𝑖𝑣𝑒𝑙𝑦 𝑙𝑜𝑜𝑘𝑖𝑛𝑔 𝑓𝑜𝑟 𝑤𝑜𝑟𝑘 𝑊𝑜𝑟𝑘𝑖𝑛𝑔 𝑎𝑔𝑒 �𝑜�𝑢𝑙𝑎𝑡𝑖𝑜𝑛 H9 In the last 4 weeks, did you look for work or try to Individual 14707 start your own business Not in education, H4 Did the person do any market-orientated work Individual 27,768 employment or (any or any farm work where at least half the % 𝑜𝑓 𝑖𝑛𝑑𝑖𝑣𝑖𝑑𝑢𝑎𝑙𝑠 𝑤ℎ𝑜 𝑎𝑟𝑒 𝑛𝑜𝑡 𝑤𝑜𝑟𝑘𝑖𝑛𝑔 + training produce is intended for sale) for at least 1 hour? 𝑛𝑜𝑡 𝑙𝑜𝑜𝑘𝑖𝑛𝑔 𝑓𝑜𝑟 𝑤𝑜𝑟𝑘 +𝑛𝑜𝑡 𝑖𝑛 𝑠�ℎ𝑜𝑜𝑙 𝑜𝑟 𝑡𝑟𝑎𝑖𝑛𝑖𝑛𝑔 𝑊𝑜𝑟𝑘𝑖𝑛𝑔 𝑎𝑔𝑒 �𝑜�𝑢𝑙𝑎𝑡𝑖𝑜𝑛 H9 In the last 4 weeks, did you look for work or try to Individual 14707 start your own business H11 What is the main reason you didn't look for work Individual 14096 in the last 4 weeks? Under-employment H32 In the last week, would you have liked to work Individual 16,456 Rate more hours % 𝑜𝑓 𝑖𝑛𝑑𝑖𝑣𝑖𝑑𝑢𝑎𝑙𝑠 𝑤ℎ𝑜 𝑤𝑎𝑛𝑡 𝑡𝑜 𝑤𝑜𝑟𝑘 𝑚𝑜𝑟𝑒 H3a-c Over the past 7 days, for how many hrs. have you Individual 27763 𝑒𝑚�𝑙𝑜𝑦𝑒𝑑 + 𝑤𝑜𝑟𝑘𝑖𝑛𝑔 𝑙𝑒𝑠𝑠 worked in any non-farm business, farm work or job 𝑡ℎ𝑎𝑛 8 ℎ𝑜𝑢𝑟𝑠 𝑎 𝑑𝑎𝑦 to earn some income? H4 Did the person do any market-orientated work Individual 27,768 (any or any farm work where at least half the produce is intended for sale) for at least 1 hour? 70 Annex 2: Information on Sierra Leone’s Youth Employment Programs Programs Implementing Agency Project Duration Number of Funding (in US Funding Agency (Years) and status Beneficiaries $m) Sierra Leone Youth Employment Support Program NaCSA/NAYCOM 4 (Closed) 45,993 World Bank 20.0 (components 1, 2 and 3) Gender and Entrepreneurship Together Ahead NAYCOM <1 (Closed) 30 ILO 0.05 Youth in Fisheries MoYA 1,400 GoSL 0.55 Youth in Agriculture MoYA 4 (In progress) 55,000 GoSL 0.6 Youth Entrepreneurship MoYA 4 (Yet to commence) 30,000 GoSL N/A Youth in Commercial Transportation MoYA 1,200 GoSL N/A Youth in Car Wash MoYA (In progress) 2,100 GoSL 0.5 Promoting Youth Employment through Local Economic MLSS/NaCSA/GIZ 4 (Closed) 32,675 24 BMZ Development (Component 1,2,3,4 and 5) Growth for Peace Consolidation Program NaCSA 4 (Closed) KFW 13.0 The Youth Employment and Empowerment Program NAYCOM/MoYA 5 (Closed) 19,007 UNDP 6.5 National Youth Service Program MoYA 4 (In progress) 450 GoSL and UNFPA 0.6 Mitigating Localized Resources-based Conflicts and 50 UNDP and WFP 3.0 Increasing Community Resilience Youth Skills Development Project along the Bandajuma- NAYCOM 1 (In progress) 1,540 EU 0.9 Liberia Border Graduate Internship Program NAYCOM 8 (In progress) 962 UNDP 0.45 Youth Demonstration Farms NAYCOM 4 (In progress) 1,000 GoSL 0.25 Skills Development and Training at Obasanjo Skills NAYCOM <1 (In progress) 375 GoSL and UNDP 0.35 Acquisition Centre Young Women's Empowerment and Advancement NAYCOM 4 (In progress) 100 GoSL 0.12 Program 71 Youth Entrepreneurship Training and support to Youth 50 GoSL Businesses Youth Entrepreneurship and Employment Project NAYCOM 3 (In progress) 2,710 AFDB 2.4 Support to Youth Civic Education and Life Skills -Sexual 10,800 Reproductive Health, HIV AIDS, Drug Abuse and GOSL 0.3 Transformational Leadership. Youth Business Groups Involvement in SALWACO Water NAYCOM 2 (Closed) 120 GoSL and UNFPA 0.05 Connections in Makeni, Bo and Kenema Livestock value Chain in Sierra Leone (In Progress) 600 GoSL and EU 2.4 Sierra Leone Skills Development Project MTHE 4 (In progress) 8,000 WB 20.0 Opportunity Salone ILO, NAYCOM, EU 9.7 SMEDA, SLRA* *SMEDA: Small Medium Enterprise Development Agency; SLRA: Sierra Leone Roads Authority 72