Can small grants, training, and mentorship for micro-entrepreneurs create jobs in Afghanistan?

As the world marks International Youth Day on August 12, many in Afghanistan, especially the youth, strive to find better ways to make a prosperous future for themselves. According to the United Nations Population Fund, about 63 percent of Afghans are under 25 years of age, reflecting a steep pyramid age structure whereby a large cohort of young people is slowly emerging. Yet, young people in Afghanistan face significant challenges in health, education, employment, and gender inequality.

To tackle these challenges, the Ministry of Labor, Social Affairs, Martyrs and Disabled is targeting youth with low education in rural and semi-urban areas through a pilot micro-grants scheme to support aspiring entrepreneurs in the face of low growth and dim job creation prospects in the private sector. The scheme is implemented under the Non-Formal Approach to Training, Education, and Jobs in Afghanistan (NATEJA) project financed by the Afghanistan Reconstruction Trust Fund (ARTF).

When I saw Fariha, 23, during her selection interview for the micro-grant scheme, she was sceptical of receiving any government support, but confident about her beauty salon idea. It was a dream come true when she got the news of the micro-grant of $500. Fariha had learnt her skills first as a trainee at a beauty salon. After four years working there, she used the grant money to invest in the business and is now a partner and manager in the salon. “I did not earn enough as a trainee, but now I am a partner. It is a good job and it is getting better,” she says.

As a NATEJA grantee, Fariha attended a business training course to learn basic accounting, marketing, and key tips to start a business as a woman. She was also very happy to receive a pictorial, practical, and illustrative business start-up booklet at the training, given her low level of education.

Fariha is one of hundreds of women supported by NATEJA, a project that identifies, funds, and trains micro-entrepreneurs. To date, close to 2,500 micro-entrepreneurs, chosen from 17,000 applicants, have received support from the project. Around 30 percent are women entrepreneurs, based in Kabul, Nangarhar, and Balkh Provinces.

As a part of the NATEJA team, along with World Bank strategic inputs, we had to think of additional ways to provide support at the local level to these young people, such as mentorship and on-demand business counselling. Can mentorship benefit micro start-up businesses? An attempt to find answers in a fragile country like Afghanistan might be relatively more complicated and challenging than otherwise.

We decided to find out by testing the idea of mentorship among selected micro-entrepreneurs in Kabul. Along with the micro-grant, groups of micro-entrepreneurs receive business skills training and counseling support. Mentorship support from local business leaders is now being introduced to randomly selected entrepreneurs who received the micro-grant in Kabul. To contribute to the evidence base, a randomized control trial will assess the impact of the micro-grants on future employment outcomes and earnings, the results of which are expected to be published in 2018.

Mentorship is based on developing a special relationship between mentor and mentee, with the aim of providing guidance and counseling to mentees, as well as transferring skills, knowledge, and business intelligence.

An enthusiastic and promising mentor is Aliya Mohammadi, who runs her own beauty salon. She is mentoring five women under the NATEJA project. “In the first session, the mentees had very low self-confidence,” she says, “but by the second session, their confidence level had increased and they were able to talk and discuss things easily.”

Mentors are selected from a list provided by labor unions, i.e., Central Council of Labor Union of Afghanistan, Afghanistan Children and Women Solidarity Organization and FACT organization. Those selected receive an orientation on approach and best practices. Each mentor is assigned a maximum of six mentees (minimum one) having a business in a similar sector.

An incentive of a small cash allowance is given per visit/session to mentors to cover travel, refreshments, and communication, and non-cash incentives, such as a certificate, appreciation letter, and awards, are also being planned. The entire effort is based on establishing trust between mentor and mentee. While cash allowances are given for a maximum of 10 visits/sessions over four months, it is assumed that once the relationship is established, both parties would not restrict themselves to the prescribed number of visits, irrespective of allowances. 

The mentorship scheme in Kabul matched around 75 mentors to almost 300 mentees in May and June 2017. There are few assumptions on effectiveness as well as on drop out from mentors and mentees. Whether the scheme is worthwhile at the micro business level is yet to be assessed by the impact evaluation, although preliminary evidence suggests that seed funds to young entrepreneurs show a high level of motivation and confidence boost in their engagement as viable citizens of society.

It is anticipated that the outcomes of this experience shall feed into a broader dialogue with stakeholders and policy makers on the economic empowerment and engagement of youth in Afghanistan, as they will shape the future of the country. Investing in youth-focused interventions, like NATEJA’s mentorship scheme, is necessary for Afghanistan’s long-term development prospects.