Youth economic opportunity ecosystem analysis Rwanda via UNCDF

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Executive Summary: 

Rwanda’s economy has experienced fast and sustained growth at an average of 8% from 2000 to 2013; it is predicted to continue on this strong trajectory. Growth has been driven by strong government leadership through policies such as the Economic Development and Poverty Reduction Strategy (EDPRS-II 2013- 2018), which aims to further build on the Vision 2020 goal of transforming Rwanda into a middle-income country. There is significant emphasis on infrastructure development, particularly in power generation, rail and road connectivity and on productivity investments in agricultural value chains. As a result, the services and agriculture sectors have been key growth drivers for Rwanda’s economy.

This economic growth has not translated into sufficient productive employment particularly for the growing youth cohort aged 14-35 years, which represents 39.3% of the population. Driven by 2.8% average annual population growth over 2010 – 2013, the size of the working-age population has continued to increase and outpace job creation. Each year, 125,000 first-time job seekers enter the labor market which the economy is not able to absorb. Indeed, with a total of 396,000 waged jobs in the formal economy today, only a handful of new labor market entrants will gain access to the formal sector. While only 4% of active youth are unemployed, 65% are underemployed and youth are disproportionately located in—and migrating to—urban areas where youth unemployment is three times that of rural areas.

To address this growing urban ‘youth bulge,’ the government of Rwanda is engineering a shift from a lowproductivity agriculture-dependent economy to a service-based ‘knowledge economy’. ‘Productivity and youth employment’ is thus central to the government’s Economic Development and Poverty Strategy, which targets the creation of at least 200,000 off-farm jobs annually.

Despite this progress there is a need for more interventions and rapid actions in order to limit the negative impact of disempowerment on the youth population, and the negative impact of youth unemployment on Rwandan society. Youth unemployment represents a sizeable economic loss stemming from unrealized human resources, foregone potential income tax revenues, and a loss of returns on government investment in education—all contributing to creating a heavy tax burden in future years. In addition, protracted joblessness increases youth disenfranchisement, which can lead to increased social unrest, political instability, and crime while increasing youth’s vulnerability to poverty


 

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