The African continent is projected to nearly double its population by 2050, with an additional 800 million young Africans entering the job market. This poses a significant challenge, especially considering the high youth unemployment rates in many African countries. The question then arises: who will create stable jobs at a mass scale to accommodate this growing workforce?
While many policies focus on solutions that have worked elsewhere, such as promoting entrepreneurship or technological advancements, there is a lack of support for homegrown solutions that have a proven track record of creating large-scale stable employment. A recent study conducted in the neighborhood of Dagoretti Corner in Nairobi, Kenya sheds light on an unexpected source of stable employment – car repair businesses.
In Dagoretti Corner, 105 identical car repair businesses have set up shop in close proximity to each other, offering the same services. This phenomenon, common in major African cities, may seem counterintuitive from a competitive standpoint. However, the study reveals that these businesses have created an informal welfare system that supports each other in various ways, ensuring their survival and growth.
The study identified five key ways in which these businesses create their own welfare system. They save and invest money together, offer apprenticeship opportunities, self-police against unethical behavior, support each other in times of crisis, and provide a form of insurance for personal emergencies. This informal social welfare system plays a crucial role in providing stable employment, saving and investment opportunities, and insurance at a considerable scale.
The researchers argue that policies should focus on strengthening and leveraging these existing welfare systems to promote firm and employment growth. By creating transparent cooperative structures and exit pathways for individual businesses to grow, policymakers can safeguard these welfare systems and ensure their sustainability. Additionally, targeted governance interventions and digital technologies can enhance the self-organizing capacity of these informal networks.
In conclusion, while there is a need for policy interventions to support individual firms, it is crucial to be context-sensitive and prioritize homegrown solutions that already work. By enabling and supporting these informal welfare systems, policymakers can ensure the creation of stable jobs at a mass scale in African societies.
