Supporting young entrepreneurs amid COVID-19 crisis

November 5, 2020

Marie Ange Mukagahima, the CEO and Founder of ZIMA Enterprise says she does not envisage to take a bank loan as she is not sure if she will be able to pay back due to protracted nature of COVID-19

On October 29, 2020, the Ministry of Youth and Culture (MYCULTURE), the United Nations Development Programme in Rwanda, the Korea International Cooperation Agency and other partners launched the Young Entrepreneurs Resilience Fund to support young entrepreneurs whose businesses have been negatively affected by COVID-19 or who have developed an innovation in response to the pandemic. The Rwf 500 million fund aims to help young entrepreneurs recover from COVID-19 and to play a role in its prevention. This intervention was initiated based on results from a rapid survey conducted by MYCULTURE to assess the effects of COVID-19 on youth-led businesses.

Marie Ange Mukagahima is the CEO and founder of Zima Enterprise, an alumni of the Youth Connekt Programme supported by UNDP through the Ministry of Youth and Culture.

The Youth Connekt initiative is a multifaceted youth empowerment model focused on leveraging youth employability, entrepreneurship, and civic engagement through innovation with a specific mission to serve as a portal of connecting youth with their peers, role models, skills and resources for their socio-economic empowerment. The program was launched in 2012. 

Zima Enterprise produces cookies, oil and flour out of pumpkins. It also sells roasted pumpkin seeds and pumpkin seeds flour. Mukagahima established her business after winning Youth Connekt Award as a youth champion in 2017.

Before Covid-19 pandemic, Zima Enterprise was a small and young flourishing business headed by a young woman with extraordinary entrepreneurship skills. The Covid crisis has hit it hard, forcing it to shrink extensively.

“This year’s plan was to expand our market towards neighboring countries starting with Goma, in the Republic Democratic of Congo and Nairobi, Kenya. We wanted also to improve the quality of our products through packaging. But the whole plan was blocked by this pandemic,” deplores Mukagahima adding that “Zima has lost nearly 70% of its market and made redundant three of its employees.”

ZIMA produces cooking oil, cookies, pumpkin flour, roasted pumpkin seeds out of pumpkin.

Due to restricted movements imposed by the government during the lockdown and after, Zima lost its clients from Rubavu District, Western Province, which constitute 45% of its national market.

Mukagahima doesn’t envisage to take a bank loan as capital for recovery due to the uncertainty of her business’s future and the protracted nature of Covid-19 crisis. “It is difficult to take a loan to use for working capital because I don’t know how long the crisis will last, how much worse my business will get, and how I will be able to pay back that loan. It is not even an option I can think of,” she explained.

Mukagahima’s story is not isolated. The Covid-19 crisis has caused significant disruptions and hardships on youth-led businesses across Africa and the rest of the world.

In Rwanda, some of these businesses were simply shut down and others have been struggling for their recovery and continuity. Most of them don’t have cash reserves that they can tap into, and neither do they have lines of credit with banks that they can fall back on.

Euphrosine Mugeni’s Avo Care LTD is facing the same challenges. It produces high quality cooking oil out of avocados. Mugeni has lost nearly 90% of her customers who were mainly tourists from abroad. To cope with the situation, she has started to develop a new market targeting internal supermarkets and malls in Kigali and in secondary cities.

Through various channels of communication, Rwandan young entrepreneurs have expressed a need for capital in order to ensure their business continuity and survival. The support will enable them to make investments to expand their businesses and take advantage of new opportunities and products.

The Ministry of Youth and Culture with the support from UNDP and KOICA, conducted a nation-wide rapid impact assessment among 972youth entrepreneurs to understand the scale of the impact of the COVID-19 pandemic on youth. The results show that 95% of the young entrepreneurs from all sectors reported severe impacts on their businesses, ranging from reduced revenues linked to reduced demand, limited access to markets, as well as transport challenges, among others.

As far as the employed youth is concerned, the survey showed that more than 40% of employed youth have been experiencing temporary suspended jobs, decreased salary (20%) or possible termination of contract (12%).

Based on the rapid assessment results, the Ministry of Youth and Culture developed a youth resilience plan with a focus on addressing challenges, particularly job sustainability and business continuity. The specific objectives of this comprehensive plan are to sustain existing youth-led enterprises, to support youth innovations developed as a response to COVID-19 as well and to mitigate post COVID-19 challenges.

With the support of the One UN and KOICA, more than 650,000USD were mobilized and allocated to support the implementation of the plan and therefore reduce the impact of the pandemic on the youth-led businesses. Furthermore, UNDP and KOICA have partnered with other development actors to provide both the technical and financial support to the young business owners.

On the occasion of the first Youth Entrepreneurship Support (YES) Webinar Series organised by the Commonwealth Youth Council (CYC) on 28 August, 2020 the Resident Representative of UNDP in Rwanda called on governments and partners across Africa to continue playing their role in supporting youth-run small and medium enterprises through different initiatives and schemes, including grants and soft loans, investments in skills and capabilities development, tax relief, subsidies, and other tailored forms of support to them.

UNDP recognized that partners can help facilitate partnerships and joint ventures that can help boost the viability and sustainability of youth-led businesses and enable them to acquire expertise and reach new markets.

Despite the havoc that Covid-19 has caused, there is still an optimism based on the resilience that many companies have shown adapting to the situation through developing new products and market, and the new innovations that have emerged to tackle the pandemic.

Supporting Africa’s youth is not a luxury. It is imperative. Africa’s young entrepreneurs play a driving role in creating jop opportunities.