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Second Rural Youth Vocational Training, Employment and Entrepreneurship Support Project – FIER II

During the first phase of the FIER project, more than 13,000 income-generating activities and microenterprises, led by young people, were created in 1,504 villages. The Second project for professional training, integration and support for entrepreneurship for young rural people (FIER 2) will consolidate these achievements and extend them to several agricultural sectors with high potential, and to some non-agricultural sectors, depending on the opportunities commercial and the potential for integration of young people. It will in particular stimulate the entrepreneurial potential of young women which has remained largely untapped until now.

The project components are as follows:

improve the institutional and socio-economic environment favoring the promotion of entrepreneurship and employment of rural youth;
support young rural people to generate decent incomes through sustainable access to financial and non-financial services, adapted to their aspirations and market requirements.

National context and rationale for IFAD intervention

  1. Mali is a low-income country that has recently suffered economic setbacks. It is among the lowest income countries in the world. In 2020, its gross domestic product (GDP) was USD 858.92 per capita. The budget deficit increased from 1.8% of GDP in 2019 to 6.1% in 2020, mainly due to a decrease in tax revenue. It is also a country in a fragile situation, and it appears on the harmonized list of countries experiencing medium-intensity conflicts established by the World Bank1. The incidence of poverty in Mali remains high and is concentrated in rural areas.
    Alignment with national priorities. Promoting youth employment is crucial. It is reflected in most sectoral policies. The second proposed vocational training, integration and support for entrepreneurship of rural youth (FIER 2) project will contribute to meeting national objectives in terms of food security, mitigation of the effects of climate change and national policy relating to gender.
    Main actors and institutional arrangements. The main actors will include specialist service providers, some of whom were the best performers in the first phase, farmers’ and youth organizations at different levels, as well as community organisations. They will be selected through competitive bidding, and their contracts will be based on performance.
    Specific aspects relating to IFAD’s priority cross-cutting themes. More than 80% of the Malian population is under 35 years old. Each year, around 300,000 young people enter the job market in a gloomy economic context, recently shaken by the COVID-19 pandemic and an unfavorable political environment, steeped in insecurity. Young rural people, the majority of whom are poorly trained, face unemployment and underemployment. In accordance with IFAD’s commitments in terms of mainstreaming, the FIER 2 project was validated as: ☒ focused on young people;
    ☒ targeting people with disabilities as a priority;
    ☒ including climate financing;
    ☒ including activities relating to adaptive capacity.
    In 2021, Mali’s gender inequality index was 0.613, which ranked it 155th out of 170 countries. The pressure exerted on the natural resources necessary for agricultural activities creates increasingly frequent conflicts, while access to non-agricultural activities remains particularly difficult for rural women. According to Notre Dame Global Adaptation Initiative, Mali is the seventh most vulnerable country to climate change, and the thirty-seventh in terms of preparedness for climate shocks.
    Rationale for IFAD intervention. IFAD has a relatively long and successful experience in Mali. It made it possible to identify and train young entrepreneurs, facilitate their access to financial services, and connect them to markets. During the first phase of the FIER project, more than 13,000 income-generating activities and micro-enterprises, led by young people, were created in 1,504 villages. The FIER 2 project will consolidate these achievements and extend them to several agricultural sectors with high potential, and to some non-agricultural sectors, depending on commercial opportunities and the integration potential of young people. It will particularly stimulate the entrepreneurial potential of young women which has remained largely untapped until now.

Lessons to be learned

  1. Community targeting and career guidance. Building on the experience acquired during the first phase, the field facilitators, recruited locally, are now an integral part of a transparent and truly participatory approach, aimed at identifying the constraints and aspirations of young people, which resulted in strong ownership of the project.
    Job creation based on microenterprise development models needs to be more demand-driven. The precise needs of the labor market must be taken into account, particularly in the context of the links to be established between young people and the sectors.
    Economies of scale and sustainability of pro-poor financial service delivery. The first phase of the FIER project effectively tested a system in which term deposits served as collateral for young targets on a case-by-case basis. This has limited the reach of microfinance institutions. To compensate for this gap, the FIER 2 project team will set up not only a mechanism that encourages the optimization of savings, but also a guarantee fund managed by professionals, which will allow microfinance institutions to increase their portfolio of young clients.
    Service provider contracts should be results-based, while ensuring continuity. Service providers should be able to plan for the long term, which does not exempt them from annual performance reviews (a condition of contract renewal).
    The two-phase approach of expanding the project area in the first phase delayed implementation. The FIER 2 project will adopt a process-oriented approach, which will allow a gradual and progressive expansion of the project to new areas as conditions permit, including the security situation.
    Connecting targeted young people to well-structured sectors increases the likelihood that their economic activities will produce lasting results. To do this, we need to encourage the type of organizational development that allows young people to participate in wholesale purchasing and sales in the most structured and regulated sectors.

Objectives, area of intervention and target groups

  1. The FIER 2 project has the development objective of promoting entrepreneurship in rural areas, and facilitating the economic integration of young people into agricultural sectors and non-agricultural sub-sectors.
    It will thus contribute to achieving the second strategic objective of the Country Strategic Options Program (COSOP): promoting access to markets for small producers.
    The geographical area of intervention corresponds to the COSOP targeting strategy, which encompasses eight regions. Implementation will start in the 12 poorest regions (circles) located in the densely populated south of the country: Koulikoro, Sikasso, Kayes and Ségou. After having covered these “concentration zones” (previously covered in the first phase), the FIER 2 project will be able to broaden its scope of action to “extension zones” (including the regions of Mopti, Gao, Timbuktu and Kidal) , depending on a series of conditions to be met, in particular those relating to security issues.
    The selection of target groups will be in line with IFAD’s targeting policy and mainstreaming objectives. Producer organizations and specialized service providers will be responsible for registering eligible rural youth and providing them with counseling and career guidance services. Some 60,000 young rural people aged 15 to 40 will follow vocational training or benefit from economic integration through paid employment or in a microenterprise, and 9,000 young rural people will be attached to sectors; overall, 40% of beneficiaries will be women.

Components, results and activities

The project components are as follows: i) improve the institutional and socio-economic environment favoring the promotion of entrepreneurship and employment of rural youth; ii) support rural youth to generate decent incomes through sustainable access to financial and non-financial services, adapted to their aspirations and market requirements; iii) coordinate and manage the project.

The expected results by component are summarized below:

Component 1 will create an institutional and socio-economic environment more conducive to promoting entrepreneurship and employment of rural youth in rural areas. This will be the overall result of the following activities: activity 1.1.1. – strengthen the capacities of the Ministry of National Entrepreneurship, Employment and Vocational Training and its services; activity 1.1.2. – strengthen the capacities of vocational training centers and regional and local actors responsible for offering services that meet the needs of young rural people;
activity 1.1.3. – build the capacity of rural youth federative organizations and other similar organizations and umbrella agencies, as well as their local services.
Component 2 will create employment for young people (self-employed and employees) in several segments of the sectors. It will be the overall result of activity 2.1.1. – target rural youth and offer them counseling and career guidance services. The project management unit will recruit, through competitive bidding, NGOs as targeting and advisory agents for young people. In addition, it will sign strategic partnership contracts with specific umbrella farmer organizations, selected based on an assessment of their capacities to provide the required services; activity 2.1.2. – provide rural youth with appropriate training and provide them with business support and monitoring services which will be gradually phased out. The project management unit will contract with service providers for training and support of young people. These will be selected through competitive bidding, in particular agencies whose capacities have been strengthened under sub-component 1.1.; and activity 2.1.3. – integrate young rural people trained in agricultural and non-agricultural sectors.
Component 3 will ensure proper coordination and management of the project. Activities will include financial management, procurement, monitoring and evaluation, as well as knowledge management.

Cost, benefits and financing

The project costs are estimated at EUR 99.1 million over seven years, consisting of base costs of EUR 90.4 million (91.2% of total costs), and provisions for material contingencies and price increase of EUR 8.7 million (8.8% of total costs). These costs are calculated on the basis of a national inflation rate of 2.6% per year and an international inflation rate of 2.0% per year; and provisions for material contingencies up to a level of 5% for certain categories of expenditure, taking into account recent experience from the country programme.
Investment costs represent 88% of base costs, or EUR 80 million, of which 12% is operating expenditure (EUR 10.4 million).

The significant financing gap of USD 39.6 million can be financed through subsequent rounds of the Performance-Based Allocation System (PBAS) or the Mechanism for Access to Borrowed Resources (MARE), according to financing conditions to be defined and subject to internal procedures and subsequent approval by the Board of Directors, or through co-financing to be determined during execution.

Subcomponent 1.2 of the project relating to resilient infrastructure is partially related to climate action. The total amount allocated by IFAD to the project for climate finance, calculated using the methods of multilateral development banks for monitoring financing of adaptation to climate change and mitigation of its effects, is estimated at EUR 15.1 million.