The World Bank Jobs for Youth through Competitiveness and Entrepreneurship Support (P179221) Project Information Document (PID) Concept Stage | Date Prepared/Updated: 17-Oct-2022 | Report No: PIDC34774 Oct 14, 2022 Page 1 of 8 The World Bank Jobs for Youth through Competitiveness and Entrepreneurship Support (P179221) BASIC INFORMATION A. Basic Project Data OPS TABLE Country Project ID Parent Project ID (if any) Project Name Ghana P179221 Jobs for Youth through Competitiveness and Entrepreneurship Support (P179221) Region Estimated Appraisal Date Estimated Board Date Practice Area (Lead) WESTERN AND CENTRAL Feb 15, 2023 Mar 31, 2023 Finance, AFRICA Competitiveness and Innovation Financing Instrument Borrower(s) Implementing Agency Investment Project Financing Ministry of Finance Ghana Enterprise Agency, Ministry of Trade and Industry, National Entrepreneurship and Innovation Programme Proposed Development Objective(s) To (i) enhance the performance of selected sectors and (ii) strengthen youth entrepreneurship. PROJECT FINANCING DATA (US$, Millions) SUMMARY-NewFin1 Total Project Cost 150.00 Total Financing 150.00 of which IBRD/IDA 150.00 Financing Gap 0.00 DETAILS -NewFinEnh1 World Bank Group Financing International Development Association (IDA) 150.00 IDA Credit 150.00 Oct 14, 2022 Page 2 of 8 The World Bank Jobs for Youth through Competitiveness and Entrepreneurship Support (P179221) Environmental and Social Risk Classification Concept Review Decision Moderate Track II-The review did authorize the preparation to continue Other Decision (as needed) B. Introduction and Context Country Context 1. Ghana's economy is in a difficult macroeconomic situation compounded by two successive crises (COVID-19 and the war in Ukraine). Ghana’s rapid growth (7 percent per year in 2017-19) was halted by the COVID-19 pandemic, the associated lockdown measures, and a sharp decline in commodity exports. Ghana’s fiscal deficit and public debt stock became some of the most elevated in the region in 2021. As of end-June 2022, public debt reached 78.3 percent of GDP and interest payments reached 54.4 percent of revenues over the first half of the year. Inflation rose to 31.7 percent year-on-year (an 18-year high) in July 2022, from 12.6 percent at the end of 2021. 2. Poverty and inequality are on the rise. The poverty rate was stagnant from 2012/13 to 2016/17, and the number of poor in Ghana grew by 400,000 individuals over the same period. Recent crises have threatened to exacerbate poverty. Global food prices rose 30 percent between July 2020 and July 2021 due to supply chain bottlenecks. Increased food prices have also revealed regional inequality, with the lagging Upper West and Northern regions experiencing higher inflation compared to Greater Accra, Eastern and Western regions, owing to limited market connectivity. Gender inequality also remains a pervasive issue and is holding back broad-based economic growth. 3. A major concern is the lack of sufficient and quality jobs in Ghana’s private sector to harness the benefits of its demographic transition. The country’s population has grown rapidly and is projected to reach 45.8 million and 50.2 million by 2040 and 2050, respectively. More importantly, the rate of job creation lags the economic growth rate, which has been recently driven by the capital-intensive, jobs-poor extractives sector. 4. The jobs challenge is particularly acute for Ghana’s youth. Ghana has relatively high youth unemployment and underemployment rates: while Ghana’s overall unemployment rate in 2016/17 was estimated at 8.6 percent, the youth (ages 15-35) unemployment rate was 12.6 percent. Based on the 2021 Population and Housing Census, the unemployment rate for those aged 15-35 years is estimated at 19.7 percent. Low skilled jobs constitute almost 50 percent of jobs held by younger youth while for older youth the share is about a third. Sectoral and Institutional Context 5. Ghana’s growing youth population is entering the labor market with increasing levels of education but fewer job opportunities. Currently, 75 percent of Ghana’s population is under 35 years, and it is estimated that between 2021 and 2040, 10 million Ghanaian youth will enter the labor force. The average education attainment among youth rose Oct 14, 2022 Page 3 of 8 The World Bank Jobs for Youth through Competitiveness and Entrepreneurship Support (P179221) from 8.5 years in 2005/6 to 9.6 years in 2016/17. Yet, youth who completed secondary school or higher made up the bulk of the unemployed in 2016/17 and cite “lack of jobs� as the primary reason for being unemployed or out of the labor force. Constraints facing youth employment in Ghana can be classified into three broad areas: lack of private sector demand for labor, supply-side constraints, and coordination challenges. 6. The demand for labor can increase by accelerating investment and firm growth in productive and employment- generating manufacturing and export-oriented services sectors. Agriculture has been shedding jobs, and employment generation in recent years has come from services and even more recently, from manufacturing– a pattern observed among youth as well. High-productivity export-oriented services have been some of the economy’s fastest growing sectors and have the potential to further generate jobs, including at the lower-end of the skills spectrum (especially Information and Communication Technologies). The manufacturing sector has the propensity to employ low-skilled workers and to absorb youth as well. 7. Key constraints to accelerated private investment and growth in sectors such as manufacturing, or services, are mostly government coordination failures and limited firm capabilities. Inadequate regulation and policy implementation; limited provision of public services and of the application of standards, rules of origin, and certification; lack of critical last mile infrastructure; and skills gaps for emerging sectors are some of the key constraints raised by investors. Firms in Ghana also lag behind in terms of the adoption of more sophisticated technologies and organizational practices, mainly due to lack of demand and uncertainty, as well as lack of finance, poor infrastructure, and lack of capabilities. 8. While the transformation of key sectors and improvement of firm performance will be critical for creating a demand pull and providing jobs for Ghana’s youth, self-employment will remain a driving force. The self-employment rate (including in contributing family work) for youth (ages 18-40) is 63 percent, and 20 percent of unemployed youth aspire to become self-employed entrepreneurs. While there has been a marked shift in self-employment and enterprises from agriculture to services in recent years, especially among youth, most of Ghana’s nonfarm enterprises are informal and are micro or small, typically a single-person enterprise. Factors external to the enterprise, e.g., regulations and infrastructure, and those internal to the enterprise, e.g., human and financial capital, knowledge, and skills, tend to be important determinants of enterprise productivity and profitability. These challenges are typically compounded for youth entrepreneurs because of inexperience, restrictions in legal and regulatory environment (e.g., minimum age and identification requirements), lack of collateral, etc. 9. The government seeks to implement both short-term and longer-term solutions to expand job opportunities for youth. To address the immediate needs of youth entering the workforce, the government announced an ambitious program in the 2022 budget known as YOUStart, with the objective of building an entrepreneurial nation and creating at least 1 million jobs for the youth in the next three years. At the same time, to achieve long-term economic transformation, the government through the Ministry of Trade and Industry (MOTI) has put in place a 10-point industrial transformation agenda, which includes a focus on strategic anchor industries, of which automotive, textile & garments, and pharmaceuticals are priority. 10. The project seeks to accelerate Ghana’s economic transformation at three levels: (i) at the sector (cluster) level, the project will help attract and accelerate private investment in manufacturing and services in selected value chains; (ii) at the firm level, the project will improve the capability of existing Small and Medium Enterprises (SMEs) within these sectors and their linkages to other investors; and (iii) at the entrepreneur level, the project will encourage and strengthen youth-led start-ups by addressing multiple constraints to entrepreneurship. Oct 14, 2022 Page 4 of 8 The World Bank Jobs for Youth through Competitiveness and Entrepreneurship Support (P179221) Relationship to CPF 11. The proposed project is fully aligned with the new Ghana Country Partnership Framework (CPF) (FY22–26), which squarely focuses on the issue of youth employment. The CPF seeks to accelerate economic transformation with the creation of more quality jobs for youth through skills and entrepreneurial development, access to finance, investment climate reform, and quality infrastructure. C. Proposed Development Objective(s) 12. To (i) enhance the performance of selected sectors and (ii) strengthen youth entrepreneurship. Key Results (From PCN) 13. Key results are as follows: (1) Number of investment commitments in selected sectors; (2) Number of supplier agreements between SMEs and investors; and (3) percentage of youth-led startups supported still in operation six months after end of intervention. D. Concept Description Legal Operational Policies Triggered? Projects on International Waterways OP 7.50 No Projects in Disputed Areas OP 7.60 No Summary of Screening of Environmental and Social Risks and Impacts . 14. The project will support both short- and longer-term interventions targeting investors, SMEs, and young entrepreneurs along value chains with potential for job creation. Component 1 interventions will facilitate more private investments to accelerate job creation in selected sectors. Support will be provided through policy reforms and the provision of common services or productive assets (e.g., specialized infrastructure and logistics, pilot production and product testing facilities, common training facilities, etc.) needed to enhance the competitiveness of the value chain. Component 2 interventions are at the firm level and aim to upgrade the capabilities of existing SMEs for growth and job creation. Support could include supplier development programs facilitating linkages between SMEs and larger firms in select value chains (including multinationals). Component 3 intervenes at the level of the entrepreneur, by providing comprehensive support (BDS, training, and grants) to young entrepreneurs, particularly in selected sectors, to help them establish and grow their businesses and benefit from the demand for services and supplies in the selected value chains. 15. The project will prioritize sectors based on the following proposed criteria: (i) Private investment committed to the sector (using recent greenfield Foreign Direct Investment announcements by sector as a proxy); (ii) public policy response by Government of Ghana through flagship programs (Ghana CARES and Industrial Transformation Agenda); (iii) sector not yet receiving significant support through World Bank financing; and (iv) impact on youth employment and linkages with existing firms. Recent consultation with the private sector confirmed that decisions have been made to invest in Ghana in automotive assembly and components manufacturing, textile and garments manufacturing, and Oct 14, 2022 Page 5 of 8 The World Bank Jobs for Youth through Competitiveness and Entrepreneurship Support (P179221) ICT (process outsourcing and customer experience management). For component 3, investments in additional and eligible sectors/subsectors will be assessed further during project preparation. Component 1: Fast-tracking private investment in manufacturing and services clusters 16. The project will finance further provision of public and common goods and services that will attract and complement private investment, enhance productivity, increase exports, and create jobs. The project will leverage private investment or mobilize private capital by offering complementary public investments in common goods and services aimed at reducing sunk costs and accelerating the implementation time of investors. Based on the sector criteria described above, support will be tailored to the manufacturing and services clusters, embedded in an overall policy, and triggered by the investment commitment. It will include a) connection to major utility services, b) research, testing, certification laboratory services, c) development of the labor force and upgrading of technical capabilities; and d) support for upgrading the regulatory framework. Component 2: Improving the capability of existing firms within selected clusters 17. The project will provide support to SME integration and linkage into emerging and growing clusters and will expand the supply and export capabilities of firms into high value markets and products. The project will cover the cost to impart technical knowledge to the production process of potential SME suppliers and build their capacity to supply larger companies, while also facilitating access to global value chains outside of Ghana. It will build on examples from World Bank Group support in other countries, such as the Vietnam Supplier Development Program implemented by the International Finance Corporation (IFC) in 2018 in partnership with the Vietnam Industry Agency to help local companies become suppliers for multinational enterprises (MNEs). Component 3: Enhancing the emergence of young entrepreneurs in selected sectors 18. This component will provide a combination of training and capacity building support, BDS, access to markets and technology, and business grants to young entrepreneurs, including for businesses or start-ups that can benefit from the growing demand in selected value chains. The project will identify appropriate “funneling� mechanisms to target and screen high potential entrepreneurs that could most benefit from project interventions such as extensive BDS, access to markets and technology, and grants, while delivering relatively inexpensive training, mentoring, and capacity building support to a larger number of youth entrepreneurs. To catalyze the development of high potential entrepreneurs, the project will leverage the Government’s flagship YOUStart program. The YOUStart program was announced in the 2022 budget statement with the objective of supporting the creation of 1 million jobs in the next three years (2022-2025) and consists of three models: (i) YOUGrace; (ii) District Entrepreneurship Program (DEP); and (iii) Commercial Model. This component will also provide technical assistance (TA), investments, and overall systems strengthening support to the YOUStart Secretariat under the Ministry of Finance (MOF) and the implementing agencies – the Ghana Enterprises Agency (GEA) and National Entrepreneurship and Innovation Program (NEIP). 19. Both the environmental and social risks of the project are rated moderate considering the nature of the proposed interventions, the potential risks and impacts associated with the proposed activities, and the capacity of the implementing agencies to effectively manage risks and impacts. Under Component 1, the project proposes to offer complementary public investments in common goods which may include connection to major utility services such as electricity, water, telecommunication services etc. The provision of these utilities is associated with noise pollution, dust emissions, waste generation, ground disturbances, and depending on the location of the investment, some vegetation may be removed through cutting of transverse or land clearing. The installation of these facilities will Oct 14, 2022 Page 6 of 8 The World Bank Jobs for Youth through Competitiveness and Entrepreneurship Support (P179221) expose workers to some occupational health and safety (OHS) hazards such as working at height, live electric cables, moving vehicles and machinery, open trenches, sharp objects etc. The communities may also be exposed to traffic related risks due to the use of machinery and equipment for the installation of these facilities. These works will happen at a time when COVID-19 is still prevalent and therefore presents some risk to workers and communities. The Components 2 and 3 will support development of MSMEs including providing grants for youth-led profitable businesses. At this stage, the eligible businesses have not been clearly defined but there are potential environmental and social risks and impacts that may be associated with their operations. For example, a manufacturing industry may generate waste (solid, liquid and potentially hazardous waste), noise, fumes, etc. and their workers may be exposed to occupational health and safety hazards. There are also risks of exclusion of women, persons with disabilities and youth from remote and rural areas from project benefits, labor management and working conditions, child labor as well as Gender Based Violence (Sexual Exploitation and Abuse and Sexual Harassment (SEA/SH). The project will also need to manage complex consultation and coordination among wide range of stakeholder and address potential project related complaints and queries during implementation. Risk of land acquisition and restriction of access may also occur during trenching and connection of businesses to utility services. There is also the potential for land acquisition depending on the type of investment that the sub business grant will finance. These potential environmental and social risks and impacts are generally not expected to be complex, they can be easily predicted, and are more likely to be localized. There are readily available mitigations measures that can effectively control these risks and impacts in a cost-effective manner. The proposed E&S instruments such as ESMF, RF, SEP, LMP and specific site-specific instruments which will be prepared for relevant subprojects and activities will help resolve potential adverse E&S risks and impacts. The proposed implementing agencies: MOTI; GEA; and NEIP have good experience in IDA financed projects with satisfactory E&S performance ratings for all ongoing IDA projects they are currently involved. The implementation of this project is therefore not expected to be a challenge to the implementation agencies. . CONTACT POINT World Bank Farah Dib, Samik Adhikari Senior Private Sector Specialist Borrower/Client/Recipient Ministry of Finance Yvonne Quansah Director yodoi@mofep.gov.gh Implementing Agencies Oct 14, 2022 Page 7 of 8 The World Bank Jobs for Youth through Competitiveness and Entrepreneurship Support (P179221) Ghana Enterprise Agency Kosi Yankey Chief Executive Officer kosi.yankey@gea.gov.gh Ministry of Trade and Industry Patrick Nimo Chief Director paddynimo@gmail.com National Entrepreneurship and Innovation Programme Kofi Ofosu Chief Executive Officer ofosu163@gmail.com FOR MORE INFORMATION CONTACT The World Bank 1818 H Street, NW Washington, D.C. 20433 Telephone: (202) 473-1000 Web: http://www.worldbank.org/projects APPROVAL Task Team Leader(s): Farah Dib, Samik Adhikari Approved By APPROVALTBL Country Director: Agata E. Pawlowska 09-Nov-2022 Oct 14, 2022 Page 8 of 8