Youth unemployment across Africa and the Middle East is a complex and urgent challenge. With over 60% of the population under the age of 25, the region faces a demographic surge that, if not matched with economic opportunity, risks deepening cycles of unemployment, underemployment, and exclusion, particularly for women and marginalised youth.
Each year, more young people enter the labour market than there are jobs to absorb them, especially in less developed economies. Formal employment remains out of reach for most: In 2023, only about one in five youth in low-income countries could expect to secure regular paid employment and nearly three-quarters of young adults in Sub-Saharan Africa remained trapped in insecure work, underscoring the persistent gap between demographic potential and economic opportunity.
Despite growing interest in youth employment programmes, many interventions remain fragmented and overly focused on supply-side solutions such as upskilling. While important, this narrow focus often overlooks the demand-side of the employment equation. In other words, what are the requirements, commercial motivations, and constraints faced by employers who ultimately create and sustain jobs?
This highlights a critical gap: the need for more evidence and investment in programmes that directly engage employers and respond to labour market realities with demand-driven solutions.
CFYE seeks to address this gap through the Pathways to Employment (PTE) Learning Series. Drawing on standardised data collected over 6 years of implementation and targeted case study research with selected partners, the PTE series aims to generate practical lessons on how different business models can create and sustain decent work for youth.
Paper 4: Intermediaries
Small and growing businesses (SGBs) across Africa and the Middle East face a persistent “missing middle”: too large for microfinance, too small for commercial banks, and too early-stage for mainstream private equity. The financing and support gap they face directly constrains job creation and improvement. One response that has emerged is Intermediary organisations such as impact investors, fund managers, and non-bank financial institutions that combine capital with technical assistance (TA) for portfolios of SGBs. By reaching many businesses through a single partnership with the donor, Intermediaries offer a mechanism for generating youth employment outcomes at scale.
For CFYE, Intermediaries represented a strategic bet: could a small number of well-positioned organisations deliver employment outcomes that would be difficult to achieve through direct SGB partnerships? This model accepts a fundamental trade-off. The opportunity is scale: a single grant can reach dozens or hundreds of SGBs, and through them, thousands of workers. The challenge is influence: CFYE funds the Intermediary, the Intermediary funds the SGB, the SGB employs young people. The further a donor’s funding travels from the point of employment, the harder it becomes to shape, verify, and attribute the results. Intermediaries face constraints on both sides of this equation.
On the supply side, the SGBs they support often lack the management capacity, HR systems, and data infrastructure needed to formalise employment and track outcomes. On the demand side, Intermediaries must balance their investment thesis with employment objectives that may not have been part of their original strategy, and develop measurement capabilities to demonstrate impact across diverse portfolios.
