Kenya Youth Employment and Opportunities Project (KYEOP)

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World Bank-financed program used public lotteries to give vulnerable 18 to 29-year-olds in 17 counties a start-up grant of 40,000 Kenyan shillings (KES) (approx. US$394, 2016), paid in two instalments, with or without
What are the main aims and objectives?

KYEOP’s development objective was “to increase employment and earnings opportunities for targeted youths”. Sub-component 2.1 funded start-up grants and business development services (BDS), such as training and counselling, for young people. The Micro and Small Enterprises Authority (MSEA) ran the grants. It named three barriers: lack of start-up finance, lack of business skills, and lack of exposure and networks.

Kenya’s labour market at the time of the 2016 project design explains the focus. More than half a million young people entered the workforce each year. Between 2009 and 2013, three million people reached working age, but the economy added only 2.6 million jobs, mostly informal. In 2009, unemployment was 13.1% among 20 to 24-year-olds, against 8.6% for all 15 to 64-year-olds. In urban areas, almost 80% of employed 15 to 24-year-olds worked in informal jobs. Young people also struggled to borrow because they had little collateral or work experience. By 2016, earlier Kenyan youth funds had not been assessed for impact.

The project defined youth as people aged 18 to 29. Kenya’s Constitution uses a wider range of 18 to 34.

Additional objectives were to:

  • build evidence, through impact evaluation, on which mix of grants and services works
  • reach 50% female participation and include people with disabilities

support recovery from COVID-19, the reason given for a large scale-up in 2021

How does the program work?

Young people received a cash grant, BDS, or both.

Start-up grant

Each grantee received KES 40,000 that did not have to be repaid. This was worth about US$394 at the 2016 exchange rate and about US$280 at the 2023 rate. MSEA paid it in two instalments by mobile money or bank transfer. Payments went into the young person’s own account, not a spouse’s or guardian’s. The original design included a one-day orientation before each instalment to draw up a simple business plan. In early 2020, the grant equalled about seven times women’s and four times men’s average monthly income from their main activity.

Business development services

As delivered, BDS combined a four-day classroom course with four months of a self-paced course by text message. It also included seven one-to-one sessions with a business counsellor. The course covered business ideas, funding sources, registration, marketing, pricing and record-keeping. The design specified performance-based contracts with providers.

Eligibility and selection

Applicants had to be:

  • aged 18 to 29
  • educated no higher than Form 4, the final year of secondary school
  • unemployed, or in vulnerable work such as unpaid family work
  • holders of a national identity card

Calls for applications opened every six months. Applicants also took an entrepreneurship aptitude test. Each county held a public lottery in front of officials and the press. Places were drawn separately by county and by gender. Twice as many people as places were drawn, to form a waiting list, because about 30% of those selected did not attend induction. A minimum quota applied for people with disabilities.

Coverage and previous system

The program started in five counties and expanded in stages to 17. It built on the Kenya Youth Empowerment Project (KYEP), approved in 2010, which tested training and internships. One lesson from KYEP was to connect would-be entrepreneurs with finance and BDS.

What is the overall cost?

A US$150 million credit from the World Bank’s International Development Association (IDA) financed KYEOP. By closing in 2023, US$143.70 million had been disbursed. Sub-component 2.1 was first allocated US$22 million. In 2021, a further US$15.68 million of unused funds was moved into it. Grants and BDS cost US$32.18 million, or US$374 per beneficiary against a planned US$647. Beneficiaries paid nothing. By June 2024, the Government of Kenya had provided KES 32.2 million (approx. US$225,000, 2023) of a planned KES 72.1 million in co-financing for the State Department for Youth Affairs.

How was it implemented?

MSEA ran the grants, BDS contracts and aptitude test. The youth ministry handled outreach, intake, follow-up and overall coordination. Its name changed several times during the project. A National Steering Committee, chaired by the Cabinet Secretary (the minister), oversaw the work.

The 2016 appraisal document described MSEA as “a relatively new government agency” that needed capacity support and some extra contract staff. Each implementing agency’s unit had an accountant, a procurement officer, a monitoring and evaluation (M&E) officer, an information systems specialist and a communications officer. The World Bank trained staff in random selection, M&E and results-based procurement. Youth officers were trained in M&E and project management. Innovations for Poverty Action (IPA) collected data for the impact evaluation.

Cornelia M. Tesliuc, Senior Social Protection Specialist at the World Bank, led the World Bank team at appraisal. Kevin Sanya Heraniah led it during supervision. Lilian Mbogo-Omollo, Principal Secretary of the Ministry of Public Service, Youth and Gender Affairs, was the government contact in 2016.

Key dates:

  • 20 May 2016: the World Bank approves KYEOP; the credit takes effect on 15 December 2016
  • October 2018: the first five counties complete training
  • March 2020: COVID-19 halts implementation for about six months
  • August 2021: a restructuring moves US$15.68 million into grants and extends the closing date
  • June 2023: the World Bank approves the follow-on NYOTA project, covering all 47 counties

31 August 2023: KYEOP closes after extensions totalling 20 months

What impact has been measured?

Level 1 (participation): By closing in August 2023, 85,951 young people had received a grant, BDS or both. A June 2023 World Bank report gave 76,361. The Auditor-General counted 87,432 for the wider job-creation component by June 2023. Women made up 49% of component participants.

Level 2 (outcomes): World Bank follow-up surveys without a comparison group report that employment, including self-employment, rose from 71.6% to 89.6%. They also report a 50.4% rise in earnings. In its 2024 audit, the Auditor-General found that 16 of 91 businesses it checked had closed.

Level 3 (wider impact): A World Bank brief (October 2023) reports that 48% of business-support recipients created jobs for others. No independent source confirms this.

Level 4 (proof of impact): A randomised controlled trial assigned 9,380 applicants by lottery to grants, BDS, both, or no support. Over the first seven months of COVID-19, grant recipients were more likely to keep a business, earn more revenue and profits, and retain employees. BDS alone showed no effect, though the authors note the period was too short for training effects. About two years into the pandemic, grants raised business performance by 25% to 45% compared with the control group. This held for women and men in a sample of 1,715 married or partnered participants.

Independent review: In September 2024, the World Bank’s Independent Evaluation Group (IEG) rated the project’s outcome Moderately Satisfactory. The completion report had rated it Satisfactory.

Highest evidence level: Level 4, for the business outcomes of grants.

Not yet proven:

  • that the program raised employment and earnings across all beneficiaries
  • that BDS adds value on its own
  • any effect beyond about two years
  • independent replication of the trial, whose authors include World Bank staff
What lessons can be learned?

Follow-up was reduced during the scale-up. Kenya’s Auditor-General audited the job-creation component in 2024. After the 2021 restructuring, the second orientation was dropped and the first was cut to one hour. Grantees then received the second instalment without accounting for the first. Of 91 grantees interviewed, 52 were not monitored between instalments.

Many beneficiaries could not be verified. Of 308 sampled grantees, 98 could not be reached and 119 refused to meet the auditors. They had received KES 83.2 million (approx. US$582,000 at the August 2023 rate).

Contracts and complaints needed tighter control. One BDS contractor received 99.7% of a KES 298 million (approx. US$2.09 million, 2023) contract after training about 60% of the agreed number. Complaints took 14 days on average to resolve, against a two-day standard. The press reported these findings in February 2024.

Administration slowed delivery. Budget releases were unpredictable and transfers took up to 30 days. Five different Principal Secretaries, who chair the project’s technical committee, held the post during the project.

Participants raised concerns. In 2021 research, most participants felt the grant was too small, especially for new businesses. The identity card rule and online applications excluded some young people. Lotteries were seen as fair, but unable to reach the most disadvantaged.

Lessons:

  • Stakeholders and beneficiaries saw the lotteries as transparent and fair.
  • The completion report links gender balance to separate draws by gender, childcare during training and payments into personal accounts.
  • The completion report suggests requiring a working information system before launch.
  • The Auditor-General recommended making part of the funding repayable, so it can be lent to other beneficiaries.

The World Bank told the Nation that the follow-on NYOTA project added stronger monitoring.

Notes + Additional Context

CURATED BY

Tom Hancock

Manager for AI and Research
Global Entrepreneurship Network
United Kingdom