Why GEN’s Work Matters

Countries often tout population demographics as a sign of strength. High population statistics tend to imply healthy economies that offer potentially billions of people access to basic sanitation, healthcare, education, and employment opportunities.

The World Health Organization, however, has identified a trend towards urbanization, or an unbalanced urban population increase compared to rural locations. In 2007, the global urban population exceeded the population of rural areas for the first time in history, and according to WHO estimates, the number of urban residents is currently growing at a rate of 60 million people annually. Urban populations will nearly double from 3.4 billion to 6.4 billion people by the year 2050. In a recent interview with the Guardian, John Wilmoth, the director of the United Nations Population Division, argued “managing urban areas has become one of the most important development challenges of the 21st century.”

Japan, the United States, and other western countries are classified by the United Nations as “upper-middle-income” countries. These countries have been urbanized for several decades. But “lower-middle” and “low-income” countries are expected to experience the most rapid rate of population growth through 2050. Countries such as these include Nigeria, India, and China, which together are estimated to account for 37 percent of the world’s urban population growth. This massive expansion is fueled particularly by youth under the age of 30.

The large influx to low-income urban centers is problematic because these cities are designed to support established industries and current population levels. As young people move to urban centers in search of job prospects, many are instead faced with unemployment or underemployment in city slums with inadequate infrastructure and municipal services. One billion youth currently live in emerging markets–that figure will continue to rise rapidly, leaving high numbers of young people without opportunities to advance their lives meaningfully. But researchers at Stanford University believe there is potentially a multitrillion-dollar market of underserved business at the economic “bottom of the pyramid.”

slums

There have been numerous attempts by traditional microfinance operations to address these issues directly. While there certainly are success stories of the traditional micro-loan method, there have also been countless failures and misguided attempts that even with the best intentions fail to produce sustainable results.

The most effective element of the Generation Enterprise model is what co-founder Clara Chow refers to as “shared CEO services.” Local youth are recruited through NGOs and government partners, and then taught methods traditional to those of a typical Silicon Valley startup. Then the GEN investment team assists promising young entrepreneurs develop growth and scaling plans. Our goal is for this process to be replicated many times over to provide employment for countless at-risk youth, and eventually expand to new territories. Hopefully this model can serve a population of youth potentially stunted by lack of employment opportunity. Replication will be a critical task. But Generation Enterprise has added its first paid COO, and continues to expand through the efforts of dedicated volunteers and new sources of funding. With the flexibility of a Silicon Valley startup, Generation Enterprise has the potential to address some of the most pressing urbanization and population growth issues identified by the WHO and many other NGOs.

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