Africa’s jobs problem is a market access problem
For decades, formal employment in Africa has remained stuck at around 15 percent. Most people work in small, informal businesses with low and unstable earnings. Even amid educational gains, nearly half of all university graduates work informally.
One common way that governments and development funders try to promote business growth and job creation is to help businesses produce more, including by giving them credit and training. This can be useful, but only a little and for some. Why? Part of the answer is because most firms are not just constrained by what they can produce, but by who they can sell to.
In this blog, we draw on a growing body of evidence from the J-PAL network and reflections from the Growth Summit 2026 to explore how to harness the potential of export promotion in driving growth and job creation.
Growth comes from expanding demand, not just shifting it
When businesses sell to the same local market, one firm’s growth often comes at another’s expense. In these cases, external support to individual firms may simply reshuffle sales and workers across businesses, rather than creating new jobs. But when firms access new markets, they can expand without displacing existing activity. Exporting is the clearest example: firms selling into international markets bring in new demand that allows them to expand, invest, and hire, leading to a net increase in employees. This is why export-oriented growth has played such a central role in job creation globally (though global scope for export-led manufacturing may be narrowing). Further, multinational businesses can help smaller domestic firms grow by sourcing goods and services from them and linking them to larger production networks, creating demand and exposing them to new ways of working.
Market access also influences which firms survive. Given large productivity differences across businesses even within industries, fragmented markets can allow less productive firms to stay in business. Market integration increases competitive pressure to upgrade or exit, raising overall productivity.
Regional markets matter too: improving trade infrastructure and lowering tariffs, including through the Africa Continental Free Trade Area, would help turn 54 separate markets into one trade region, unlocking new demand. Across much of Africa, services have been central to recent productivity growth; understanding how these sectors can generate sustained external demand and better jobs remains an important frontier.
Exporting can transform businesses and jobs, leading to better lives
When firms access larger markets, they don’t just sell more; they change how they operate. In Egypt, rug producers who received export orders increased profits and upgraded product quality by learning directly from foreign buyers on how to consistently deliver. Domestic firms supplying multinationals in Costa Rica similarly saw sustained productivity gains through ongoing feedback and standards, and those in Uruguay saw improved export performance. In Bangladesh and Myanmar, firms supplying foreign buyers improved job safety, as meeting buyer requirements meant adopting safer practices (though industrial roles are not always preferred by workers).
Accessing new markets is costly and complex
Delivering to customers beyond local markets requires businesses to overcome additional steps— finding buyers, meeting standards, executing production, and managing logistics—that are costly and complex, even for ambitious, high-growth potential firms.
Targeted programs can ease these constraints by supporting sustained investment, learning, and coordination. Tools that help firms find and connect with buyers, such as digital trade platforms in Latin America and Uganda, have increased sales and exports by making firms discoverable. Buyer–supplier matching and procurement training have also improved business performance over time. And some governments directly help firms cover the costs of entering export markets. In Tunisia, a government subsidy program increased exports by offering matching grants that reduced upfront costs.
These efforts point to a broader implication for how public funds are deployed by governments and international financial institutions. Blended finance—public or concessional capital alongside private investment—should be used to address coordination failures, in which firms and investors won’t first move by themselves: backing first-time exporters, anchoring supplier networks, or seeding new sectors, instead of financing lower-risk activities that could move ahead on commercial terms.
What does this mean for policy?
If firms grow when they reach new customers, then policy should focus on making those connections easier. That means:
- helping firms find and match with buyers
- supporting firms to meet quality standards and deliver consistently
- reducing frictions that make it difficult to move goods, access inputs, and complete transactions
- using public and concessional finance to address coordination failures, such as supporting first movers, building networks, and facilitating entry into new markets
These are practical, targeted ways to harness demand—and with it, job creation.
Critically, export promotion may fall short if underlying systems aren’t adequate. Reliable energy, efficient customs, and functioning logistics shape whether firms can compete and export. These factors also influence who benefits from market integration. Improvements in market access tend to go to more connected regions first, while others adjust slowly, underscoring the need for complementary investments in infrastructure, mobility, and regional development to help share concentrated gains.
What’s next?
Building on these insights, J-PAL is committed to strengthening our work on evidence-informed approaches for growth and private sector development, especially in sub-Saharan Africa. We welcome opportunities to collaborate, including by working with governments and partners to co-design and assess export promotion strategies, improve targeting (stay tuned for a forthcoming J-PAL policy insight), and better understand how specific policies and programs translate into more jobs, higher wages, and fewer people living in poverty. If you’re interested in partnering or learning more, please contact Julia Kaufman at [email protected].
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When J-PAL co-founder Esther Duflo spoke with Aspen Network of Development Entrepreneurs (ANDE) last fall, she shared a message that resonated deeply with both our organizations: "Evidence is not about confirming what we believe; it’s about discovering what actually makes a difference."
When J-PAL co-founder Esther Duflo spoke with Aspen Network of Development Entrepreneurs (ANDE) last fall, she shared a message that resonated deeply with both our organizations: "Evidence is not about confirming what we believe; it’s about discovering what actually makes a difference."
Esther also emphasized the long-term goal of supporting entrepreneurs with this evidence: “The goal should be to help small firms become mid-sized enterprises that can sustain growth, create stable employment, and integrate into global markets.” She captured why entrepreneur-led development matters, and why we need to rethink how to improve it by putting evidence to work.
We’ve had the privilege of working with many policymakers and implementation leaders committed to making entrepreneurship a pathway for job creation. Drawing on our experience and recent conversations with partners across research and implementation, we’re sharing actionable ideas.
Seeing a bigger picture: Why entrepreneurship ecosystems matter
Small, dynamic businesses drive 50-90 percent of employment across low- and middle-income countries (LMICs). These businesses face daunting challenges, from lack of access to financing and talent to transitioning to lower emission economies. Yet only about 3 percent of international development assistance has traditionally focused on helping them overcome these challenges. Direct support to individual businesses can help create jobs, but understanding the broader conditions that shape entrepreneurial success is key to making development assistance programs more effective.
Entrepreneurship doesn't happen in isolation. It can thrive, or struggle, depending on the surrounding web of organizations and conditions, including investors, mentors, enabling policies, and market opportunities. Entrepreneurship ecosystems are the interconnected network of organizations, policies, and market linkages that allow entrepreneurs to start and grow businesses. Enterprise Support Organizations (ESOs)—accelerators, incubators, and other intermediaries—play a unique role here by helping firms access capital, build capabilities, and connect to markets.
Strengthening these ecosystem actors can help ease bottlenecks and foster more durable job creation and business growth. For example, tailored business consulting is a solution that can improve how entrepreneurs run a business and grow it, yet uptake remains low. Researchers also recommend developing markets for affordable, locally provided services to make proven practices more accessible and sustainable.
Using evidence to improve how organizations support entrepreneurs
An expanding evidence base on firm growth is helping practitioners and researchers learn faster, share lessons, and improve programs. Here are a few highlights:
Smarter selection: Improving targeting to focus support to entrepreneurs with the highest growth potential, and tailoring financing or other support to their needs can unlock their potential to grow their businesses, create jobs, and strengthen the local economy.
Non-traditional data like performance in business plan competitions, community input, and personal characteristics of business owners, sometimes combined with machine learning, have been able to predict entrepreneurial success and growth. By funding innovations for tools that identify and target high-potential firms, donors can help ESOs create more impact.
Building market connections: Linking businesses to new markets with programs that facilitate trade, e-commerce, and procurement programs often boost sales and employment by connecting small and mid-sized businesses to new buyers, and to each other. The know-how gained from these connections with buyers can also make local businesses more productive. By investing in programs that broker connections between small firms and large buyers, programs can fuel businesses to grow faster and longer.
Collaborative learning: Collaborative research initiatives directly inform and improve practical support programs. For example, Global Accelerator Learning Initiative (GALI) findings revealed that acceleration services often exacerbate gender inequities in financing, prompting organizations like the Sasakawa Peace Foundation (SPF) to design specific gender-lens acceleration programs.
By supporting organizational capacity building, particularly technical assistance for collection and strategic application of data, donors enable ESOs to match local entrepreneurs’ specific needs to their own capabilities and play a more specialized role within a higher performing ecosystem. These ESOs will also produce higher quality data on the performance of the businesses they support, enabling researchers to learn faster.
Three broader shifts for donors and policymakers
If we're serious about job creation, inclusive growth, and building low-emission economies in LMICs by leveraging entrepreneurship, we need to make three shifts:
1. Fund organizations, not just programs. Support ESOs to build capabilities, systems, and networks, not just deliver services. This requires longer funding horizons and flexibility for organizational development. The most effective ESOs are data-driven specialists that rigorously measure impact and refine offerings to meet clear market needs. Donor funding should empower them to identify these high-impact niches and scale solutions. Investing in organizational capacity enables ESOs to find the best match between business needs and market demand, drawing in market forces to multiply their impact.
2. Invest in evidence. Support research on what works, under what conditions, and for whom, like the evidence above. At the same time, invest in better data and stronger partnerships between researchers and practitioners to turn insights into more effective programs. Continued learning between these different actors is essential.
Donors can strengthen these partnerships to make sure all parties benefit from faster learning and practical application. More ambitious studies designed for scale and systems change, including those evaluating ecosystem-based interventions, will help build stronger and more useful learning cycles for everyone involved.
3. Think systemically. Success isn’t just about how many firms receive support, but whether whole markets or ecosystems become stronger and more inclusive. Are there missing pieces of critical infrastructure or a weak link that needs strengthening? Can local institutions such as universities based in LMICs serve as ecosystem enablers? Do organizations collaborate and form a spectrum of support, or are they fiercely competitive and duplicate each other’s efforts?
An aligned ecosystem is essential to create scalable pathways for many entrepreneurs, foster trusted networks, and improve access to markets and resources beyond the immediate businesses, leading to a more sustainable model of support over time.
Researchers in the J-PAL network have been using randomized evaluations to learn how to help people get jobs and how to help businesses grow for over two decades, drawing out insights to inform policies and programs from Brazil to sub-Saharan Africa and beyond. Researchers have also started testing how new AI interventions can support workers and firms to improve economic outcomes for people in low- and middle-income countries.
People in many countries face persistent challenges to employment. Even when jobs exist, specific opportunities can be hard to identify, difficult to get, and might not pay enough. Workers looking for jobs need employable skills and knowledge of where jobs are. Businesses and entrepreneurs, on the other hand, often struggle to grow, limiting how many jobs they can create. How can AI tools support workers and businesses to address these challenges?
Researchers in the J-PAL network have been using randomized evaluations to learn how to help people get jobs and how to help businesses grow for over two decades, drawing out insights to inform policies and programs from Brazil to sub-Saharan Africa and beyond. Researchers have also started testing how new AI interventions can support workers and firms to improve economic outcomes for people in low- and middle-income countries.
AI to support workers
AI has the potential to support workers and businesses in LMICs by both uncovering new evidence-informed solutions and making existing solutions more effective.
One clear pathway is by increasing worker performance. Early research on equipping workers with AI tools tends to show positive impacts on productivity.
For example, in ongoing research in the Czech Republic, small and mid-sized businesses whose workers received training on using AI in operations, marketing, customer management, product development, and financial management saw their profits grow compared to similar firms. Across Boston Consulting Group offices around the world, providing strategy consultants with access to a company-specific AI platform improved productivity and quality on knowledge-intensive tasks.
Within businesses, this early evidence suggests that AI tools lead to larger gains for workers with lower skills or less experience. In the Boston Consulting Group example above, AI-driven improvements were larger for consultants who were performing below average before the study began.
Similarly, a quasi-experimental study with customer support agents in the Philippines and the United States finds that providing agents with chatbot-based suggestions for client responses and links to internal documentation increased their performance. Improvements were largest among lower-skill agents, while higher-skilled agents receiving chatbot access experienced a small dip in work quality.
In the US, giving software developers at large companies access to AI assistants increased the number of tasks they completed compared to developers without access. Less-experienced developers saw larger productivity gains.
AI to connect workers and businesses
AI tools may help match workers to suitable jobs more efficiently by reducing search barriers for both job-seekers and employers.
For example, in Ghana, an automated application review tool screened prospective teachers more effectively than “human-only” and “human-with-AI-assistance” alternatives, resulting in a higher rate of offers and hires at the interview stage. Three ongoing projects will evaluate tools designed to improve matching: a career counseling and recommendation tool in Kenya; a platform to help hiring managers assess applicants in Mexico; and a system using administrative data to recommend applicants for existing vacancies in France.
AI to support businesses
However, improving performance and matching only go so far if businesses aren’t growing and expanding their hiring.
AI and other innovative tools can help banks and other lenders identify entrepreneurs and businesses with high growth potential, providing them with resources to grow and create jobs. For example, in Egypt, an AI-based credit scoring system that incorporated borrowers’ personality traits helped lenders allocate larger loans to client businesses that were more likely to grow with more capital, while flagging others who were unlikely to see their profits grow with the larger loan.
AI may help business owners and leaders make better decisions through customized advice, creating more jobs as they grow their existing enterprises or launch new ones. While giving traditional business training to entrepreneurs tends to have modest effects, evidence shows that more customized or consulting approaches can have greater impacts. Using AI may enable personalized and more effective support to help improve business practices. Among new sellers on a Chinese e-commerce site, for example, those receiving business training materials that an AI tool selected for them based on real-time performance data experienced higher revenues than sellers who were not offered training.
However, emerging evidence also shows not all entrepreneurs may benefit from general purpose tools. For example, an early study from Kenya found that small business owners who were offered access to an “AI business assistant” chatbot did not improve business performance on average. But researchers also found that, among this group of entrepreneurs, businesses that were already more successful before being introduced to the AI tool increased their revenues and profits—yet the chatbot reduced revenues and profits for those who were less successful. Researchers suggest that the difference in outcomes stemmed from how the business owners picked and implemented specific pieces of AI advice.
Risks of exacerbating inequality
How will the role of workers change in economies shaped by AI? Researchers within and beyond the J-PAL network are assessing AI’s broader economic implications, including the possibility that AI’s widespread use could cause firms to hire fewer people in LMICs or lower their wages. For example, one study identified relative declines in employment for early-career workers in AI-exposed fields in the United States. As AI adoption spreads in LMICs, automation may reduce the need for workers with certain skills, with some groups benefiting while others lose out.
If not designed and monitored with care, AI-based matching and targeting systems to improve jobs and business growth may also exacerbate inequality. These AI tools identify hidden patterns in data that predict successful trainees or candidates. Depending on how the underlying model is trained, it may reinforce biases against marginalized groups. The existing evidence is mixed: in one case, giving reviewers an AI-generated score of applicants reduced discrimination against women. In another study that leveraged a Fortune 500 company’s historical hiring data, a tool that predicted candidate quality worsened discrimination unless it was carefully designed to consider target groups who are less represented in the data.
Careful design may allow AI to instead close gaps—helping underserved groups access credit, prepare for disasters, and maintain housing.
Looking forward
Further research should explore how to leverage AI tools for improved skills, productivity, and wellbeing, and avoid inadvertent harm. Priority questions include:
- Skills and training: How can AI tools improve training for job-seekers and workers? Can they make training on hard or soft skills more accessible and customized?
- Workforce organization: How can AI reduce discrimination and bias in the workplace and in hiring?
- Small and medium enterprise (SME) profitability and sustainability: What are the best models of AI interventions to increase the profitability, resilience, and sustainability of small enterprises?
- Welfare effects: What are the job displacement effects of AI, and how do they vary across LMIC sectors and labor markets?
AI adoption presents both opportunities and challenges for LMICs trying to support workers and businesses and foster economic growth that benefits more people. To chart this emerging frontier, J-PAL’s forthcoming AI Evidence Playbook will summarize what we know—and what we still need to learn—about AI’s role across sectors.
Beyond labor markets and business growth, AI offers enormous potential in many other sectors. The next blog in this series will focus on applications relevant for health outcomes—stay tuned!
Read other posts in this series.
The private sector is a fundamental force for driving global prosperity. For corporations and investors, there’s enormous opportunity in low- and middle-income countries’ growing markets and talent. What’s less clear is how to partner most effectively for maximum impact: How can multinationals, local businesses, investors, governments, and catalytic donor capital work together to deliver growth, expand access to higher-income jobs, and scale market-based solutions?
Prior Evidence Effect installments have focused on how to work with governments and nonprofits to scale what works. Of course, the private sector is another fundamental force for driving global prosperity. And for corporations and investors, there’s enormous opportunity in low- and middle-income countries’ growing markets and talent.
What’s less clear is how to partner most effectively for maximum impact: How can multinationals, local businesses, investors, governments, and catalytic donor capital work together to deliver growth, expand access to higher-income jobs, and scale market-based solutions?
Today, a growing body of evidence offers guidance to sharpen the playbook for these partners. But more partnerships between researchers and private sector actors are needed to generate new insights and test what works. At J-PAL, we’re working to foster more partnerships between researchers and private sector implementers to help fill this evidence gap.
For those working at the intersection of development and business innovation, our message is simple: Partnership and learning are essential to maximize both profits and social impact. Together we want to create sustainable solutions that work with markets to improve people’s lives while reducing reliance on traditional aid at a time when those resources are increasingly limited.
Three impactful strategies to get us started: What works to support business growth, better jobs, and market-based solutions
Support small and growing businesses: Small and mid-sized enterprises (SMEs) create most jobs in LMICs, but face a daunting list of barriers—lack of growth financing, difficulty finding skilled workers and managers, limited access to buyers, and so on. Multinational and domestic firms should consider those strategies that have the highest impact and business returns—for example, improved access to customers has been shown to boost SME profits, productivity, and product quality in different industries. Companies with purchasing power should use such insights to be intentional about buying from places where they actively want to create more growth and impact.
Government agencies like export promotion offices can also apply evidence to improve how they support industry development: Exporting can bring broad benefits beyond short-term growth. When local businesses in low- and middle-income countries connect to export markets, they often create more jobs, pay higher wages, and improve product quality and management practices.
Access to finance and capital is essential for businesses, but doesn’t always lead to transformative growth for the average small and mid-size business. A growing body of research shows that targeting high-potential entrepreneurs with more tailored finance can boost business performance and jobs. Small tweaks to microcredit programs can also improve outcomes across a large client base. Investors and lenders can use such evidence-based insights to refine their product offerings and to incorporate entrepreneur selection methods into their due diligence at low cost, improving impact and reducing risk.
Upskill the workforce: Skills matter, but training outcomes are most successful when tied to actual employers and industry needs, and when they look beyond just technical know-how. In the United States, sectoral employment programs that focus on industries with high pay and/or rising demand for workers have led to lasting income gains and helped firms find talent. Globally, boosting soft skills like communication and teamwork is increasingly proven to make a real difference in lifting the earnings of workers and entrepreneurs by lifting productivity. Business stands to benefit from participating in such programs to access a pool of workforce-ready talent, helping support growth.
Make markets work for people and businesses: Scaling up market-driven solutions has the potential to bring home immense benefits, including helping solve long-standing development challenges—when designed well. Discovering how these programs affect not just the people directly involved, but also the broader community, can help shape more appropriate design choices and avoid unintended harm.
Policymakers and implementers should pilot and test novel market interventions before scaling. In India, emissions markets now improving air quality for 15 million people began with a rigorously tested pilot, showing how evidence-informed market tools can deliver large-scale improvements to people’s lives.
Market tools work best when they reduce risk, build trust, and create incentives for investment across entire supply chains. In agriculture, for example, research is revealing both the benefits and tradeoffs of improving farmers’ access to domestic and international markets, helping decision-makers understand not just who benefits and how these benefits are distributed, but how these programs affect prices, production, and communities.
How can we create the right enablers for evidence-informed private sector impact?
J-PAL is investing in partnerships between researchers and private sector implementers to co-generate new insights and make evidence use more routine in private sector decision-making for impact:
- Our work on private sector engagement helps companies to access J-PAL’s evidence and research in support of their social and environmental goals.
- The UM6P-J-PAL Agricultural Lab for Africa (UJALA) is advancing solutions for small-scale farming and food security on the continent in partnership with OCP Africa, a leading fertilizer company.
- We are partnering with businesses from across industries to meet their impact aims, from decarbonizing aviation to ride-hailing, to improving factory working conditions in the fashion supply chain.
Supporting evidence-informed policy that contributes to long-term growth is also critical. Government-research partnerships helped inform policy decisions like India’s market-based industrial pollution regulation, and are identifying tools to improve public procurement, court systems, and taxation.
Of course, rigorous research on programs, policies, and investments is just one piece of the puzzle. Global trade trends, macroeconomic stability, and social policies to address extreme inequality all shape how much the private sector can contribute to inclusive growth. But evidence on growth and market-shaping policies plays a vital complementary role in these broader conversations. We welcome continued dialogue and collaboration to help keep private sector solutions both innovative and grounded in what delivers real impact.