Impactful outcomes do not happen in isolation. They require partnerships, and the state has a critical role to play in shaping them. However, with public budgets under strain, government and donors are searching for innovation. Outcomes-based funding models have emerged as one response. These funds aim to improve efficiency and effectiveness by paying for measurable results and shifting resources away from programmes that do not demonstrate impact.
The Presidency’s jobs boost fund is one such initiative. It was launched to boost market-linked employment outcomes, with a strong emphasis on additionality and placement into jobs that would not otherwise have existed. The model prioritises demand-led placements, clear attribution of results and avoiding overlap with existing public or philanthropic funding streams that already subsidise employment pathways.
Endorsement
These are sensible design principles, and the success of the fund was referenced in the state of the nation address. However, given the scale and spatial distribution of South Africa’s youth unemployment crisis, the question is whether our incentive perimeter is wide enough.
More than 85% of new formal sector jobs are concentrated in metropolitan hubs. Many young people are searching for opportunities far from these growth centres. Their journeys into economic participation are rarely linear and seldom confined to a single funding stream or institution. If our outcomes mechanisms focus narrowly on formal employer-led placements, we risk strengthening one part of the system while leaving other critical pathways underpowered.
Take YearBeyond, a social franchise youth service programme. Its theory of change is straightforward: provide work experience, build competencies, connect young people to opportunities and support their transition from being “not in employment, education or training” (Neet) to economic participation. Over the past decade 70% to 80% of participants have transitioned into the economy annually. That matters.
Yet longitudinal evidence shows many young people churn in and out of employment over several years. With only 8.7% of job seekers absorbed into the economy annually, stability is hard-won. The challenge is not simply entry into the economy, but also sustained participation over time.
Outcomes-based pilot
YearBeyond and Harambee tested this directly through an outcomes-based pilot. Partners within the YeBo Social Franchise were rewarded for keeping young people economically active for 12 months after exiting a state-funded youth service programme. The goal was deliberate: from first placement to durability.
The pilot surfaced an uncomfortable but important reality. Public funding is often part of the transition pathway. Organisations that achieved stronger, sustained outcomes frequently had access to public programmes that allowed them to smooth gaps between market opportunities. This was not a substitute for private employment. It was a bridge.
This is where the debate on additionality becomes more nuanced. Leveraging public funds does not automatically negate additionality. If public support reduces prolonged unemployment gaps, strengthens employability and increases the probability of subsequent market absorption, it can be catalytic rather than duplicative. The relevant question is not whether public funding is present, but whether the overall trajectory shifts in a way that would not otherwise have occurred.
Similarly, economic activity extends beyond formal payroll employment. Many young people move in and out of self-employment between transitions. A small enterprise may begin as survival income and evolve into something more stable. Measuring this space is complex, particularly where formalisation is low and trust in systems is fragile. However, excluding it because it is difficult to verify risks narrows our field of vision to only the cleanest outcomes.
Understanding education transitions
Education transitions present another design challenge. The fiscal and human cost of dropout from tertiary and vocational pathways is significant. Enrolment alone is not enough. Retention and progression matter. If we are serious about reducing Neet rates, incentive models should consider how to strengthen traction within educational transitions alongside employment outcomes.
The pilot also raised a broader structural question about who is inside our outcomes frameworks and who is left out. Who is incentivised and who is excluded?
The pilot also raised a broader structural question about who is inside our outcomes frameworks and who is left out. Who is incentivised and who is excluded? The private sector remains central to growth. But outside major hubs, the social sector and the state are often the most consistent economic actors. Community organisations, NGOs, schools, clinics and other social spaces shape youth trajectories in practice. For example, in YearBeyond, almost 5% of participants are retained and financed by the partners. Ignoring their role in incentive design risks overlooking where real leverage lies.
None of this diminishes the value of mechanisms focused on market-linked outcomes. Rather, it suggests complementary approaches may be required if we are to address the full complexity of youth transitions.
Ecosystem approach
The youth unemployment crisis will not be solved by a single funding instrument. It demands an ecosystem approach. That means defining additionality in a way that recognises catalytic public support. It means measuring durability, not only entry. It means finding credible ways to value self-employment and progression in education. It means recognising intermediaries and social sector actors as part of the economic architecture.
Partnerships are not optional. They are structural. Incentives shape behaviour across that structure. If we want to reduce Neet rates meaningfully, we need outcome mechanisms that reflect the pathways young people actually navigate, not only the pathways that are easiest to count. The task ahead is not to abandon existing instruments but to refine and complement them so the full system works in concert.
Hope will not change the trajectory on its own. Smarter incentives, applied across the ecosystem, might.
• Dr Hove is a board member and Boulle CEO of the YeBo Institute.
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