The potential of young entrepreneurs in South Africa

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Research shows that young people are three times more likely to be unemployed. The
African Economic Outlook 2012 report concurs that youth unemployment figures will
increase unless Africa moves swiftly to make youth employment a priority.


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South Africa, along with the rest of the world, is facing a youth employment
crisis of unprecedented proportions. The country’s National Youth Policy (NYP) of
2009-2014 made mention of the mid-year population estimates for 2008 where the
young people (aged 14 - 35) are said to comprise 37.4%.
It confirms that the vast majority of the South African population constitute
youth, while the population analysis statistics indicate that the youth also constitute
a significant proportion of the adult population.
According to the International Labour Organisation (ILO), "... compared to adults,
young people today are more than three times as likely to be unemployed ... (and)
being without work means being without a chance to work themselves out of
poverty".
The African Economic Outlook 2012 report concurs that youth unemployment
figures will increase unless Africa moves swiftly to make youth employment a priority.

Unemployment rates among young South Africans have soared to double the
national average, hitting 50.5% in 2010, according to the report. The report notes
that South Africa had a youth unemployment rate of 48% in 2009, compared to 19%
for adults.

Moleke (2006)’s study indicates that the unemployment rate of young people who
drop out of secondary school before completing their senior secondary education and
those with some secondary school education is at 58,5% and 50% respectively. The
former represents 40,3% of the unemployed youth of South Africa.

This is the highest of any education exit group illustrating extremely poor labour
market prospects for this category of youth. A matriculation certificate, however still
does not guarantee employment for those wishing to enter the labour market after
school.
A transformation audit released by the Institute for Justice and Reconciliation (IJR)
questions whether youth entrepreneurship, as an alternative to formal employment,
has been sufficiently exploited to get young people into jobs, especially since job
growth in the private and public sectors is slow.
A 2011 Global Entrepreneurship Monitor (GEM) report has found that the more
people in a country are involved in opportunity entrepreneurship, the greater the
level of economic development.
Self-employment and entrepreneurship in South Africa are however challenging
strategies, because only a small proportion of the youth are self-employed and
engaged in entrepreneurial activities.
Some barriers include limited access to collateral, capital, infrastructure or
appropriate technology and lack of business networks; prevent entrepreneurship
among this large, young, economically excluded population. For example, the National
Youth Development Agency is one of the few institutions to finance (e.g. finance
ranges from R5000 to R100000 per venture youth ventures); but it is said that
obtaining the funds is often a slow, inefficient process.
The Kauffman index of entrepreneurial activity, a US-based indicator reveals that
another barrier for young people’s ability to move into more sustainable enterprises is
hampered by their inexperience and [other] age-related constraints. Their findings
state that the average age of successful entrepreneurs was 39, as by then people
had the advantage of work experience and a network of contacts they had built up
over the years.
This corroborates the IJR report that most young people in South Africa lack
requisite skills or experience to navigate the business world. An exception to this
however was a younger group with successes in information and computing
technologies. These abovementioned assertions support the IJR report that says
there is a strong link between the level of formal education and entrepreneurial
activity.
In order words, people with a tertiary qualification are more likely to start an
opportunity-motivated business than a business motivated by necessity.
Unfortunately, necessity businesses started out of desperation by people who
cannot find alternative employment generally provide only enough income to employ
one person. Evidence from various countries reveals that experiential entrepreneurial
skills development programs coupled with effective non-financial and financial support
are among the factors that could help address these challenges.
But another difficulty facing SA's efforts to create young entrepreneurs is
attitude. According to the IJR report, willingness to accept the possibility that a
business will fail is a good indicator of entrepreneurial capacity. The report
approximate that 40% of young South Africans say fear of failure is a strong
inhibiting factor in deciding to start their own business, with black and coloured
youths the most inhibited.
This unfortunate attitude is further complicated by their culture of entitlement of
believing that being an entrepreneur implies a "rags to riches’ anecdote where
through securing government tenders or through automatically having black economic
empowerment (BEE) credentials means they need not to work harder and that these
tenders will sustain their businesses. Regrettably, one of the unintended
consequences of BEE policies has been the inhibition of entrepreneurial activity
among black youths.
y Matome Mahasha


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