Ntokozo Khumalo. Picture: BUSINESS DAY TV
Ntokozo Khumalo. Picture: BUSINESS DAY TV

On the eve of Youth Day, Ntokozo Khumalo discusses whether starting a business could help reduce youth unemployment in the country

BUSINESS DAY TV: As SA’s youth mark Youth Day tomorrow, youth unemployment has climbed to a record high, leaving young people feeling like they have very little to celebrate or commemorate.

But the picture is not completely bleak, especially for those who hone in on their entrepreneurial spirit. Business Day TV reporter Ntokozo Khumalo filed this report, let’s take a look.

NTOKOZO KHUMALO: More than a quarter of South Africans are unemployed and at least half of that figure is young people under the age of 34. These are the stats the Global Entrepreneurship Monitor sees as a ticking time bomb.

The Hope Factory, which mentors entrepreneurs across the country, says that although government and corporates alike have been punting entrepreneurship to help tackle unemployment, starting one’s own business still has negative connotations to many.

HF: "It’s not always easy because firstly it’s not something that we talk about positively when we say somebody is going to become an entrepreneur, we celebrate now … we celebrate a lot of people who have found employment. So now the energy around it is not actually building the courage in our youth to enter into entrepreneurship. So basically, it is the issue of mindset.

NK: Mzuzukile Soni is a 1970s kid who founded Brownsense, an online business platform for black small businesses. He agrees that being a successful entrepreneur starts with the mindset and getting things done with what you have.

MZUZUKILE SONI: "The inspiration behind it was just being tired of complaining and being tired of waiting for government programmes to kick in, the corporates to embrace or take it seriously in terms of ESD or whatever else that they’ve got in place, but to say as a business, as a group of people, we’ve got the power to make things happen with what we have, where we are." NK: Lack of financing is often the number one reason given for the declining entrepreneurial spirit in the country but the Hope Factory says money is often the last thing on a real entrepreneur’s mind.

HF: "True entrepreneurs sometimes don’t even look for finance, they just want to be given access to market, opportunities to pitch their businesses in order for them to get known and to be seen." NK: And in order for this to happen Mzuzukile says young entrepreneurs need to embrace the entrepreneurial process and know there will be speedbumps along the way.

MS: "Self-awareness, loving the process and hard work, there is nothing that you will achieve without that. That is a key ingredient and for me, when I see something that seems way too easy to make money, I’m not saying it doesn’t work, but anything that is meaningful, that is sustainable that has a long-term effect, hard work will always be a requirement." NK: Mzuzukile adds that innovation, which is essential for entrepreneurship, should be the driver for today’s youth.

While SA is in its first recession in eight years, it does give young people the opportunity to become creative and create their own non-traditional income streams.

BDTV: So is entrepreneurship and starting your own business the panacea to SA’s unemployment problems? Joining us to unpack this further is Jason Levin, MD of Elevation Holdings.

Jason, so are the youth getting creative? Because it looks like SA is not very competitive when it comes to the entrepreneurship stakes and we are lagging when we should actually be pushing ahead because of our unemployment problems? JASON LEVIN: You are right, we are not where we should be in start-ups and entrepreneurship. There is a huge passion and interest and veracity around it from young people and we are very lucky to have one of the most populous or densely populated incubator and accelerator systems in the world. We have 340 organisations in SA like the Hope Factory that are assisting young entrepreneurs. Unfortunately, we’re not getting the outputs from it that we need.

Some of that is a function of a pretty bad education system so that by the time young people get into incubators, they’re not really going to fly very easily. And also that entrepreneurship is just hard and it’s not suited to everybody.

BDTV: So you’ve got to tackle things from grassroots level here because as you highlight, education is constraining entrepreneurship and that cropping up as one of the three most significant factors at this stage. In 2015, 45.4% of the working-aged adults believed they had no knowledge or skill to start their own business. That fell to 37.9% in 2016 and more staggering than the figure, I guess, is the pace of rapid decline we’re seeing on that front.

JL: Yes, we’ve built a great corporate sector in SA so being a corporate employee in SA, we’ve built a culture around that being glorified. We don’t necessarily or we haven’t glorified entrepreneurship as much as we should because to tell you the truth, we don’t have hundreds or thousands of great small businesses the way we do have hundreds of large and medium corporates that are world-class.

So it’s tough to glamorise it for young people. Then you also don’t want to over glamorise it because when you get into it you come out of an incubator you hit the world’s worst reality club. When you go and try to raise funds for a business or get into month six and realise how hard it is. So one of the things in the report that we launched last night says is, maybe the approach that we should adopt with incubators and capacity development resources is to train a whole lot of young people to be great team members of local and international start-ups based in this country as a live, job-based incubator for then becoming entrepreneurs themselves after a couple of years. There are very few entrepreneurs who, in their first attempt, certainly who in their 20s make a go of it. Nine out of 10 of those fail.

BDTV: In fact, some research done by the Seed Academy showed that over 80% of entrepreneurs already had one year’s work experience before they launched their own venture. So do you think it’s important for someone to have some experience before they go it alone? JL: Pivotal. It’s not in the millennial mindset to want to be a corporate slave or enter any corporate or employer position at a lower level. But the fact is school fees have to be paid and start-ups and small organisations are a great place to pay them because you’re likely in two years to learn a whole multifaceted set of skills that you’re unlikely to learn in a big corporate in that amount of time.

And equip yourself for entrepreneurship. The most successful entrepreneurs in the world, crazily are between 35 and 50 years old, so they’re not very young at all. There is a long road of school fees to be paid and the concern is that if you luck out, strike out or bomb out at age 23, you’re very battle-weary in terms of giving it another shot.

BDTV: Where there are long-term structural issues that need to be addressed? What are some of the quick wins that we could be achieving as a country right now to get more of the youth down that entrepreneurial road? JL: I believe government is trying. Having pledged a million jobs a year is a huge undertaking so driving that through SMEs, big business, public-sector projects etc is absolutely necessary. So small business needs to play its part and getting small businesses to suck up through incentives, through internships, etc, as are in place, as many young people as possible is one step in the right direction.

And then another step is post-matric qualifications which are quick and dirty. So we need in order for a tech-based start-up system lots of coders and developers and dev staff, and that’s not … basic programming isn’t that hard to pick up if you’ve matriculated. So you can put people through a six-to-12-month course without dragging them through three to four years of very expensive tertiary tuition to then put them into start-ups as junior dev staff. Those kinds of smart, workaround, quick-and-dirtys, upskilling people really quickly in ways that are practical and useful, we need to look at hundreds or thousands more opportunities of.

BDTV: Just very quickly, in your discussion paper Unicorns, Gazelles and Leapfrogs, great name, but I presume it looks into research in other countries. Which countries have got it right? JL: The countries who have bitten the bullet have got it right, countries that 15 years ago we would never have expected to be high-tech hubs like Bangalore in India, which is world class, Eastern European countries like Poland, which have invested hugely in B to C soft-tech skills as they call them. Countries like Israel where the government ploughed in a lot of money to build entrepreneurship.

So there are lots of lessons around. They don’t have to come from Silicon Valley … in fact very few of Silicon Valley’s lessons are transferrable to us, but there are a lot of lessons around from emerging markets.

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