Harnessing young entrepreneurs to deliver SA from jobs crisis
While tertiary education is often depicted as the route to economic freedom, school leavers should be encouraged to start companies
SA’s economic growth, sluggish before Covid-19, is now under severe strain. At this point, it’s hard to see when the pandemic will no longer be an issue and where the jobs will come from.
The government’s National Development Plan (NDP) projects that by 2030, some 90% of new employment opportunities, at least 11-million of them, will be created by small and medium enterprises (SMEs). However, this is looking increasingly unlikely in the face of stubborn unemployment rates and brutal job losses due to the pandemic.
More alarming is the state of youth unemployment, which hit an unprecedented high of 30.1% in the first quarter of 2020, with nearly 9-million young South Africans unable to find work, according to Stats SA. And SA must also absorb hundreds of thousands of matriculants who graduate from high school each year.
In 2018, President Cyril Ramaphosa promised to tackle youth unemployment through the Youth Employment Service (YES) initiative, but the pandemic has hindered those efforts. YES is anticipating a further increase in youth unemployment as jobs in tourism and hospitality, the biggest employer of entry-level jobs, have been hit by Covid-19’s travel restrictions.
What SA needs urgently is an array of creative new ideas to stimulate employment — a mixture of policy changes that make it easier for big business to employ (and let go of) young people and create a hyper-conducive and flexible small business regime that promotes the employment of young people.
Now, more than ever, we need to take more seriously the opportunity of promoting “very young” entrepreneurship as a viable option for matriculants and tertiary education graduates — those between 18 and 25 years old.
In a research report, “The Very Young Entrepreneur Scenario for Africa 2020”, commissioned by the Anzisha Prize which works with very young African entrepreneurs for over a decade, it was found that 77 of its 122 Anzisha Fellows had created over 2,000 dignified work opportunities and 56% of those jobs were for young people under 25.
The report is careful not to paint youth entrepreneurship as a panacea. But what it does say is that there’s been an underinvestment in very young entrepreneurship. And it provides a counterpoint to the commonly held view that older entrepreneurs are more successful and have more impact.
But entrepreneurship among the very young sits at the intersection of three established policy spaces — education policy, small enterprise policy and youth policy — and often gets lost in between.
Differences with elder peers
The very young entrepreneur scenario proposes investing heavily on those entrepreneurs between the ages of 18 and 25. This is necessary since businesses started by older entrepreneurs generally have a higher chance of surviving anyway.
Research suggests that young entrepreneurs are more receptive to starting businesses using new technologies, and they’re more adaptable to social and economic changes and to challenging the status quo than their older counterparts. Unburdened by preconceived assumptions, they can look at problems and possible solutions in new ways, allowing them to be more innovative.
But the success of young entrepreneurs requires the creation of an ecosystem that includes the private sector, educators, the government, parents and a support network of investors and mentors. Those without those means have a harder road to travel than those with support.
Younger entrepreneurs also have specific challenges not as acutely felt amongst older, more established peers.
For one thing, they have less access to credit — often the only source of financing is family and friends. But many of these financing arrangements are informal in nature, and should be formalised to protect the personal relationships. Innovations in lending would support this sector.
Of course, an early exposure to entrepreneurship, through integrating these ideas into education systems, are essential to fostering aspirations. We need to reimagine secondary education in ways where it’s not just seen as a stepping stone to tertiary education, but as a platform from which young people can transition directly into work.
Education policies need to be implemented that push entrepreneurship and business skills development, including promoting the skills required to start a business and other technical skills.
One of the most powerful influences are parents, and they often expect that their children should go from school to university, not to work. But just as it’s important to show young entrepreneurs examples of success, it’s also critical that parents are persuaded to support their children’s entrepreneurial aspirations.
Lastly, incubators and accelerators provide critical training and support. They typically focus on helping entrepreneurs and innovators to solidify ideas that could evolve into businesses, patents or other ventures. Incubators might provide workspaces, peer or expert mentoring, training and networking.
But they need to do more now: they need to reach out and mentor young people in geographically distant areas. In this way, they can help budding entrepreneurs overcome the structural challenges they face, and help them contribute to building the country.
* Theunissen is the founder of Property Point which has facilitated opportunities worth more than R1.5bn for 216 SMMEs. Adler is the executive director of the Anzisha Prize, a partnership between the African Leadership Academy and the Mastercard Foundation that seeks to increase the number of very young entrepreneurs in Africa.
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