Are SA's youth a lost generation?
With the availability of jobs expected to diminish even further now, given that South Africa is in a technical recession after the economy contracted by 0.7% in the first quarter of 2017, Adv. Kobus Engelbrecht, spokesperson for the 2017 Entrepreneur of the Year® competition sponsored by Sanlam and BUSINESS/PARTNERS, says that the national attitude towards entrepreneurship needs to be shifted, especially in the minds of the youth.
South Africa currently possesses below average entrepreneurial activity levels for those aged between 18 and 34 years, says Engelbrecht. The GEM report showed that in 2016, only 6.3% of 25 – 34 year olds were engaged in early-stage entrepreneurial activity – down a staggering 42% from 2015, which reported 10.9%. This is also less than a third of the Africa average (20.8%) and efficiency-driven economies (17%), of which South Africa falls under.
South Africa also ranked 58th out of 65 economies in terms of entrepreneurial participation for this age group.
Interestingly though, entrepreneurship doesn’t appear to be an option driven by unemployment, judging from the results of the 2016 Seed Academy Startup Survey. Surveying 1500 startup entrepreneurs in South Africa, the survey revealed that only 4% started their business as they were unable to find a job and more than 80% had over a year of work experience before venturing into entrepreneurship.
Engelbrecht says that as South Africa’s economy looks set to stagnate for the foreseeable future with the World Bank forecasting GDP growth of just 0.6% and 1.1% in 2017 and 2018 respectively, the youth will increasingly have to explore entrepreneurship for employment opportunities. “Given low economic growth, companies in the private sector are either shaving jobs, or not hiring as they try to prevent further retrenchments. As such, the majority of jobs currently being created are in the public sector, which is counterproductive as this doesn’t contribute to GDP or job figures.”
Encouragingly, Engelbrecht says that Government has recognised the need to empower young South Africans to explore a career in entrepreneurship.
“At a Youth Day rally this month, President Jacob Zuma encouraged the youth to take advantage of Government initiatives aimed at helping them to establish businesses. He also said that the National Youth Development Agency would invest R72 million in the current financial year for economic participation programmes.”
Engelbrecht concludes that while there is no simple solution to the poor youth entrepreneurial levels, the more inclusive initiatives that are introduced to encourage young South Africans to participate in the economy, the faster this rate can be improved. “The implementation and access to existing youth entrepreneurial programmes has to be improved in order for youth to benefit. Further, more sustainable, long-term measures are needed to encourage young individuals into entrepreneurship and ensure that they have the skills necessary to succeed.
“Currently, young South Africans are not adequately equipped with the skills necessary to start and run a business. If young entrepreneurs are to realise their full potential and contribute to the greater economy, the country needs to mould the youth’s talent, skills and ideas with supportive training and mentorship.”