Entrepreneurship could cure SA’s growing youth unemployment crisis

Youth unemployment in South Africa has reached boiling point and has spurred on heated political debates and mass protests ending in violence. Governments around the world have tried to react to the mass youth protests and the swelling problem by implementing labour market policies, such as subsidised wages, tax incentives and encouraging school-work transition through apprenticeships and training programs. However, the unemployment figures have continued to soar and have not shown signs of slowing down.

According to Nimo Naidoo of the Sanlam/Business Partners Entrepreneur of the Year® competition, the rising levels of youth unemployment can be effectively curbed through the promotion of entrepreneurship as a viable career choice for South Africa’s youth. However, it requires a committed change in South Africa’s public perception and culture.

She says that the UN estimated last year that 74.8 million young people, between the ages 15 and 24, remained unemployed worldwide, while 6.4 million youths dropped out of the labour force globally. According to an International Labour Organisation (ILO) report, the youth of today are three times more likely be unemployed in comparison to adults, while 1 in 5 young working people live on R8/day.

Naidoo says that recent statistics, released by the latest Labour Force Survey, paints a dire picture for South Africa’s youth. “Youth unemployment has increased by 9.9% since last quarter and is now standing at a staggering 42%. Government has tried to absorb the high unemployment numbers through various state programs and have been actively promoting entrepreneurship in the hopes of reaching their goal of 5 million jobs created by 2020. However, according to Adcorp, a large discrepancy exists in the formal employment market. 800 000 vacancies are available in the private sector, yet 600 000 university graduates remain unemployed.”

“The 2011 South African GEM report, released last week, has also revealed a significant decline in entrepreneurial levels among South Africa’s youth. Entrepreneurship levels of people aged between 18 and 34 have declined significantly by 16% between 2010 and 2011. Evidence, from the recent released GEM report, shows that young entrepreneurs in South Africa chose self-employment out of necessity rather than being motivated by attractive opportunities.”

Naidoo says that these statistics are very worrying and show signs of an unhealthy entrepreneurial culture in South Africa. “The manner in which a country supports and recognises their entrepreneurs determines the culture of entrepreneurship and ultimately moulds the future of the economy. A positive entrepreneurial culture is not something that can be simply put in place. It begins at the roots of society and needs to be carefully nurtured.

Naidoo believes that the roots to South Africa’s entrepreneurial problem can be linked to South Africa’s educational structures. “Both South Africa’s formal and informal educational structures do not prepare the youth to become skilled entrepreneurs. Not only has the structure ill-equipped the youth to become entrepreneurs, but it has created a culture where young South African’s dream of becoming employee’s rather than employers.”

He says that not all individuals posses the qualities to become an entrepreneur and therefore these qualities and talents need to be developed accordingly. “Youth should be exposed to entrepreneurship via the South African education system, as well as leaders and managers of businesses where they work.”

As the business world continues to rapidly evolve an increasing amount of young entrepreneurs, such as Facebook’s Marc Zuckerberg, are emerging as successful entrepreneurs and outright market leaders in their respective industries. Sanlam and Business Partners, the competition’s co-sponsors, would like to recognise the ability and deserved success of South Africa’s young entrepreneurs by encouraging them to enter the 2012 Sanlam/Business Partners Entrepreneur of the Year® competition, which boasts an array of advantages for both finalists and winners.


    13 June 2012 at 4:34 pm

    The government cannot understand claims that BEE is a MASSIVE disincentive for especially younger whites (largely the creators of the SA we once knew) to start their own businesses. A close study of the requirements of this (unconstitutional?) system will reveal that the end result is a hand over of white business to blacks.Employers are also required to shoulder the burden of a failed education system, support local communities & assist in the creation of black business – all this is actually the responsibility of government and should be funded out of taxes paid by businesses – not effectively adding further social taxes. The granting of tax rebates for work done in these areas would be far more appropriate! It is presently not sustainable and when coupled with the labour laws and EE ‘s draconian penalties – not to even begin to mention the provisions of the mining charter! Why start up a business here – when you can work 24/7 bond your house etc and have to take in a 26% partner who cannot finance his share of the risk – and then neither can you even pass a special resolution in your own company – and when you come to retire who is going to buy 74% of a company they cannot effectively run and control? No one!
    The best option is to downsize & get under the “system” (more unemployment) – or sell up and move on. Staying in business under the rules set by government is simply not worth the trouble – and what is happening that the government are making all the rules and thinking they will force people to comply but this is not happening as no one is “turning up” to “play” their game as the rules are unfair and not economically sustainable – so why bother? If I had known 20 years ago what the situation of a business owner would be in this country today I would be in Australia employing Australians – at least there what you work for is your own! I am also still trying to work out what I got under apartheid that means I should be paying pennance to people who have grown a culture of entitlement – which in itself is not sustainable. The government needs to realise that owning a business does not make one rich and able to sustain all the demands made upon one.
    I believe our economy has enough “critical mass” and could thrive even in these times if the economy and labour were freed up with just basic protections for workers and truly equal opportunities for all. Government policy is exactly back to front – do the exact opposite & I believe our economy will take off!
    Run the country like a business and everyone will profit!
    I could go on but there is work to do – I would be very pleased to discuss any of the above at any time – especially to illustrate the effects of BEE scorecards on business – very few folks seem to really understand the effects of this code.

  2. teboho
    13 June 2012 at 12:35 pm

    Dear all members
    our country we depend on government and private creates employement let do it our self focus on entrepreneur stop search for start search for purpose and we can do it.


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