Entrepreneurship for young people – is it the way forward with ecosystems? Stellenbosch Business School Skip to main content
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The role of entrepreneurship, within the context of youth, has frequently been heralded but the prospects remain challenging.

As South Africa approaches another Youth Day the high levels of inequality, unemployment and economic inactivity remain endemic. As in all counties, the effects of inequality and economic turmoil are often felt by those with the weakest attachment to the market – particularly young people. The role of entrepreneurship has frequently been heralded but the prospects remain challenging.

The challenges facing Young South Africans are significant. With rates of unemployment exceeding 30% combined with further shares of a population being inactive, the economy is clearly not working to integrate young people. Not least the skills needed to gain formal employment or to establish a business. The risks of exclusion and long-term scarring are significant – the process by which periods with no work have long-term effects on economic prospects and employability.

Recent data from the Global Entrepreneurship Monitor show some signs of growth in youth entrepreneurship. The results show rising youth entrepreneurship engagement compared to previous years but remain low compared to other countries. The total early-stage entrepreneurship activity among 18-24 years old have increased from 3.4% (2002) to 19.3% (2021) and for the age 25-34 increased from 5.3% (2001) to 19% (2021).

Today the economic headwinds the South African economy faces do not bode well. Regardless of the unconducive entrepreneurship environment in South Africa and the high failure of businesses, youth participation does show a significant increase in 2021.  While good entrepreneurship opportunities can provide a way forward for some young South Africans others may be a source of further precariousness and exclusion. We should be cautious as entrepreneurship is not a magic solution for all.

Further exploration of the results shows other signs of hope. Young people are more involved and advanced when it comes to technology compared to the adult groups. The level of technological advancement has been growing and changing and young people are more exposed and advanced to technological changes, particularly the digital platforms, which give them the opportunity to create innovative ideas.

Yet we cannot rely only on young people. There is a role for policy to support these green shoots of hope. The government, learning institutions, and small business development programs can support entrepreneurship. The state has a range of programs that include the Department of Trade and Industry, Competitiveness Fund, Junior Achievement South Africa, Incubation Support Programme, Small Enterprise Development Agency, Enactus, and the National Youth Development Agency. These can be supported by university lead projects such as the Stellenbosch Small Business Academy which runs projects across three provinces. This kind of support for the entrepreneurial ecosystem through training, support, and links to funding is what has been called for in other recent studies

Such actions can reinforce an entrepreneurship ecosystem as a strategy for the successful development of entrepreneurship with interlocking institutions and actions that combine to support innovation in entrepreneurial concentrations. These ecosystems offer resources, knowledge, exchange opportunities, talent, and mentors, which all enable entrepreneurs to build and grow their businesses.

In addition, entrepreneurship education can be a tool to uplift and develop entrepreneurship activity and business success. However, it remains poorly developed and not sufficiently aligned with local needs. A key consideration is to start at an early age for young people in order to lay a solid foundation of entrepreneurship for young people by developing an entrepreneurial mindset and culture.

Entrepreneurship may be a potential solution, or part of the solution, for the challenges young people in the labour market face. However, it is important to recognise the need for a coordinated approach by supporting entrepreneurial ecosystems. Also, the potential and the risks should be recognised given the high failure rates of small businesses. Nevertheless, the potential in supporting nascent entrepreneurs among young people with the policy to build an entrepreneurial ecosystem may help grow an entrepreneurial economy and provide more opportunities for South African youth.

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