Entrepreneurship support systems failing youth entrepreneurs - MANCOSA


Entrepreneurship support systems failing youth entrepreneurs

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A study examining support structures relevant to youth entrepreneurship in the Ekurhuleni Metro in Gauteng has revealed that the system is a dismal failure to youth entrepreneurs and instead impedes their entrepreneurial aspirations.

Mr Stebby Mutobola, an academic at the Management College of Southern Africa (MANCOSA) and Mr Sifiso Khumalo a Clinical Programme Manager at the Bertha Gxowa Hospital reveal the findings of their research in an article titled: An Eminent `Volcanic’ Eruption: Youth Entrepreneurship published recently in the Kuwait Chapter of the Arabian Journal of Business and Management Review.

A survey of 100 youth entrepreneurs within the Ekurhuleni Metro, Gauteng between the ages of 18-35, revealed that financial support is inadequate; bureaucracy surrounding legislation and policies impede the youth from starting their own businesses and taxes imposed on youth businesses are comparatively high.

The study further reveals weaknesses in the education and skills set of the current crop of youth entrepreneurs, majority of who have matric and no tertiary education.  According to the researchers youth entrepreneurs have gained limited training on management and communication skills and have limited marketing support. They are of the view that training opportunities available to youth entrepreneurs are not occurring at the desired level.

 However, on a positive note they (youth entrepreneurs) do have access to business premises and infrastructure including water, a road network and electricity.

“With slightly above fifty percent of respondents agreeing that excessive regulation of business exists, we categorically state that regulating authorities need to appreciate the role of small businesses in building sustainable economies. This excessive regulation has dire consequences for national economic performance,” the researchers stated in the article.

The researchers believe that policy makers responsible for government intervention programmes that target youth entrepreneurship should develop a plan that addresses the challenges youth entrepreneurs face in accessing such programmes because it “eats at the fibre of hope for the youth.”

“Sound management practices are in dire need when it comes to business performance and sustainability. However, current support in this regard is disappointingly low. Most youth do not have capital to fund their entrepreneurial ventures. As such it would be advantageous for them to get a loan from the bank and yet again support in this regard is almost non-existent due to lack of collateral security, the researchers’ explained.

To rectify the existing situation the researchers suggest a range of options. These include:

  • Forging partnerships between banks, microfinance institutions and community organisations to improve and simplify youth entrepreneurs’ access to finance, especially since they lack collateral security.
  • Government aided institutions dealing with entrepreneurship should be more proactive in exposing the youth entrepreneurs to their development programmes.
  • Existing youth agencies adopting the role of mentor to youth entrepreneurs by providing them with opportunities to gain access to robust entrepreneurship training offered at tertiary institutions.
  • Complex regulations pertaining to first time registration of businesses should be loosened to encourage youths to register their business.

“Governments should prioritise investment in youth entrepreneurship initiatives to tackle youth unemployment and as a means to reduce welfare costs. We are of the view that emphasis on welfare is both unsustainable in the long run and does not contribute to encouraging the entrepreneurial spirit,” added the researchers.