Entrepreneurship

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Youth enterprise development strategy 2013-2023
(The Department of Small Business Development, 2014-05)
The Department of Small Business Development is delighted to introduce to the public the Youth Enterprise Development Strategy (YEDS). South Africa is faced with the challenge of limited and poor participation of young people in the economy. A salient feature of this poor economic participation is high persistent youth unemployment, which means that young people are not acquiring the skills and work experience they need to assist in driving the economy forward. It is also difficult for young South Africans to secure business opportunities to develop their own businesses. The overall unemployment rate in the country stands at 25% and rises to about 36% if discouraged workers are included in the calculation1. Youth unemployment constitutes 73% of the total unemployment in the country. Therefore the ratio of youth to-adult unemployment is about 1:3 (i.e. for every unemployed adult there are three unemployed youth). About 42% of young people under the age of 30 are unemployed, compared to less than 17% of adults over the age of 30. Only one in eight working adults under the age of 25 have a job, compared with 40% in most emerging economies similar to South Africa. Employment of youth aged between 18 and 24 years old has fallen by more than 20% since December 2008. Unemployed young people tend to be less skilled and inexperienced; almost 86% do not have formal further or tertiary education, while two-thirds have never worked. The overall determinants of the high levels of youth unemployment are a lack of skills for jobs required by the economy; young job seekers believe the probability of finding a job is so low that they do not even look; lack of work experience; lack of job search capabilities and networks; companies find it risky and costly to employ young people; the rate of population growth among youth far exceeds the number of jobs created by the economy and, in certain instances, the low levels of economic growth. The Department of Small Business Development offers this policy instrument in response to the call made by the New Growth Path (NGP) for the state to provide bold, imaginative and effective strategies to create millions of new jobs that would also address youth unemployment and limited participation of young people in the economy. Through this strategy instrument, Government intends to foster youth economic participation by deliberately enhancing youth entrepreneurship, accelerating the growth of youth owned and managed enterprises capable of contributing to the gross domestic product (GDP) growth rate and increasing youth self-employment and innovation.
Skills and youth entrepreneurship in Africa: analysis with evidence from Swaziland
(African Development Bank, 2014-07) Brixiová, Zuzana; Ncube, Mthuli; Bicaba, Zorobabel
The shortages of entrepreneurial skills have lowered search effectiveness of potential young entrepreneurs and the rate of youth start-ups. Our paper contributes to closing a gap in the entrepreneurship and development literature with a model of costly firm creation and skill differences between young and adult entrepreneurs. The model shows that for young entrepreneurs facing high cost of searching for business opportunities, support for training is more effective in stimulating productive start-ups than subsidies. Further, the case for interventions targeted at youth rises in societies with high cost of youth unemployment. We test the role of skills and training for productive youth entrepreneurship on data from a recent survey of entrepreneurs in Swaziland.
Research on the limited success of entrepreneurial activity by locals in townships and rural areas : seven dialogue locations: townships, rural and informal settlement
(Department: Planning, Monitoring and Evaluation, 2017-10)
Research on the limited success of entrepreneurial activity by locals in townships and rural areas was undertaken as part of the National Planning Commission’s (NPC’s) economy work-stream’s task of prioritising township and rural economies as vehicles for achieving nationwide objectives of transforming and growing the economy, as well as addressing youth unemployment. The purpose of the research was to enable the NPC and its stakeholders to:  Gain deeper insights into the context of and challenges faced by township and rural economies;  Inform the processes for reviewing and assessing existing strategies for developing and supporting these economies; and  Formulate new and/or refine existing strategies aimed at addressing these challenges as envisioned in the NDP. A multi-method approach was undertaken to collect a range of qualitative and quantitative data. Emphasis was placed on the qualitative data emanating from six of the seven dialogue sessions conducted. Evidence was obtained from various sources including:  a literature review; and  mini-survey conducted at six of the dialogue sessions in Khayelitsha, Diepsloot, Mamelodi, Uitenhage, Hluhluwe and Thohoyandou.
Promoting youth entrepreneurship in Africa: a policy brief - 2020
(African Union Commission, 2020)
Youth unemployment is one of the major challenges faced by the African Union (AU) Member States. The problem is exacerbated by limited alternate opportunities to earn decent livelihoods. Since the youth form the backbone of the African population - over 60% - the continent’s sustainable development hinges on harnessing the demographic dividend. That entails going beyond the limited formal employment opportunities for youth and creating and availing opportunities to make a decent living and contribute to the realisation of Agenda 2063. Acknowledging the importance of investing in and creating space and opportunities for young people for them to realise their full potential, the African Union has pioneered several initiatives geared towards youth empowerment. The AU Agenda 2063 recognises the need to do this as a prerequisite for achieving the socio-economic transformation of Africa. Through its African Plan of Action for Youth Empowerment (APAYE), the AU places a premium on five key priority areas, among them youth employment and entrepreneurship. The African Union Commission (AUC) has rolled out an initiative “1 Million By 2021” which is aimed at reaching millions of youth from across the continent with opportunities and interventions in key areas of employment, entrepreneurship, education and engagement. Youth entrepreneurship is projected to be increasingly relevant in the current contexts of rising unemployment and underemployment, as well as insecure, low-paying, hazardous employment that does not result in liveable wages. However, Covid-19 outbreak has shown that pandemics and disasters have the potential to subject young entrepreneurs or businesses to a great deal of uncertainty and exposure to high risk of unproductivity. Covid-19 has led to a global health emergency and economic slowdown with trade, investments and employment being seriously affected. This has left many vulnerable youth-led enterprises struggling to carry on business in the face of unexpected economic shockwaves. Response to the Covid-19 crisis should entail cushioning young entrepreneurs against the shockwaves, assisting them to develop long-term growth plans, finding innovative ways to survive the economic slowdown and searching for novel market opportunities.
Assessment of the viability and potential of township economies for municipalities
(Local Government Sector Education and Training Authority (LGSETA), 2020)
This research study was commissioned by the Local Government Sector Education and Training Authority (LGSETA). The objectives of this study was twofold; (i) to examine the potential of unlocking township economies with a view to help address the crucial socio-economic conditions facing municipalities namely, high levels of unemployment, poverty and inequality and (ii) to identify the skills gaps that can propel the township economy (the researches opted to include the possible skills gaps in both township entrepreneurs and local economic development officials in municipalities) and finally to develop a concept document with a focus on local, regional and international perspectives. From the literature review it is clear that although the policy regime is intact, this is compromised by the poor implementation of local economic development (LED) policies together with a lack of leadership and political will. The socio-economic impact of LED has not addressed the triple challenge of poverty, inequality, and unemployment. This study examined the lived experience of more than 1000 township entrepreneurs. It found that the majority of township entrepreneurs regard business as both a steppingstone to something better and a means of survival during tough economic times. They are in business to make a living and to offer a service to the community. This speaks to the drive for social innovation. Thus, people are not just in business to make money, but genuinely sees this as an opportunity to meet a need in society. Thus, it is not surprising that the majority of interviewed entrepreneurs established themselves in the retail and services sector. The study found that local entrepreneurs need support to identify new opportunities and to acquire skills that will enable them to better market their goods and manage their finances. The needs in support and skills include the following: the development and improvement of effective communication structures to facilitate effective communication between municipalities and township entrepreneurs; ; municipalities to take up a facilitation role in in setting uplinks/partnerships between informal traders and formal business; the better management of the safety and security of township entrepreneurs; more infrastructure support and the allocation of more space for trading speaking to the critical role that local government should play in creating an enabling environment to propel the township economy; more financial support from the municipality. Although training is the most commonly used intervention by local government, the research found this to be the least effective. Participants requested that the format of training is re-designed to include more on the job training as opposed to the typical classroom format of training. Finally, the majority of the research participants experienced the municipality as absent rather than supportive in their entrepreneurial endeavours. Pertaining to the competence levels of LED officials, the study found an urgent need in developing a hands-on capacity building program for municipal LED officials. Such a training programme should focus on managing township economies, policy development, LED planning and implementation, research, and promotion, and promoting industrial and business development.
Exploring youth entrepreneurship
(Department of Economic and Social Affairs (DESA), 2020) Holt, Diane
This report explores aspects of youth entrepreneurship as a mechanism to achieve the Sustainable Development Goals. It sets out the position and challenges of youth in Cambodia, Lao PDR, the Philippines, the Gambia, and Fiji, and investigates the dynamics of youth entrepreneurship through an overview of key debates, including the importance of context and the role of the informal economy. The report presents good practices to promote youth entrepreneurship as a way to maintain global employment rates and provide sustained livelihood opportunities to vulnerable groups. This paper was prepared under the project ‘Enhancing National Capacities for Unleashing Full Potentials of Micro-, Small and Medium-sized Enterprises (MSMEs) in Achieving the Sustainable Development Goals in Developing Countries’, supported by the 2030 Agenda for Sustainable Development Sub-Fund of the UN Peace and Development Fund (UNPDF), of which the People’s Republic of China is a major contributor.
Gauteng township economy revitalisation strategy 2014-2019
(Gauteng Province. Economic Development, 2020)
‘Township economy’ refers to enterprises and markets based in the townships. These enterprises are operated by township entrepreneurs to meet primarily the needs within and beyond the township and therefore can be understood a ‘township enterprises’ as distinguished from those operated by entrepreneurs outside the township. Township enterprises are diverse, with high rate of informality and provide a range of goods and services to meet the needs of township communities and beyond. Whilst township enterprises are mostly necessity micro in nature, characterised by poverty and low-incomes, there are many that were born out of opportunity. Both necessity and opportunity enterprises have produced successful black entrepreneurs who have ‘graduated’ from exclusively serving the township economy or trace their roots in the township economy. Meeting the social and economic needs of township communities, on the basis of co-operation and solidarity, has been one of the defining features of township enterprises. Government believes that township enterprises have a distinct and vital role to play in helping to create a vibrant socially inclusive, labour-absorbing and growing economy. Government’s vision is of vibrant and sustainable township enterprises as part of building an inclusive, labour absorbing and growing economy. Successful township enterprises can play an important role in helping to contribute to government’s programme of radical transformation, mordernisation and re-industrialisation of the Gauteng City Region economy by transforming townships into sites for productive activities, contributing to socially inclusive wealth creation and helping to foster sustainable livelihoods through job creation, social cohesion and active citizenship. Government is committed to ensure that township economy contributes at least 30% of the Gauteng GDP by 2030. The strategy sets out a programme of action for the next five years and beyond, illustrating how government together with key stakeholders will take a lead in revitalising the township enterprise activities. Key partners in the delivery of the strategy will include national government and its support agencies, provincial government, local government, the corporate sector, representative and support organisations for different types and forms of enterprises. Over the last 20 years, there has been a range of government support programmes aimed at micro, small and medium enterprises and co-operatives. These support measures are wide- ranging, combining both financial and non-financial support. In their variety, they aim to address a number of barriers common to all micro, small, and medium enterprises and cooperatives.
Capacitating entrepreneurs for a sustainable township economy : the Khulisanani/Godisanang and GrowYourBiz Initiatives
(Gordon Institute of Business Science, 2020-01)
The need for South Africa to develop its entrepreneurial capacity in order to create employment and a more dynamic, inclusive economy is well established in public and private sectors. However, success stories are hard to come by – especially when they focus on township entrepreneurs, a group that might be neglected by broader initiatives for being ‘too difficult’ or ‘not high impact enough’. The hope is that this report will ignite more rigorous debate about how to develop entrepreneurs and entrepreneurship, even in environments that are resource-constrained and apparently opportunity-poor. This report details findings from research focused on a series of training and coaching and mentoring-based interventions in township economies across seven of South Africa’s nine provinces. These interventions and this research were conducted by the GIBS’s EDA through funds provided by the Walmart Foundation. The data was collected in a mixed methods design, involving qualitative and quantitative methods, before, during and after the intervention that was conducted during 2018 and 2019. The findings reveal that township entrepreneurs had developed their personal and business skills during the programme, resulting in improvements in their business operations and market position. For some, this was believed to have resulted in immediate and measurable growth in their businesses, while others believed that their new-found skills enabled them to build a strong foundation for future growth.
Entrepreneurial ecosystems and challenges of small business development in a South African township
(World Bank Group, 2020-08) Parker, Marlon
The small business sector is a critical contributor to the South African economy providing employment to more than 8 million people. Due to the high levels of unemployment, especially amongst young people,the government and many other agencies have prioritized support to develop small businesses in South Africa. Small businesses are already facing a number of challenges that impact their growth and sustainability. This has been perpetuated by the COVID-19 pandemic and lockdown strategies in South Africa. This research identified a number of key areas of support to small businesses operating in townships. Although a number of entrepreneurship ecosystems exist in South Africa, few have been setup to support township entrepreneurs. The adoption of technology has also proved to be supportive in helping small businesses succeed but its uptake has been limited in township or informal businesses.
Building women’s businesses in South African township economies a view on intersectional approaches to entrepreneurial support
(Value For Women, 2021) Hunter, Renée
In November 2021, ANDE published its South Africa Township Economy Entrepreneurial Ecosystem Snapshot (Ecosystem Snapshot). This publication provides an entrepreneurial ecosystem mapping of the financial and non-financial support available to township-based entrepreneurs, as at November 2021. The publication covers research on the townships of the Eastern Cape, Western Cape, and Gauteng provinces regarding, among other information, the types of support and investment instruments available, and the types of stakeholder interest. This Gender Deep Dive takes a closer look specifically at the support provided to women entrepreneurs in township economies. It is based on desktop research, data from the Ecosystem Snapshot, and 15 in-depth key informant interviews with entrepreneurial support organisations (ESOs) that intentionally seek to improve the lives of women— either as consumers, employees, business leaders, or suppliers and distributors. We asked them about their reasons for focusing on women, their approaches used in doing so, and which approaches have worked particularly well. This report finds that women entrepreneurs in township economies face a double set of intersecting— and mutually reinforcing —challenges. On the one hand, there are challenges due to them being women. This includes the multiple competing demands on women’s time, various prejudices and biases against women business owners, and the challenges inherent in women-dominated sectors, which are often less high growth than men-dominated sectors. On the other hand, there are the challenges inherent in being based in a township economy, with lower levels of infrastructure and service provision, higher levels of insecurity and crime, and the business challenges of operating in a relatively low-income context.
Promoting effective entry and participation of women entrepreneurs in the South African economy : pro-competitive principles for government and non-government stakeholders
(Competition Commission South Africa, 2023-06)
Competitive markets allow consumers to benefit from low prices, better quality of goods and services, innovation and more choice. For markets to be competitive they need to be accessible to all players that wish to participate in the markets. Barriers to entry and expansion are a significant hinderance to competitive markets. Barriers can arise from systematic issues, inequality, regulatory requirements, anticompetitive conduct and lack of access to key resources and markets to support firms seeking to enter markets and compete. These barriers ultimately result in reduced competition in markets, which in turn adversely impacts consumers. For women entrepreneurs, these barriers are further compounded by gender inequality. Women entrepreneurs face gender-based barriers that hinder their ability to enter and effectively compete in high income generating markets. Women entrepreneurs often find themselves operating businesses in low value generating sectors or informal sectors due to these gender-based barriers. Studies on entrepreneurship shows that women are starting businesses at a faster rate than men, especially in emerging economies. These studies show that women entrepreneurs play a critical role in job creation, income generation and revenue growth in many economies and that their entrepreneurial ventures also contribute to the reduction of the existing wealth inequalities between women and men. Although more women are taking the entrepreneurial plunge, research shows that there are existing gender-based barriers which restrict the ability of women entrepreneurs to start-up, enter markets and sustain successful businesses, especially in high value generating sectors of the economy. This is specially the case in South Africa, where women entrepreneurs are largely concentrated in areas of crafts, hawking, personal services and retail. The South African context is further complicated by issues relating to the intersectionality between gender and racial inequality, which compounds the barriers that are faced by black women entrepreneurs.6 These barriers affect the ability of women entrepreneurs to participate effectively and meaningfully in the economy and consequently have significant adverse effects for competitiveness of markets and inclusive economic growth.
Strengthening youth entrepreneurship in South African townships
(Aspen Network of Development Entrepreneurs, 2024) Braithwaite, Samantha
South Africa faces significant economic challenges, with youth disproportionately affected by high unemployment rates and limited economic participation. Townships, home to a significant portion of the unemployed population, are now focal points for addressing youth entrepreneurship as a solution. However, sparse data on township youth entrepreneurial activity hinders effective support strategies. This research indicates that proximity issues, such as isolation and lack of access to information, are key barriers for both youth entrepreneurs and business development support providers. Current support efforts often lack relevance and fail to target high-growth potential businesses. To improve outcomes, there’s a need to shift focus towards reaching more youth entrepreneurs and tailoring interventions to their needs.
Entrepreneurship in South Africa's townships: ecosystem challenges and recommendations for the path forward
(Aspen Network of Development Entrepreneurs (ANDE), 2024-02) Kim, SangEun; Davidson, Abigayle
South African politicians frequently refer to entrepreneurship as a potential solution to the economy’s significant unemployment problem.1 For instance, Lebogang Maile, a Member of South Africa’s Executive Council for Economic Development, shared his projection that entrepreneurship will generate 90% of all newly created jobs in the South African economy by 2030.2 The South African government provides various support to bolster small business activity, including business development support (BDS) services and funding, with the country’s Small Enterprise Development Agency (SEDA) serving as the focal point for these endeavours. In reality, many entrepreneurs need to come from townships. Out of the country’s population of 60 million, 22 million South Africans live in townships and informal settlements, accounting for 38% of the country’s working age citizens.3 Moreover, while the country’s unemployment rate remains at a staggering rate of over 30%,4 the unemployment rate in townships (60%) poses an even greater challenge to the economy.5 Numerous reports address challenges faced by South African entrepreneurs.6 A smaller set of literature focuses specifically on entrepreneurial activity in the townships. ANDE’s 2021 South Africa Township Economy Entrepreneurial Ecosystem Snapshot and the associated report contribute to this literature, illuminating some of the primary challenges and opportunities facing entrepreneurs in townships.7 This narrower investigation of the unique characteristics of entrepreneurship in the townships illuminates that while the nature of the challenges confronted by township entrepreneurs may share many similarities to those in the rest of the country, they are more pronounced and, therefore, require their own investigation. What distinguishes this report from extant studies, including the ANDE’s 2021 report, is that this report features the voices of entrepreneurs and entrepreneur support organisations (ESO) to vividly portray township entrepreneurs’ challenges through in-depth interviews. This report also aims to elucidate the factors that contributed to the success of exemplary township entrepreneurs despite existing challenges and other strategies that ESOs can employ to guide more entrepreneurs to emulate these success stories. The subsequent sections are organised as follows. The next section describes key concepts and research methodology, highlighting the definition of township businesses and interviews utilised throughout this report. Subsequently, this report scrutinises challenges faced by township entrepreneurs based on the interviews and then explores success factors that have enabled township entrepreneurs to lead profitable and sustainable businesses. Lastly, the report concludes with recommendations for different stakeholders in the township entrepreneurial ecosystem, including entrepreneurs, investors, BDS providers, and the government.

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