Moving young entrepreneurs front and centre
Only 6.8% of South Africans aged 18 to 24 are involved in any entrepreneurial activity, according to the Global Entrepreneurship Monitor.
The most entrepreneurially active group are those aged between 35 to 44, who contribute 32% to overall activity.
During a recent panel discussion, hosted by SA Breweries’ entrepreneurship incubator programme, KickStart, the following factors were identified as key to promoting youth entrepreneurship:
» Develop a tightly knit ecosystem to support entrepreneurs
There is a need for greater coordination and integration of business development support efforts by government and the private sector. In the current system agencies operate separately.
“We have a comprehensive ecosystem, but it’s disconnected,” said Septi Bukula, director of business support-services company Osiba Management. “There are pockets of strength and pockets of weakness and no seamless transition from one stage of support to another. We tend not to effectively use what we have to develop entrepreneurs,” he said.
Nomonde Mesatywa, chief director in the department of trade and industry, suggested a government one-stop shop for entrepreneurs which would provide financial and non-financial support.
“The issue of funding is not the biggest challenge facing entrepreneurs,” she said. A lack of information, skills and mentorship opportunities abound.
» Integrate small businesses into bigger businesses
Current thinking regarding entrepreneurship is dominated by attempts to create a multiplicity of small businesses, a measure Magdalene Moonsamy of the National Youth Development Agency (NYDA) described as a “stopgap”.
“We need a better system for supporting entrepreneurs to create independent entrepreneurs,” she said.
A way in which big business could support this would be for large companies to diversify their value chains and incorporate small businesses into their supply chains.
Ideally, entrepreneurs would be included in a company’s core business supply chain, or they could provide opportunities for small businesses to supply products and services not central to operations.
» Infant protectionism and government set-asides
In South Africa, small business competes directly with big business, something that puts young entrepreneurs at a disadvantage.
“You have to fight so much harder just to get a foot in the door,” Trevor Müller, director of the hospitality company, Indibano Group, said.
One way of shielding young entrepreneurs from harsh competition would be for government set-asides to be established for young entrepreneurs.
A controversial subject, set-asides are a certain category of work in a government contract reserved for a specific group. This make sense, as government is the biggest spender in any economy.
A danger in this, Bukula pointed out, however, was the creation of a superficial economy that would be unable to sustain itself in the long term.Treasury also believes set-asides might not pass constitutional muster.
» Supporting innovation
The systems currently in place to access funding for innovation were said to be cumbersome and a hindrance.
Prospective funders need to increase their appetite for risk and invest in entrepreneurs whose novel technologies may change the world.
The Youth Technology Innovation Fund from the Technology Innovation Agency has been launched with the aim of encouraging technologically inclined young entrepreneurs.
» Promoting entrepreneurship from a young age
Introducing children to business from an early age, by letting them participate in the family or other business, can help bridge the vacuum in youth entrepreneurship.
Encouraging this early exploration of business may go a long way towards teaching the rudimentary skills required for entrepreneurship.
Teachingkidsbusiness.com introduces kids to elementary real-life business situations. It states that engaging children in business from an early age builds skills and self-confidence through the experience gained, which is vital for success.