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Will entrepreneurship solve SA’s high unemployment crisis?



South Africa’s high youth unemployment rate has forced many to turn to entrepreneurship for survival.

Mzansi’s official unemployment rate currently stands at 31.9%, while 43.4% of young people between the ages of 15 to 34 are without jobs.

Although starting a business may seem like a viable option for many, some question whether it’s the silver bullet to SA’s high unemployment crisis.

Entitlement and self-gratification

Speaking to The Citizen, independent economist Professor Bonke Dumisa said entrepreneurship is one of the key solutions to the country’s high unemployment rate, but had some reservations.

“My worry about entrepreneurship in South Africa is we have this culture of demanding… people say they’re running businesses so government must come into the picture and support them,” he said.

The economist said there’s a prevalent “tendency” among South African entrepreneurs to depend on government for handouts.

“That’s where the foreigners come in as they do not do those things because they know they’re not going to get any loans or demand any government support,” he added.

Dumisa also said conspicuous consumption was an issue among South African entrepreneurs.

“A person gets a loan from a funding institution as working capital, instead of using that money for its intended purpose, the first thing they do is buy an expensive luxury car,” he said.

“We need to be open and honest about these things because it’s painful to see people who had the potential to run successful businesses lose it because of short-term fame and gains.

“This whole sense of entitlement and [pursuit of] instant gratification are killing small businesses, especially those of black people,” he said.

‘Entrepreneurship has potential’

Meanwhile, Proudly South African CEO Eustace Mashimbye is hopeful about the economic prospects of starting a business.

“Entrepreneurship has the potential to alleviate South Africa’s unemployment crisis by creating new jobs, fostering innovation, and facilitating skills development,” said Mashimbye.

Citing research by the Global Entrepreneurship Monitor, Mashimbye said that small and medium-sized enterprises (SMEs) contribute significantly to job creation.

Unfortunately, entrepreneurship can be challenging with a number of hurdles to overcome.

Mashimbye said high failure rates, barriers to accessing financing and markets as well and industry-specific limitations were a hindrance.

“To effectively address unemployment, support for entrepreneurship must be accompanied by a favorable business environment, improved access to finance and skills development, and efforts to tackle underlying structural issues contributing to high unemployment rates,”

Equipping the youth

Echoing Mashimbye’s sentiments, media and public relations specialist at the National Youth and Development Agency (NYDA) Bongekile Skosana believes entrepreneurship is key to solving SA’s youth unemployment crisis.

NYDA provides financial support in the form of micro-finance grants to young entrepreneurs and youth cooperatives, providing them with both financial and non-financial business development support.

“We support young entrepreneurs with a range of services [including] business boot camps, business development services and development finance, access to markets, and mentorship support,” Skosana told The Citizen.

“Over the past 10 years, NYDA has supported more than 200,000 young people with non-financial support and 20,000 with financial support,” said Skosana.


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