Young entrepreneurship as an avenue of opportunity

By Christian Gaya Business Times

Within the framework of potential efforts and strategies to boost employment and job creation for young people, entrepreneurship is increasingly accepted as an important means and a useful alternative for income generation in young people.

As traditional job-for-life career paths become rarer, youth entrepreneurship is regarded as an additional way of integrating youth into the labour market and overcoming poverty. Supporting this shift in policy is the fact that in the last decade, most new formal employment has been created in small enterprises or as self-employment. Given global demographic trends, it is important that the social and economic contributions of young entrepreneurs are recognized. Young entrepreneurship can unleash the economic potential of young people.

Chigunta (2002) sums up a number of reasons for the importance of promoting young entrepreneurship as creating employment opportunities for self-employed youth as well as the other young people they employ, bringing alienated and marginalized youth back into the economic mainstream and giving them a sense of meaning and belonging and helping address some of the socio-psychological problems and delinquency that arises from joblessness and  helping youth develop new skills and experiences that can then be applied to other challenges in life.

Other reasons for the importance of promoting young entrepreneurship are as promoting innovation and resilience in youth including promoting the revitalisation of the local community by providing valuable goods and services and capitalising on the fact that young entrepreneurs may be particularly responsive to new economic opportunities and trends.

Entrepreneurship and self-employment can be a source of new jobs and economic dynamism in developed countries, and can improve youth livelihoods and economic independence in developing countries like Tanzania.

For young people in the informal economy, micro entrepreneurism is a bottom-up method for generating an income, self-reliance and a new innovative path to earning a living and caring for oneself.

However, caution should be exercised so that young entrepreneurship is not seen as the wide-ranging solution against youth unemployment. Considering the lack of appropriate economic conditions, the lack of market opportunities and very little consumer spending power in developing countries, the all-purpose of youth entrepreneurship is still uncertain.

As White and Kenyon (2001) put it “In certain situations and conditions youth enterprise should not be promoted, especially when it is only concerned with keeping young people busy”.

Also estimates about the real potential and effectiveness of young entrepreneurship differ, depending on how one measures the extent of young entrepreneurship, which is inextricably linked to how it is defined and on how one assesses the particular socioeconomic conditions for young entrepreneurship in different areas.

Therefore, the promotion of young entrepreneurship should still be seen as an important element/complement within a broader young employment policy. Ignoring the young employment challenge imposes not only widespread unhappiness and social discontent among young, but also carries tremendous economic and social costs.

Young people unemployment is an immense waste of human resources that could contribute to economic and social progress. An increase in young people employment would have multiplier effects throughout the economy, boosting consumer demand and adding tax revenue.

The ILO estimates that halving young people unemployment from the present 14.4 to 7.2 per cent, i.e. approaching adult unemployment, would add 4,4 to 7 per cent to global GDP. According to the ILO, the direct economic gains to society would be matched by a reduction in expenditure to counter risky behaviour, violence and crime, as well as social benefits in terms of reduced vulnerability and exclusion. Decent work can also shift young people from social dependence to self-sufficiency and helps them escape poverty.

Last but not least it gives young people a sense of meaning and belonging and a perspective in fulfilling their aspirations and dreams. That is why effective pro-young people employment efforts benefit everyone in the long run. Appropriate strategies to address the main factors affecting youth employment are therefore needed.

The study of young entrepreneurship is still relatively recent. Though the crucial role played by young entrepreneurship in driving economic development and job creation is increasingly understood, there has been little effort to look at it from a young people and entrepreneurship perspective.

Young people are mostly absorbed into the general adult population, ignoring their specific needs and particular young entrepreneurial potential as well as their critical contribution to economic and social progress. Unfortunately there is still a general lack of in-depth research and concrete data on young entrepreneurship, especially as it relates to different (entrepreneurial) framework conditions and to the creation of new firms.