Entrepreneurship is not only crucial in stimulating economic growth and job creation, but plays an important role in determining the future economic outlook of a nation. However, research indicates that the same trend is not materialising among Generation Y-ers in South Africa.
Today's Generation Y is faced with a barrage of unique challenges when entering the work environment that are distinctive to their generation. Today's youths are joining an unpredictable job market plagued by poor global economic conditions that has resulted in an escalating mass of unemployed youths.
However, I believe that these obstacles have produced a generation of problem solvers in countries like America, who possess a strong entrepreneurial culture. A study conducted by Employers Insurance found that 46 percent of Americans from Generation Y wanted to start a business within the next five years, while only 35 percent of "Generation X-ers" (born between 1965 and 1979) and 21 percent of the "Baby Boomers" generation (born between 1946 and 1964) were interested in pursuing a career in entrepreneurship within the next five years.
A strong entrepreneurial culture is important in shaping and developing the future of an economy. It is commonly believed that a strong entrepreneurial culture laid the foundation for building one of the world largest economies. In 1970, 90 percent of the American population comprised self-employed entrepreneurs. Today, many of those companies are global leaders and drivers of economic growth. It is, hence, of utmost importance that entrepreneurialism is encouraged amongst the young in order to encourage sustainable economic growth in the future.
However, I believe that the South African Generation Y has fallen behind in this regard and not only lags behinds the United States, but also behind its fellow BRICS (Brazil, Russia, India, China and South Africa) economies.
Research indicates that South Africa's Generation Y is not interested in becoming entrepreneurs. Data from the recently released 2011 Global Entrepreneurship Monitor (GEM) South Africa report found that only 6.8 percent and 10.2 percent of South Africans, aged between 18 and 24, and 25 and 34, respectively, were involved in entrepreneurship. In comparison to other BRICS countries, members of Generation Y in Brazil and China are approximately two to three times more likely to be entrepreneurs when compared to South Africa.
I believe that this is a great cause of concern considering South Africa's relatively high youth-unemployment rate. According to the GEM report, South Africa's youth-unemployment rate is currently as high as 48.2 percent, which is considerably higher than Brazil's rate, currently at 17.8 percent. In poor economic conditions, young people are generally the first to lose their jobs and last to be hired.
Many young people in South Africa feel the need to find employment in the formal job market directly after school. However, given South Africa's very low established business rate, which is the lowest of the BRICS nations and one of the lowest across all GEM countries, few jobs are available.
With limited jobs available and a soaring youth-unemployment rate, one would expect the unemployed youths of South Africa to seek alternative forms of employment. However, this is not the case in South Africa. According to GEM research, only 14.3 percent of South Africans are interested in starting their own business in the next three years. The study indicated that South Africa has the fifth-lowest entrepreneurial intent amongst all efficiency-driven economies in the world.
More needs to be done to create a positive entrepreneurial culture that supports a fruitful business environment in which young entrepreneurs can flourish. Encouraging entrepreneurship amongst this generation could serve as a very viable solution to the rising youth-unemployment rate, income inequality and rising poverty levels.
This can be done by promoting and recognising entrepreneurs who have not only been successful in their own right, but also in doing so have benefitted others. These "economic heroes" show true courage, vision and leadership and should be positioned as the true champions for South Africa's aspiring youths.
