Kickstarting Youth Entrepreneurship: An Answer to Youth Unemployment?

ODI and Youth Business International

Youth unemployment is a global problem.  A recent OECD report reveals that the average rate of youth unemployment in OECD countries is 16% while the troubled economies of Greece and Spain are struggling with youth jobless rates above 50 per cent.  In Africa, an increasingly youthful population needs more opportunities to make a living, an issue deemed so relevant to the future development of the continent it was the primary focus of this year’s African Economic Outlook. In the Middle East and North Africa, dissatisfaction caused by high youth unemployment rates have been cited as one of the key underlying reasons for the Arab spring, illustrating the destabilising impact that youth unemployment can have.

Photo: Amir Asor, YBI Entrepreneur of the Year 2011, received support from Israeli YBI member Keren Shemesh

In contrast to rich countries where youth unemployment is high, in low income countries most young people do work, out of necessity – in the face of household poverty and the absence of a social safety net.  Yet, as set out in the AEO report, in these countries only 17% of working youth (and 7% of all youth) are in full-time employment working for an employer.  Most are in effect, self-employed, often working in the informal sector.   In reality, most young people in the developing world face little hope of obtaining a job with prospects, and for many, self-employment is the only option.

That’s why Youth Business InternationalRestless Development, War Child and ODI have launched a consultation on how best to support young entrepreneurs. The consultation looks into how context affects impact in youth entrepreneurship and livelihoods. The goal of this new framework and toolkit is to provide guidance to policymakers, programme designers and implementers on how youth entrepreneurship support initiatives should be prioritised and adapted in different contexts in order to maximise impact.

Getting started in business isn’t easy. There are plenty of obstacles to overcome, including how to get finance, how to access or develop necessary accounting and numerical skills, learning how to develop business relationships with clients and customers. Many of these constraints are particularly severe for young people.  For example, an inability to provide a credit history or other security will hamper efforts to obtain access to capital.

So there is an important role for the development community to play in supporting youth entrepreneurship.  Helping young people to earn a living through entrepreneurship can make a crucial contribution to cutting poverty and driving growth. Future innovation and macroeconomic growth will depend on nurturing people with entrepreneurial skills and attitudes. 

Photo: After receiving business support from YBI member in India, the Bharatiya Yuva Shakti Trust, Madhuri Khandave now employs 37 people in her tailoring business.

Plenty of initiatives exist to promote youth entrepreneurship and they vary significantly in approach.  Whether it’s addressing training needs or providing start-up funds there is work being done, but we don’t yet know what works best – especially in different contexts. In establishing a successful development intervention, context is critical to impact. That’s why we set out to try and understand better the different environments in which donors and other development actors are trying to prime future growth and development.  Yet there exists very little understanding or guidance about how context affects impact in practice, or how interventions should be adapted to maximise impact – especially in the youth entrepreneurship sector.

Our approach to building a contexts framework is set out in our consultation report, This is based on background research by ODI focused on assessing the binding constraints to youth entrepreneurship in different contexts, and providing a toolkit to guide the design of interventions to support youth entrepreneurship.

YBI chairs the consultation and, alongside ODI, presented the toolkit at the Global Youth Entrepreneurship Conference 2012 and hosted a roundtable discussion with policymakers, donors, practitioners and decisions makers to help develop and refine the toolkit, kindly hosted by FHI360. In the coming months, we will continue consulting with experts in the field to challenge and enhance our approach. There are many important questions, such as whether the recommendations in the toolkit are practical and drawn from the most effective ways of tackling the various different constraints to entrepreneurship? 

For more information about our consultation or to contribute, please go to www.yecontexts.org, where you will find all our resources, be able to answer some of the questions mentioned above and find out more about our consultation activities.

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