Unemployment, Underemployment and Why Youths Start Businesses

High youth unemployment and underemployment is fundamental to the growing problems around the world including in African countries causing diverse economic, social and moral issues. A World Bank survey of 200,000 people in 20 countries specified apathy and worry among the poor, but self-employment and wages were identified tools for upward mobility (Jenkins, 2007).

It is important to understand why youths start entrepreneurial careers, businesses or develop entrepreneurship skills. However, there is scarcity of empirical and systematic literature accurately providing this information (Chigunta, 2002b; Green and Amat, 2012; Beeka, 2015). Understanding youth motivation can contribute innovative avenues to encourage youth entrepreneurship (Beeka, 2015). Chigunta (2002b) shows different research how the level of youth entrepreneurship and self-employment high in Sub-Saharan Africa compared to other developed countries, but in comparison to African adults noticeably lower. Africa Commission (2009) declares more men engage in entrepreneurial activity compared to women, and older youths run more enterprises than younger youths. These studies need greater investigation to check applicability to each African country, however, in Nigeria the NBS/ SMEDAN (2010) survey indicates those within the youth age dominate the small business sector. Although, we have to remember the African youth charter generally defined youths as those between 15-35 years.

A Zambian study (e.g., Chigunta, 2001) shows 92.3% of youth businesses are due to necessity to escape socio-economic problems, out of these 46.2% cite unemployment, 30.8% supplementing household income, 15.4% poverty and 7.7% the need to accumulate wealth as the major venturing reason. Similarly, in Malawi (e.g., Kambewa, et al., 2001) youth entrepreneurs cite unemployment and poverty (Chigunta, 2002b). The survey by NBS/ SMEDAN (2010) confirms there are more Nigerian women operating within the informal and micro sectors, and a Gallup poll and Beeka and Rimmington (2011) show mostly opportunity entrepreneurial intentions among Nigerian youths (Rheault and Tortora, 2008). Therefore, Chigunta argues while easy to dismiss the entrepreneurial aspirations of African entrepreneurs as arising from lack of alternatives, the reality is various factors contribute, such as, changes within the political and social environment, and lower wages in the formal economy. Also, self-employment is increasingly seen as an employment option (Chigunta, 2002b, Beeka, 2015). A rationale why many young African entrepreneurs are opportunity rather than necessity entrepreneurs (Beeka and Rimmington, 2011, Beeka, 2015). Basically, entrepreneurship facilitates personal development enabling self-esteem and independence. Additionally, within the same age group, young self-employed individuals boast higher “life satisfaction” (OECD, 2001). See the list below why youth entrepreneurship is important and should be encouraged.

The Importance of Promoting Youth Entrepreneurship (Beeka, 2015; Chigunta, 2002b):

Revitalise the nation, local community and support innovation/creativity.
Enable employment opportunities for the self-employed youth and jobs for others.
Support opportunity recognition, development and value chain transformation
Enable marginalised youth participate in the economic mainstream.
Address the societal ills and socio-psychological issues associated with unemployment.
Encourage the use of technology in business development and resilient youths.
Youth run enterprises provide especially the marginalised, a sense of identity, meaning, belonging and psychological satisfaction.
Enterprise assists young women and men develop new skills
Business experiences enable learning, applied to many other challenges in life.
Encourage informal businesses to become formal due to growth.
Provide role models needed for intergenerational transformation
Entrepreneurs being problem-solvers, provide solutions for competitive economies
The youth run businesses contribute taxes boosting government earnings
These businesses support sustainable institutions and contribute to the GDP .

Entrepreneurship is a viable career and employment option for the youth.

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