Injecting new energy into the economy via youth entrepreneurship

The transformative power of youth entrepreneurship

Youth entrepreneurship is becoming much more than a sexy buzzword. In a country with persistently high unemployment and poverty rates, entrepreneurship could be the solution to both job and wealth creation. The scope for investing in entrepreneurial development across a wide range of sectors is significant – and we are already seeing the positive impact of existing programmes funded and implemented across the social economy. In fact, the immense potential of entrepreneurship development to transform South Africa’s economic landscape and labour market across industries and demographics makes it one of my favourite sectoral trends.

Mobilising the youth to help drive economic development

Young people make up the largest portion of South Africa’s population and their active participation in the economy is vital to the country’s prosperity. Yet, unemployment among youth in particular remains stubbornly high. In the first quarter of 2024, the unemployment rate among youth between the ages of 15 and 34 was 45,5% (exceeding the national average of 32,9%), according to StatsSA.

Against this backdrop, youth entrepreneurs are seen as the key to reducing unemployment while increasing job creation. In acknowledgement of the declining absorption capacity of South Africa’s formal economy, social investors and funders are making a concerted effort to support initiatives around self-employment, entrepreneurship and enterprise development. On a higher level, the youth are recognised as important drivers of economic development based on the new ideas, creativity and solution-focused mindset they bring to the table. Yet, the Global Entrepreneurship Monitor report highlights that South African youth entrepreneurship participation (12,8%) is the lowest on the African continent, indicating enormous scope for growth.

Youth entrepreneurship has already become the second most supported development portfolio within corporate social investment (CSI) budgets. Interestingly, development efforts employed across the social economy are targeting several intersecting areas. These include incorporating entrepreneurship into school and university curriculums, skills development, seed funding, incubators and accelerators, infrastructure and facilities as well as coaching and mentoring.

The wheels are already turning – it’s time to get on the bandwagon

Several signature programmes and collaboratives provide clear evidence of the rising trend of youth entrepreneurship:

• The Entrepreneurship Development in Higher Education (EDHE) is a national programme aimed at embedding entrepreneurship at universities and is executed via three streams:

  • Mobilising South African students and graduates to create successful enterprises.

  • Supporting academics in instilling an entrepreneurial mindset in students and graduates across all disciplines through the transfer of relevant knowledge and practical skills as well as the application of business principles.

  • Creating a university environment that is conducive to entrepreneurship and enables universities to adapt strategically and execute innovative business ideas that generate a third income stream.

• Government youth employment programmes include examples such as the Township and Rural Empowerment Programme (of the Department of Small Business Development) and the Township and Community Development Fund (of the National Empowerment Fund). South Africa's township economy – i.e. small and informal businesses that provide goods and services to township communities, estimated to be around 50% of South Africa's urban population – is a vital part of the country's economy. There are estimated to be more than 500 townships, with approximately 30 to 40 businesses per 1000 people. One of the most notable new government initiatives launched over the last year is the Jobs Boost Fund: a R300m pay-for-performance model or outcomes fund that works with implementing partners to secure sustainable, quality jobs for unemployed, excluded youth. It is the largest youth employment outcomes fund in the world.

• Programmes by corporate funders, for example the Richard Branson Centre for Entrepreneurship (focuses on mentoring and accelerating high-potential, youth-led enterprises) and the Absa Chair in Entrepreneurship (drives entrepreneurship education and research at university level). The Allan Gray Group via Allan and Gill Gray Philanthropies has several youth entrepreneurship programmes:

  • The Allan Gray Centre for Entrepreneurship provides business development support and investment funding for young entrepreneurs.

  • The Allan Gray Makers Movement is an entrepreneurship inter-college challenge focused on the technical and vocational sectors.

  • The Allan Gray Entrepreneurship Challenge is a game for school children.

  • The Allan Gray Scholarship Programme offers high school scholarships and entrepreneurial support to learners who have an entrepreneurial mindset and the potential to excel academically, among other requirements.

  • The Allan Gray Fellowship Programme supports young achievers who want to make a big impact with their transition into university by providing needs-based funding for university and support and development aimed at cultivating an entrepreneurial mindset.

  • Motse Collective Impact acts as a catalyst for connecting and mobilising the South African entrepreneurship support community through dialogue, collaboration and empowering stakeholders.

• Community-led entrepreneurship initiatives such as the Multimedia Creators Entrepreneurship Programme of the Kouga Wind Farm Community Trust, whereby creatives gain hands-on experience and business skills to help them build sustainable businesses in photography, videography, drone operation, web design, coding, digital marketing and podcasting.

• Not-for-profit initiatives such as the Young African Entrepreneurs Institute (YAEI), a registered youth-led non-profit company that aims to empower the youth with skills, knowledge and support to successfully transition from venture ideas to venture startups.

In addition, several other large scale funded programmes – centres around entrepreneurial aspects.

• The Nedbank Foundation’s investment strategy focuses on advancing employment through skills development and growing entrepreneurship in the green economy, which it envisions as a catalyst for sustainable economic growth. Its Greenhouse Initiative focuses on catalytic grant funding, holistic capacity-building and skills development for early-stage, high-potential green economy entrepreneurs. The goal is to grow a pipeline of successful businesses that create sustainable jobs and impact in the areas of agriculture, energy, water and waste.

• ESquared Social Impact Investments (which is part of Allan and Gill Gray Philanthropies) provides blended finance to early-stage hybrid social enterprises focused on youth entrepreneurial initiatives, while creating meaningful societal impact. ESquared just seeded South Africa’s first Artisan SMME Fund — Imara - a new initiative dedicated to supporting artisans and trade entrepreneurs. The fund will also support the Allan Gray Makers platform — a vital tool that connects talented artisans with potential customers, strengthening visibility and accessibility in the market.

• The Financing for Impact Fund (launched by the SAB Foundation and Lead Impact Capital) is an R88m private loan fund that provides affordable financing to qualified alumni of the SAB Foundation’s entrepreneur programmes. The loans can be used for asset and equipment financing, growth financing, or purchase order and cashflow financing.

• Rhiza Babuyile and Rhiza Ventures provide business training and seed capital loans to social enterprises focused on job creation in rural areas, enabling enterprises in healthcare, agriculture and education to grow and employ local youth. Two excellent examples of their work include the following:

  • The nursepreneur network model provides nurses with the opportunity to own their own private health clinic providing primary healthcare services. The nursepreneur is trained in entrepreneurship and receives the clinic as part of a loan.

  • The enterprise development and clothing manufacturing programme includes business hub management, incubation and acceleration programmes, where entrepreneurs receive essential resources such as professional spaces, business coaching, mentorship and access to funding.

• The Township Entrepreneurs Alliance focuses on empowering township-based companies and entrepreneurs with knowledge-sharing, skills development, enterprise development and market access.

• Gold-youth has tackled youth unemployment, fuelled entrepreneurship and developed a pathway to economic independence for thousands of young Africans over the past two decades via a youth peer education programme.

Social entrepreneurship as a crucial part of new development models

Entrepreneurship can play an equally transformative role in the development sector itself. Currently, limited capacity, knowledge, social capital, experience, governance and financial resources are leaving grassroots organisations at a disadvantage. The service gap left by the lack of government service delivery in South Africa cannot be filled by providing free services linked to a charitable model – the need is simply too great. We need a policy change (the last attempt was in 2019), so that non-profits can be regarded as drivers of the economy and job creators. Crucially, the business case for social entrepreneurship argues that these organisations must be categorised as SMEs so that they can apply for the same benefits and support as other entrepreneurial businesses, in order to generate both social impact as well as financial sustainability.

Research in 2020 already recognised 120 000 self-identified social enterprises. Going forward, we urgently need to move non-profits up the value chain – while providing the necessary technical support and an enabling environment for this transition – and integrate social enterprises into entrepreneurial and enterprise development programmes.

The bottom-up transformation we never knew we needed?

Investing in entrepreneurship may be just what South Africa needs to transform the economy from the bottom up. Much like our rainbow nation, it is flexible, resilient and innovative. It does not discriminate against sectors, industries, geographies, education and skill levels or capacity. It is not scared of starting small and dreaming big. Entrepreneurship is about leveraging what we have, whatever the scale. It is about taking action, instead of being hampered by limitations. The question is: are we doing what we can to realise its potential?

The 2025 Research Report will be launched on the 6th of May in Johannesburg and the 12th of May in Cape Town whereafter it will be available for download on the website.

Interested parties can attend the launch event by booking at:

Johannesburg event: 6 May:
https://momentummetropolitan-events.co.za/webinar/67ea4886b0a5cb135e798af3

Cape Town event: 12 May:
https://momentummetropolitan-events.co.za/webinar/67ecccf7bfa1733b941fedb2