Africas Young Entrepreneurs

Description
On this brief explanation relating to africas young entrepreneurs.

AUTHOR
JACQUI KEW
CONTRIBUTORS
REBECCA NAMATOVU
RILWAN ADERINTO
FRANCIS CHIGUNTA
AFRICA’S
YOUNG ENTREPRENEURS:
2015
rothko.co.za
AFRICA’S
YOUNG ENTREPRENEURS:
2 Af r i ca’ s Young Ent r epr eneur s
ABOUT THE
AUTHOR AND
CONTRIBUTORS
Jacqui Kew is an associate professor at the University of Cape Town’s Department of
Accounting. Her research interests include the youth, entrepreneurship and accounting
education. She is the principal author of Financial Accounting: An Introduction and is
project director of learnaccounting (www.learnaccounting.uct.ac.za), a multi-lingual
project that offers free access to accounting and fnancial management concepts in
English, isiXhosa and isiZulu. Jacqui has been involved with the Global Entrepreneurship
Monitor (GEM) project for more than 11 years, and she contributes her passion and
expertise in business training, academic and commercial research and projects.
Rebecca lectures at Makerere University Business School and has been part of the GEM
research project since 2003. She is the country co-ordinator of Youth and Employment:
the Role of Entrepreneurship in African Economies (YEMP) - a DANIDA-funded project.
She is also a country co-ordinator of the Entrepreneurship Education Project (EEP).
She was recently awarded a research grant from the Investment Climate and Business
Environment arm of the International Development Research Council.
Rilwan Aderinto is the co-founder and chief executive offcer of MarketSight Consultancy
Limited, and the national co-ordinator of the GEM project in Nigeria. He is a graduate
in Statistics from the University of Ibadan, holds a master’s degree in Business
Administration and in Managerial Psychology, and is a doctoral candidate at Gordon
Institute of Business Science (GIBS), University of Pretoria, South Africa. Rilwan is a
Fellow of the National Institute of Marketing of Nigeria (FNIMN).
Professor Francis Chigunta is a researcher, consultant and policy analyst in youth,
entrepreneurship and governance research. A graduate of Oxford (PhD) and Cambridge
universities (MPhil), his research interests focus on the state, governance and
development; entrepreneurship; public policy analysis; socio-economic analysis; youth
livelihoods; the informal sector; and small enterprise development. He has consulted to
numerous international organisations, including the United Nations, UNDP, ILO, UNIDO
and NEPAD.
JACQUI KEW (AUTHOR)
REBECCA NAMATOVU (CONTRIBUTOR)
RILWAN ADERINTO (CONTRIBUTOR)
FRANCIS CHIGUNTA (CONTRIBUTOR)
Unl ocki ng t he potent i al for a br i ghter f ut ur e 3
CONTENTS
11
12
14
18
19

23

24
24
28
28
29
31
31
33

36

37
37
38
41

42
45
46
47
49
50
51

54

55
57
58
59
60
CHAPTER 1:
Introduction
1.1 Background
1.2 Youth unemployment in sub-Saharan Africa
1.3 Factors inhibiting youth entrepreneurship
1.4 Why youth entrepreneurship matters
CHAPTER 2:
Youth Entrepreneurship in
sub-Saharan Africa
2.1 Introduction
2.2 The entrepreneurial pipeline
2.3 Entrepreneurial attitudes
2.3.1 Opportunity and skills perceptions
2.3.2 Fear of failure
2.3.3 Entrepreneurship as a career
2.3.4 The infuence of gender on youth entrepreneurship
2.3.5 Entrepreneurially active youth

CHAPTER 3:
The Impact of Youth-operated
Enterprises in sub-Saharan Africa
3.1 Introduction
3.2 State of youth businesses
3.3 Actual job creation and growth potential
3.3.1 Gender differential with respect to actual job creation and
growth potential
3.4 Sector involvement
3.5 Impact of education on growth potential
3.6 Innovation
3.7 Technology usage
3.8 Gender, choice and location of business
3.9 Financing
3.10 Business support
CHAPTER 4:
Conclusions and Recommendations
for Policy and Practice
4.1 Education and training
4.2 Business support and advice
4.3 Business capital and fnancial support
4.4 ICT and technology
4.5 Conclusion
02 ABOUT THE AUTHOR
AND CONTRIBUTORS
05 FOREWORD
06 ACKNOWLEDGEMENTS
07 EXECUTIVE SUMMARY
4 Af r i ca’ s Young Ent r epr eneur s
APPENDICES
Appendix 1: About GEM
Appendix 2: Detailed Country-specifc Information
LIST OF TABLES
Table 1.1: Global unemployment rates by region, 2014
Table 1.2: Unemployment rates by country, sub-Saharan Africa, 2014
Table 1.3: The youth unemployment landscape in sub-Saharan Africa
Table 2.1: Entrepreneurial pipeline classifcations
Table 2.2: Adult and youth entrepreneurs by new, nascent and established business by country,
sub-Saharan Africa, 2013
Table 3.1: Actual job creation by youth businesses by country, GEM 2013
Table 3.2: Job growth expectations for youth businesses by country, GEM 2013
Table 3.3: Growth expectations for adult and youth businesses by country, sub-Saharan Africa, GEM 2013
Table 3.4: Percentage in early stage entrepreneurial ventures, by age and gender,
sub-Saharan Africa, GEM, 2013
Table 3.5: Growth expectations for youth businesses by gender, sub-Saharan Africa GEM 2013
Table 3.6: Percentage of youth businesses per sector, sub-Saharan Africa, GEM 2013
Table 3.7: Percentage of youth businesses per sector, by gender, sub-Saharan Africa, GEM 2013
Table 3.8: Innovation indicators in youth businesses, sub-Saharan Africa, 2013
Table 3.9: Business premises by country and gender, sub-Saharan Africa, GEM 2013
Table 3.10: Business fnancing by country and gender, sub-Saharan Africa, GEM 2013
LIST OF FIGURES
Figure 1.1: Sub-Saharan Africa’s population pyramid, 2010 and 2030 (projected)
Figure 2.1: The entrepreneurial pipeline
Figure 2.2: The distribution of the youth as potential, intentional, entrepreneurs and non-
entrepreneurs in sub-Saharan countries, 2013
Figure 2.3: Fear of failure among the youth, sub-Saharan African countries, 2013
Figure 2.4: Entrepreneurship as a good career choice, youth aged 18 to 34, 2013
Figure 2.5: Youth entrepreneurial propensity, potential and intention, by gender and country, 2013
Figure 2.6: Total Early-Stage Entrepreneurial activity (TEA), factor and effciency-driven economies, 2013
Figure 3.1: State of youth businesses by country, 2013
Figure 3.2: Actual job creation, by gender, sub-Saharan Africa, 2013
Figure 3.3: Participation in four popular sectors by youth businesses by country, 2013
Figure 3.4: Actual job creation by popular sector, sub-Saharan Africa, 2013
Figure 3.5: Impact of education on growth potential, sub-Saharan Africa, 2013
Figure 3.6: Newness of product/service by youth and country, sub-Saharan Africa, 2013
Figure 3.7: The use of technology in youth businesses, sub-Saharan Africa, 2013
Figure 3.8: Proportion of customers from outside the country, youth, sub-Saharan Africa, 2013
Figure 3.9: Primary sources of guidance with respect to managing a business, by country, 2013
Figure 3.10: Percentage of young business owners who used government business support,
by country, 2013
61

61
69

12
13
16
24
35

38
39
40
41

41
42
43
46
49
50

14
24
25

30
31
32
34
37
41
43
44
45
47
47
46
51
52
Unl ocki ng t he potent i al for a br i ghter f ut ur e 5
Africa’s population
is expected to more
than double, rising
from 1.1 billion in
2013 to at least 2.4
billion by 2050.
2013 World Population Data Sheet,http://www.prb.org/Publications/Data
sheets/2013/2013-world-population-data-
sheet/data-sheet aspx
FOREWORD
There are nearly 200 million Africans aged
between 15 and 24. This makes Africa
the youngest continent on the globe. The
potential contribution of its young people
to the continent’s sustained economic
development is immense. By 2040,
Africa’s young workforce will be the largest
in the world, surpassing that of both China
and India. Harnessing the potential of
Africa’s youth is, thus, imperative.
The formal sector is unable to meet the
employment demands of the growing
young population. For millions of young
Africans, creating their own enterprises
is the only avenue open to them for
employment. In tacit acknowledgement
of this phenomenon, governments
have adopted a wide range of policies
and programmes aimed at facilitating
entrepreneurship. However, such
interventions must be informed by a solid
understanding, based on reliable data
that accurately describe young people’s
aspirations, their challenges, and
how they can overcome the obstacles
inherent in establishing and running a
viable enterprise.
Before research by the Global
Entrepreneurship Monitor (GEM), much
of the evidence of young people in
the private sector was anecdotal and
exclusively country-based. Canada’s
International Development Research
Centre (IDRC) rapidly understood the
value of analysing and quantifying the
participation of young people in the
private sector in order to inform policy
options and interventions that are most
likely to bring choice and change to those
who need it the most. The data gathered
under the GEM umbrella, fnanced by the
IDRC in more than 10 African countries,
has been invaluable in understanding
not only the nature and characteristics
of youth entrepreneurship but also the
kind of policies that might be adopted
to support young entrepreneurs in their
businesses. Further, GEM data and
analysis indicate avenues for supporting
successful, job-creating enterprises and
those in high-growth, sustainable sectors.
The evidence in this report
demonstrates that young people are
constrained by insuffcient education
and training for a business career,
a lack of infrastructure and diffcult
access to fnance. These factors not
only constrain the efforts of young
entrepreneurs, they also hold back
the pace of economic and social
development more generally. What
this report shows is that the dynamism
of young people can be unlocked
by providing relatively simple but
comprehensive policy responses directly
targeted at them.
The IDRC is committed to helping
developing countries fnd solutions to
their problems by supporting knowledge
and innovation for large-scale positive
change, building the leaders for today
and tomorrow, and working with local
teams to achieve the greatest impact.
Hence, the centre’s 2015 to 2020
Strategic Plan is titled Investing in
Solutions, a precise refection of its
mandate and activities through its
programmes and fnancial support to
research teams across the globe.
The IDRC considers young people in
the developing world as central to
economic and social advancement
through sustained, inclusive growth.
Part of ‘investing in solutions’, therefore,
is ‘investing in the future’: investing in
Africa’s youth to give them the tools to
drive inclusive economic growth and
social progress.
This report has produced a solid body of
evidence to support policy enhancement
and change in the region. With the right
policies to support young entrepreneurs
and encourage them to enter high-growth
and proftable sectors, African countries
can start to harness the potential of their
youthful resources. The report makes an
important contribution to this goal.
Simon Carter
Regional Director, Sub-Saharan Africa
International Development Research Centre
6 Af r i ca’ s Young Ent r epr eneur s
ACKNOWLEDGMENTS
The author wishes to express her gratitude to the following contributors and
partners, without whom this project and report would not have been possible:
The International Development Research Centre of Canada (IDRC) for its generous
fnancial support, and the valuable support provided by members of the IDRC staff – in
particular, the constant academic and moral support given by Martha Melesse;
The GERA Team, Yana Litovsky for her help with the data analysis and development of
tables and charts, Michael Herrington for his valuable feedback and guidance;
The contributors Rebecca Namatovu, Rilwan Aderinto and Francis Chigunta for their
ideas and discussions;
Penny Kew and Colm Foy for their editing and academic assistance; and
Rothko International for designing and printing the report.

This report is part of a multi-country study on youth entrepreneurship conducted under the
auspices of the Global Entrepreneurship Monitor (GEM), with fnancial support from the IDRC.
Opinions stated in this report are those of the authors and do not necessarily refect the
views of the IDRC or the GEM.
Unl ocki ng t he potent i al for a br i ghter f ut ur e 7
An encouraging
fnding is that youth
businesses, in most
countries, have an
overall positive impact
on the livelihood of
the entrepreneur.
EXECUTIVE SUMMARY
Sub-Saharan Africa has experienced
more than a decade of consistently
high growth but the benefits have
not been shared by all and inclusive
growth – which reduces poverty
through opening up new and better
job opportunities for all segments
of the population – is an urgent
policy imperative. Young Africans
are three times more likely than
adults to be unemployed and the
growing young population (62% of
sub-Saharan Africans are under 25)
requires urgent action to provide
sustainable employment opportunities
so that young people become active
participants in the future economic
activity of sub-Saharan Africa. This
report, the culmination of a three-year
project carried out with fnancial support
from Canada’s IDRC, focuses on youth
entrepreneurship in the region. It draws
on data from nine countries in sub-
Saharan Africa – Angola, Botswana,
Ghana, Malawi, Namibia, Nigeria, South
Africa, Uganda and Zambia – as well as
from more than 300 experts.
YOUTH ENTREPRENEURSHIP IN
SUB-SAHARAN AFRICA
The youth in sub-Saharan Africa have
generally positive entrepreneurial
attitudes and perceptions. Most
young Africans believe there are
good business opportunities in their
countries and that they have the skills
and knowledge to start and manage
a new business. There is also a high
level of intention among young people
to start their own enterprises and
consider running a business to be a
desirable career choice, undaunted
by any significant fear of failure. Thus,
the region has a large pool of potential
entrepreneurs, and over a third of
young people in all countries except
South Africa demonstrate a propensity
to engage in private enterprise.
A high proportion of young people are
engaged in entrepreneurial activity
in sub-Saharan Africa. In Uganda,
Zambia and Nigeria, in particular,
more than half of them are either
starting a business or running one. In
addition to their high ‘total early-stage
entrepreneurship activity’ (TEA) rates
that represent involvement in new or
nascent enterprises, they also show
relatively high levels of youth-owned,
established businesses.
An encouraging finding is that youth
businesses have an overall positive
impact on the livelihood of the
entrepreneur in most countries. In
GEM terms, that means the business
is making enough money to survive
now and the owner expects future
growth, or the business is already
in a growth phase. In job creation,
however, the majority of these
businesses only create employment
for the business owner. Angola stands
out as the exception. While Angola’s
youth entrepreneurial rate is lower
than most of the region, it has the
highest percentage of youth businesses
creating jobs for others.
Youth economic activity is concentrated
within a limited number of sectors,
with 64% of the youth in sub-Saharan
Africa involved in the retail, hotel and
restaurant trade. Almost all (97%) of
youth businesses in the retail sector
are low-growth businesses, 54%
of which offer employment to only
the business owner. This suggests
that while most young people are
classified as part of an economy’s
entrepreneurial activity, their small,
undifferentiated businesses are
unlikely to generate a sustainable
livelihood, with very few exceptions, as
noted above.
Our research confirms the positive
relationship between the level of
education and the likelihood of
business owners’ indicating growth
expectations within a business. Sixty-
five percent of low-growth business
operators only have a primary school
education while 80% of high-growth
businesses have completed secondary,
post-secondary or tertiary education.
8 Af r i ca’ s Young Ent r epr eneur s
Young women are
as actively involved
in entrepreneurial
activities in sub-
Saharan Africa, and in
some countries such
as Uganda, even more
so than young men.
These findings reinforce the
importance of education, particularly
in post-primary school, as well as
renewing the focus on improving the
quality of education in the region.
Innovation rates, as measured by the
degree to which products or services
are new to some or all customers and
whether numerous other businesses
offer the same ones, are relatively
low in sub-Saharan Africa. Two-
thirds of the youth businesses in
the region indicated that what they
offer is not new to some or all of
their customers, while 57% indicated
that numerous other businesses
offered the same product or service.
Selling undifferentiated products
and services in over-traded markets
makes it extremely difficult for young
entrepreneurs to generate a profit
and will rarely lead to viable business
creation over the longer term. The use
of technology by the youth for business
is also generally low.
Own funding and/or funding from
family or friends are the primary
sources of financing for young people
throughout sub-Saharan Africa. Formal
financial institutions play an important
role in financing youth businesses in
only a handful of countries, namely
Angola, Botswana, South Africa and
Namibia. Only a small number of
young business owners in the region
have made use of government-funded
business support initiatives. Angola
is the only exception, with almost a
third of both male and female youth
business owners indicating that they
had made use of government-funded
business support.
GENDER
Young women are as actively involved
in entrepreneurial activities in sub-
Saharan Africa, and in some countries
such as Uganda, even more so than
young men. However, there are
significant gender differences when
one considers the types of businesses
they are engaged in, the sectors they
operate in and their growth potential.
More than half of young women operate
in businesses in which no employment
is created — young female-owned
businesses are 1.3 times more likely
than businesses owned by young men
Unl ocki ng t he potent i al for a br i ghter f ut ur e 9
There are signifcant
gender differences
when one considers
the types of
businesses they
are engaged in, the
sectors they operate
in and their growth
potential.
to offer no employment other than to
the owner. The gender differential with
respect to actual job creation is most
noticeable with respect to high-growth
businesses, with young men being five
times more likely to offer employment
to 20 or more employees. There is
also a significant gender difference
with respect to both medium and
high-growth business aspirations, with
young men 1.5 times and two times
more likely to be involved in medium
and high-growth potential businesses,
respectively, than young women.
More than three-quarters (78%) of
young women operate in the retail and
agricultural sectors, which explains in
part the greater proportion of young
women operating in low–growth
businesses. Young women are also
more concentrated in a smaller number
of sectors, while young men have a
more diversified profile in terms of
sector involvement.
Compared to young men, young women
(other than in Nigeria and Zambia)
are most likely to operate from home
and are less likely to operate from the
market or from an established business.
This limits their market to a smaller local
reach. A possible option, to mitigate the
limited reach of home-based businesses,
is to trade online. Only South African
youth show any real online presence and
this is dominated by young women who
are 3.6 times more likely than young men
to use an online option as their primary
trading space.
INTER-GENERATIONAL
COMPARISONS
The youth entrepreneurial landscape is
similar in many respects to that of the
adults’ but there are also some notable
differences. In all but two countries
(Botswana and Malawi), young people
are more likely than adults to believe
that they have the skills and knowledge
to start a business and to indicate an
intention to start a business within the
next three years. In Uganda, Ghana
and Namibia young people show
entrepreneurial propensity rates of 1.8
times, 1.6 times and 1.4 times higher
than adults respectively.
There is not much difference in the
levels of fear of failure or the total
early-stage entrepreneurial activity
(TEA) rates of youth and adults in
much of sub-Saharan Africa; the only
significant difference is in the rate
of established businesses, where –
perhaps unsurprisingly – adults are
found in greater proportions than the
youth. In countries where the youth
exhibit higher levels of high-growth
aspiration than adults, their potential
economic contribution could be more
pronounced. Unless policy supports
young people’s aspirations to achieve
higher growth in their enterprises, the
current low economic impact of most
youth-operated businesses is likely
to continue.
There is little evidence of greater
diversification by youth-operated
businesses into sectors that are
currently under-represented or away
from over-traded sectors such as
retail. Policy needs to be adjusted in
recognition of this and encourage more
diversification and innovation among
young people in business. Without
these, youth-operated businesses
will merely continue to contribute
to the working poor and not to
improvements in the livelihood of these
entrepreneurs.
AN OPPORTUNITY FOR
POLICY MAKERS
The report identifies four areas
that can be targeted to unleash
the potential of Africa’s young
entrepreneurs – education and
training, business support and advice,
business capital and financial support,
and ICT and technology.
EDUCATION AND TRAINING
Structural problems affecting the
education systems continue to be
a stumbling block in the region’s
efforts to stimulate sustainable
entrepreneurial activity and improve
business productivity. This report has
shown a clear relationship between the
level of education and the likelihood
of business owners indicating growth
expectations within a business. A
young, undereducated and under-
employed workforce in sub-Saharan
Africa is pushed into entrepreneurship
as a survival option.
10 Af r i ca’ s Young Ent r epr eneur s
Too often, the formal education system
does not equip young people for the
realities of the current labour market.
Mismatches between the skills required
by industry and the economy and those
provided by schools and universities
are prevalent. Schools need to promote
entrepreneurship as a career path
alongside interventions that deal
with key skills gaps by, for example,
promoting apprenticeships and
technical and vocational education.
BUSINESS SUPPORT AND ADVICE
A consistent fnding across the nine
countries that participated in our survey is
that a signifcant majority of young people
are unaware of the entrepreneurship-
support programmes (both public and
private) designed specifcally to help
them. Moreover, business-support
programmes often fail to adequately
distinguish between different types of
entrepreneurial ventures and need to
differentiate between high- and low-
growth entrepreneurial initiatives. Hence,
support programmes should be better
publicised and targeted, reduced in
bureaucracy and regularly monitored
for effciency. Mentoring programmes
should be encouraged and incubators of
young enterprises should be supported
by public policy aimed at improving the
quality of young entrepreneurs and their
ventures. In addition, support needs to
be extended to professional and business
organisations to encourage young
people’s participation in them.
BUSINESS CAPITAL AND
FINANCIAL SUPPORT
Lack of access to finance is an
important disincentive to starting or
growing a business. Young people
who lack collateral or who have
not kept formal records for their
business are likely to be particularly
disadvantaged in their attempts to
start small businesses. The majority of
the young entrepreneurs surveyed for
this report raised the start-up capital
from their own or family savings, rather
than approaching formal institutions
or agencies. Public micro-lending
schemes could reduce the dependence
on personal or family funding.
Governments could ease access to
credit for young entrepreneurs through
the banking system and facilitate
the emergence of new financing
sources, such as business angels and
venture capitalists. A major cost to
young businesses is the acquisition
of premises, which explains the high
proportion of young entrepreneurs
who operate from home or the street,
limiting their potential. Public policies
to ease the burden of acquiring
premises would make a major
contribution to the viability of youth-
owned enterprises. Access to finance,
however, is only part of the equation.
Once they are able to secure finance,
young people also need to be able to
manage their money. Interventions that
aim to provide them with management
skills are needed.
ICT AND TECHNOLOGY
Many young entrepreneurs (particularly
young women) run their businesses
from home or on the street, which
signifcantly limits their access to
suitable markets. While the use of the
online platform could enable the many
home-based businesses to expand
their market reach, the cost of internet
access can be prohibitive. Improving
IT infrastructure would allow for a
reduction in the cost of technology –
this, as well as the potential to reach
new markets, could have a signifcant
impact on the sustainability of youth
businesses. Policy makers should
promote training in the business use of
ICT. Access to new information and other
technologies needs to be brought within
reach of younger people - this implies
the introduction of pricing mechanisms
adapted to young people’s means.
This report has identified a number
of factors that seem to be holding the
sub-Saharan African youth hostage and
preventing them from fully benefitting
from a relatively high entrepreneurial
propensity as well as a high number of
actual entrepreneurs. The key issues
that can be lifted from this report
are that the youth are predominantly
trapped in the retail sector in low
growth, low innovation businesses that
make use of older technology.
Mentoring
programmes should
be encouraged and
incubators of young
enterprises should
be supported by
public policy aimed
at improving the
quality of young
entrepreneurs and
their ventures.
Unl ocki ng t he potent i al for a br i ghter f ut ur e 11
CHAPTER 1
I n t r o d u c t i o n
12 Af r i ca’ s Young Ent r epr eneur s
Table 1.1: Global unemployment rates by region, 2014
Region Total unemployment rate (%)
Developed Economies and European Union 8.6
Latin America and the Caribbean 6.5
Middle East 10.9
North Africa 12.2
sub-Saharan Africa 7.6
Source: ILOhttp://www.ilo.org/global/research/global-reports/global-employment-trends/2014
1 World Bank, 2015, Global Economic
Prospects, January 2015, www.worldbank.
org/content/Worldbank/GEP2015a/pdfs/
GEP2015a_chapter2_regionaloutlook_SSA.pdf
2 McKinsey Global Institute, 2010, Lions
on the move: The progress and potential of
African Economies
3 Herrington, M. and Kelly, D., 2012,
African entrepreneurship, Sub-Saharan
African Regional Report
4 ILO, 2014, Global Employment Trends 2014
Africa’s population
is expected to more
than double, rising
from 1.1 billion in
2013 to at least 2.4
billion by 2050.
2013 World Population Data Sheet, www.prb.
org/Publications/Data sheets/2013/2013-
world-population-data-sheet/data-sheet aspx.
1.1 BACKGROUND
Sub-Saharan Africa has experienced
more than a decade of consistently
high growth – a phenomenon referred
to as ‘Africa rising’. Real GDP rose by
4.9% from 2000 to 2008, more than
twice that of the 1980s and 1990s. This
growth has been sustained: in 2014 it
averaged about 4.5%, compared to 4.2%
in 2013, and is predicted to increase
to 5.1% by 2017
1
. This performance is
being boosted by rising investment in
natural resources and infrastructure,
and strong household spending.
Africa is enjoying positive trends such as
strong global commodity prices, a rising
number of consuming households and
growth in sectors such as manufacturing
and services
2
. The underlying reasons
behind the rapid growth of some African
economies include actions to end armed
confict, improved macro-economic
conditions and micro-economic reforms
that are creating a better business climate.
This growth is slowly starting to reduce the
poverty rate; however, the impact on health
and education is still muted. To lift general
living standards to a more acceptable level
and have a broad overall positive impact
on the continent, the current growth rate
will need to be sustained or increased
3
.
There is a critical need to focus on the
quality of growth, with growing evidence
that the benefts of high growth have not
been shared by all, and inclusive growth
– which reduces poverty through opening
up new and better job opportunities for all
segments of the population – should be an
urgent policy focus.
However, it is important to recognise
that the stated unemployment rate,
particularly in less-developed economies
such as those in large portions of
sub-Saharan Africa, disguises the full
extent of the employment challenge. In
addition, the average unemployment
rate hides the large variations found
across the region, with countries such
as South Africa (25.3%), Botswana
(18.4%) and Namibia (17.7%)
respectively recording unemployment
rates of 3.3 times, 2.4 times and 2.3
times higher than the regional average
(Table 1.2)
4
.
While the average unemployment rate
in sub-Saharan Africa compared to that
in other regions does not seem to be
cause for much concern, it is imperative
to recognise that the offcial defnition
of unemployment conceals a great deal.
Of greater importance is the signifcant
proportion of the population that is
under-employed, (i.e. earning very low
wages), stuck in vulnerable employment
or classifed as the working poor. These
individuals are forced to take whatever
work opportunities present themselves,
most of which are not sustainable
nor are they viable routes out of
poverty. A large majority of individuals
are employed (or self-employed) in
informal businesses, often household
businesses, or in small-scale farming.
These employment opportunities are
characterised by low productivity and
low growth. The unemployment rates
are also understated as they do not
take into account unregistered and
discouraged work seekers.
Unl ocki ng t he potent i al for a br i ghter f ut ur e 13
Table 1.2: Unemployment rates by country, sub-Saharan Africa, 2014
Country Total unemployment rate (%)
Angola 8.4
Botswana 18.4
Ghana 4.5
Malawi 7.6
Namibia 17.7
Nigeria 7.5
South Africa 25.3
Uganda 3.9
Zambia 13.3
Source: ILOhttp://www.ilo.org/global/research/global-reports/global-employment-trends/2014
Individuals
in vulnerable
employment are
unlikely to have
formal contracts,
social security and
decent working
conditions. Vulnerable
employment is likely
to offer low earnings
and a lack of options
with respect to job
security.
ILO Global Employment Trends for Youth, 2013
14 Af r i ca’ s Young Ent r epr eneur s
5 Swaniker, F., 2014, Lifting Africa up
by empowering its youth,http://voices.
mckinseyonsociety.com/empowering-
youth-in-africa/
1.2 YOUTH UNEMPLOYMENT
IN SUB-SAHARAN AFRICA
A related challenge is Africa’s burgeoning
youth population. The youth are three
times more likely than adults to be
unemployed and Africa’s growing and
youthful population, where 62% of the
population is under the age of 25 years
5
,
requires the continent to address the
issue of fnding sustainable opportunities
for a rapidly increasing workforce. Figure
1.1 shows the population pyramid for sub-
Saharan Africa.
The median age in sub-Saharan Africa is
18.6 years, lower than any other
geographic regions, including other
developing regions. Asia has a median
population age of just below 30. The
population pyramid in sub-Saharan Africa
has a triangular shape, implying a large
youth population, a smaller working age
population and a small older population
(65+). Figure 1.1 indicates an
expectation of only a small tapering off
with respect to the population growth
rate in sub-Saharan Africa and that youth
as a percentage of the population will
continue to be signifcant for the
foreseeable future (2030).
Even with the optimistic economic
growth projections for sub-Saharan
Africa and a concomitant increase in
wages, the infomal sector in countries
such as Uganda will only decrease in
Strategic reforms are
needed to expand
young people’s access
to science-based
education at both
the country and the
regional level, and
to ensure that they
graduate with cutting-
edge knowledge that
is relevant and meets
the needs of private
sector employers.
Makhtar Diop, World Bank Group’s vice
president for Africa.
importance from 79% to 74% by 2020.
Further, many young people in Africa,
due to a lack of other options, work
in the same place as their parents
– in small household enterprises or
small-scale farming operations. Youth
unemployment and productivity is caused
by the lack of employable skills; the
diffculty of access to resources such as
land and capital; insuffcient focus by
government organisations on the informal
sector and agriculture; and negative
attitudes towards work, especially in the
agricultural sector. Causes of youth under-
employment include inappropriate skills;
poor or jobless economic growth; growing
youth populations; and a lack of education
(or lack of appropriate education). Young
people who drop out of education and
training avenues fail to access relevant
occupational skills.
There is suffcient evidence that the
problem is not just poor levels of school
completion rates but, more importantly,
that of skills mismatch. In many
countries, the education system does
not prepare young people adequately
for the realities of the labour market.
A key factor in addressing the youth
employment challenge, therefore,
requires a focus on improving the
quality and type of education on
offer, as well as an improvement in
the throughput rates to allow greater
numbers of students to complete
secondary schooling. This will both
100+
95-99
90-94
85-89
80-84
75-79
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
25-29
20-24
15-19
10-14
5-9
0-4
100+
95-99
90-94
85-89
80-84
75-79
70-74
65-69
60-64
55-59
50-54
45-49
40-44
35-39
30-34
25-29
20-24
15-19
10-14
5-9
0-4
7.5% 7.5% 5.0% 5.0% 2.5% 2.5% 7.5% 7.5% 5.0% 5.0% 2.5% 2.5%
2010 2030
Male Male Female Female
Figure 1.1: Sub-Saharan Africa’s population pyramid, 2010 and 2030 (projected)
Source: United Nations Department of Economic and Social Affairs, Population Division. World Population Prospects (http://populationpyramid.net)
Unl ocki ng t he potent i al for a br i ghter f ut ur e 15
increase the general skill levels within
the various countries and widen the
pool of potential tertiary students.
The pressure on governments with
respect to education spending will
continue to stretch budgets for the
next few decades. The poor quality
of basic education continues to trap
large numbers of young people in low-
earning jobs. With a growing population,
improving the quality of basic education
to ensure that sub-Saharan Africa is
able to increase the productivity of
its workforce is an important step in
developing a long-term sustainable
solution to address the twin challenges
of a large youth population and high
levels of unemployment (taken as a
percentage of people that are not in
sustainable jobs).
Between 1960 and 1990, South East
Asia experienced what has been termed
a ‘demographic dividend’, a position
where the growth in the labour force
exceeds growth of the total population.
As a result, young people entering the
work place in South East Asia had access
to suffcient good job opportunities. This,
coupled with the fact that the youth in
South East Asia had a good level of
education, was a key driver of economic
growth. Projections from the UN
population division indicate that by
2050, the growth in the labour force in
sub-Saharan Africa would exceed the
growth of the total population, which
means that Africa could beneft from its
own demographic dividend. However,
the situation in Africa is signifcantly
different from South East Asia in that
many young people entering the working
population are poorly educated and for
whom there will be limited work
opportunities. It is important to
emphasise that a declining fertility rate
is a crucial component of the
demographic dividend. For sub-Saharan
Africa to achieve a similar demographic
dividend to that enjoyed by South East
Asia, supply and demand-side policies
will not only need to improve the quality
of education and improve the business
climate within the continent, but a
concomitant drop in the fertility rate is
crucial for sustainable growth.
The 10 countries
worldwide with the
highest fertility are
all in sub-Saharan
Africa. In addition to
high birth rates, the
region’s population
is also quite young,
with 43 percent of
the population below
age 15.
United Nations, 2013, World Population
Data Sheet,http://www.prb.org/
Publications/ Datasheets/2013-world-
populationdata-sheet
16 Af r i ca’ s Young Ent r epr eneur s
Table 1.3: The youth unemployment landscape in sub-Saharan Africa
Region/Country Total unemployment
rate (%)
Youth unemployment
rate (%)
Youth male
unemployment rate
(%)
Youth female
unemployment rate
(%)
Adult unemployment
rate (%)
sub-Saharan Africa 7.6 11.9 11.1 12.8 6.0
Angola 8.4 14.1 13.8 14.5 6.1
Botswana 18.4 34.3 28.9 40.0 13.0
Ghana 4.5 8.5 7.7 9.4 3.6
Malawi 7.6 13.6 12.6 14.4 5.4
Namibia 17.7 35.6 31.3 40.8 13.7
Nigeria 7.5 13.7 14.0 13.2 5.7
South Africa 25.3 53.0 48.5 58.4 21.0
Uganda 3.9 6.6 6.1 7.1 2.7
Zambia 13.3 24.6 26.6 22.5 8.1
Rwanda 0.6 0.7 1.0 0.5 0.5
Source: ILO www.ilo.org/legacy/english/get/2014/GET_UR.xlsx
6 ILO, 2014, Global Employment Trends
2014
7 ILO, 2013, Trends Econometric Models,
October 2013 www.ilo.org/legacy/english/
get/2014/GET_UR.xlsx
Sub-Saharan Africa (Table 1.3) has an
average youth unemployment rate of
11.9%. The average youth unemployment
rates in the Developed Economies and
the European Union (18.3%), Latin
America and the Caribbean (13.6%) the
Middle East (27.2%) and North Africa
(29.4%)
6
are generally higher than the
offcial average youth unemployment
rate in sub-Saharan Africa, with a greater
proportion of Europe showing youth
unemployment rates that are more
comparable with South Africa, an outlier
in sub-Saharan Africa
7
.
As with the total unemployment rate
(Table 1.2), the sub-Saharan African fgure
disguises similar signifcant, country-
specifc differences with South Africa and
Botswana at a high of 53% and 34%,
respectively, and Rwanda and Uganda
at a low of 0.7% and 6.6%. These youth
unemployment fgures at the extremes
mask the reality of the employment
challenge within these countries, because
offcial rates do not acknowledge the
large number of people who simply
cannot afford to be unemployed and
therefore engage in vulnerable forms of
employment merely to survive.
In general, young women have a higher
rate of unemployment than men and
Table 1.3 shows that the sub-Saharan
African region conforms to this trend.
Within sub-Saharan Africa, the male-
to-female youth unemployment ratio
is 1:1.2 with young women being 1.2
times more likely than young men to
be unemployed. Botswana, with a male
to female youth unemployment ratio of
1:1.4, and Namibia, with a ratio of 1:1.3,
have the highest disparities with respect
to youth male and female unemployment
rates of the sub-Saharan African
countries reported. In a few countries,
notably Nigeria (with a ratio of 1.1:1) and
Zambia (with a ratio of 1.2:1), male youth
unemployment is higher than female
youth unemployment.
The ILO’s Global Employment Trends for
Youth 2013 highlights the following with
respect to less-developed regions such as
large portions of Africa:
? In countries and regions with high
shares of vulnerable employment,
the youth employment challenge
is as much a problem of poor
employment quality as one of
unemployment;
Unl ocki ng t he potent i al for a br i ghter f ut ur e 17
Unemployment fgures
mask the reality
of the employment
challenge within these
countries, because
offcial rates do not
acknowledge the large
number of people who
simply cannot afford
to be unemployed and
therefore engage in
vulnerable forms of
employment merely
to survive.
8. ILO’s Global Employment Trends for
Youth, 2013
? Young people have a higher
likelihood than adults of being
among the working poor; and
? Many young people in developing
economies begin their working
lives engaged in family businesses
(likely to be an informal enterprise)
and few make the transition to paid
employment in the formal sector.
As is the case for most formal
assessments of unemployment
rates, the ILO unemployment rate
has active job search as a criterion
for inclusion in the unemployment
rate. When this criterion is excluded,
the unemployment rate doubles in
many low-income economies and the
unemployed rates in least developed
economies are then higher than those
of the high-income economies. To put
this into context, it is estimated that up
to 60% of young people in developing
regions are either without work, not
studying, or engaged in irregular
employment
8
.
18 Af r i ca’ s Young Ent r epr eneur s
9 World Economic Forum, 2015, The
Global Competitiveness Report 2014
to 2015http://reports.weforum.org/
globalcompetitiveness-report-2014-2015/
subsaharan-africa/
10 Schott, T., Kew, P, and Cheraghi, M.,
2015, Future potential – a GEM perspective
on youth entrepreneurship
11 Fatoki, O., 2011, An investigation into
the Obstacles to Youth Entrepreneurship in
South Africa
12 United Nations, 2013, Opportunities and
constraints to youth entrepreneurship
1.3 FACTORS INHIBITING
YOUTH ENTREPRENEURSHIP
The Global Competitiveness Index
published by the World Economic Forum
highlights key areas where sub-Saharan
Africa continues to underperform. The
quality of infrastructure and basic
education remains low. Higher education
and training also need to be further
developed to provide the skills required
for higher-value-added growth
9
. As these
are basic requirements to enable a
competitive economy, they impact on
the ability of the region to develop an
entrepreneurial environment.
Governmental efforts to boost
effective education, job creation and
entrepreneurship development within the
sub-Saharan African region have included
reforms of the education and training
systems as well as of the school curricula.
Some countries have focused on policies
designed to increase the number of young
people going into vocational and technical
training institutions, while entrepreneurial
education has also been introduced into
a number of curricula. These appear to be
bearing fruit, as youth in the sub-Saharan
Africa region are the most likely to have
received some form of business training
at school, compared to youth in the rest of
the world
10
. This is encouraging. However,
the quality of this training is likely to be
inconsistent, given the lack of teacher
training and resources in most countries.
The following obstacles hinder youth
entrepreneurial development: access to
fnance; lack of management, technical
and marketing skills; and access to
infrastructure and markets. Young people
in sub-Saharan Africa perceive lack of
capital, lack of skills, lack of support and
lack of market opportunities as the main
obstacles to entrepreneurial ambitions
11
.
Other barriers identifed in sub-Saharan
Africa include the lack of links to
professional networks, corruption, lack
of property rights and the over-regulated
information and communications
technology sector
12
. Barriers to youth
employment identifed in high-income or
middle-income countries include the lack
of an enterprise culture in many countries;
unfavourable legal, policy and regulatory
frameworks for youth entrepreneurship;
the lack of entrepreneurship education
across formal and informal educational
systems; the lack of access to affordable
fnancing in the form of start-up,
The quality of
infrastructure and
basic education
remains low.
Unl ocki ng t he potent i al for a br i ghter f ut ur e 19
investment or working capital; and
lack of knowledge about and access to
relevant business development services
and support schemes for youth already
in business or for those interested in
pursuing an entrepreneurial career
13
.
While many of these obstacles could
be considered to be generic issues that
face all business owners, the youth are
often more or differently disadvantaged
due to their lack of asset accumulation,
credit history and work experience.
Access to fnance has, in particular, been
well-documented, both as a general
business concern and more specifcally
as a youth-specifc obstacle. However,
while raising bank or investor fnance
is made more problematic for young
people as they are unlikely to have
developed a credit history to support
their ability to raise funding through
traditional routes, it is often over-
reported as the key inhibitor of youth
entrepreneurial development. Access
to fnance is often the most visible
constraint but it is not, necessarily, the
primary inhibitor of youth entrepreneurial
development. Increasing the amount
of funding available to youth-based
businesses without the concomitant
mentoring, skills development or market
access being available is unlikely to
result in a signifcant increase in youth
entrepreneurial activity.
Entrepreneurship is believed to
contribute to economic development
because entrepreneurs create new
businesses, and new businesses create
jobs, provide people with a variety
of products and services, intensify
competition, and increase productivity
through technological change. However,
not all entrepreneurial activity has
an equal impact on job creation and
economic development. Given that
sub-Saharan Africa already faces
enormous issues with respect to under-
and unemployment, understanding
the key challenges and opportunities
for inhibiting and enabling
entrepreneurship in sub-Saharan
Africa as well as understanding
the motivations and impact of
entrepreneurs within the region is
important to inform policy discussions
and decisions with actual data from the
region itself.
1.4 WHY YOUTH
ENTREPRENEURSHIP
MATTERS
Youth is a crucial time of life when young
people start realising their aspirations,
assuming their economic independence
and fnding their place in society.
Employment is critical to the realisation of
these ideals. Despite recent rapid growth
in the region, under-employment and
poverty have remained stubbornly high in
sub-Saharan Africa.
The problem of un- and underemployment
has exacerbated the vulnerability of young
people in terms of:
? lower quality of jobs for those who
find work;
? greater labour market inequalities
among different groups of young
people;
? longer and more insecure school-
to-work transitions; and
? increased detachment from the
labour market
14
.
The traditional job-for-life career path is
no longer an option for most people
15
and
youth entrepreneurship should be seen as
an additional path into the labour market
and source of job creation.
Organisations and initiatives such as the
ILO
16
, the United Nations, the World Bank,
Youth Business International and Nigeria’s
Youth Business Initiative have highlighted
a number of positive advantages to
stimulating youth entrepreneurship:
? youth entrepreneurship is an
option to create employment for
the youth;
? young entrepreneurs are more
likely to hire fellow youths;
? young entrepreneurs are
particularly responsive to new
economic opportunities and trends;
? young people are active in high
growth sectors;
? young people with entrepreneurial
skills are better employees;
? young people are more innovative
and often create new forms of
independent work;
? young people who are self-
employed have higher ‘life
satisfaction’
17
;
? entrepreneurship offers
unemployed or discouraged youth
an opportunity to build sustainable
13 Ilo, 2010, How to build an enabling
environment for youth entrepreneurship and
sustainable enterprises
14 Chigunta, Chisupa and Elder, 2013,
Labour market transitions of young women
and men in Zambia,http://www.Ilo.Org/
wcmsp5/groups/public/dgreports/dcomm/
documents/publication/
15 Schoof, U. 2006, Stimulating Youth
Entrepreneurship: Barriers and incentives to
enterprise start-ups by young people, ilo
16 Simpson, J. and Christensen, j., 2009,
Youth Entrepreneurship and the ILO
17 AfDB, OECD, UNDP and UNECA, 2012,
African Economic Outlook 2012: Promoting
Youth Employment
Access to fnance has,
in particular, been
well-documented, both
as a general business
concern and more
specifcally as a youth-
specifc obstacle.
20 Af r i ca’ s Young Ent r epr eneur s
livelihoods and a chance to
integrate themselves into society
18
;
? Entrepreneurial experience and/
or education help young people
develop new skills that can be
applied to other challenges in
life. Non-cognitive skills, such as
opportunity recognition, innovation,
critical thinking, resilience, decision
making, teamwork, and leadership
will beneft all youth, whether or not
they intend to become or continue as
entrepreneurs
19
.
It is imperative that the youth become
active participants in the future economic
activity of sub-Saharan Africa. This report,
the culmination of a three-year project
carried out with fnancial support from
Canada’s International Development
Research Centre to enhance informed and
evidence-based policies and interventions
that foster entrepreneurship and
sustainable livelihoods in sub-Saharan
Africa, therefore focuses on youth
entrepreneurship in the region.
This work has been carried out
under the auspices of the Global
Entrepreneurship Monitor (GEM). The
Global Entrepreneurship Monitor (GEM)
has completed 14 annual surveys of the
entrepreneurial attitudes, activities and
aspirations of individuals around the
world. Starting with just 10 developed
countries in 1999, GEM has grown to
include over 80 economies. In 2014,
more than 206 000 people were
surveyed in 73 economies. Together, this
group covers over 72% of the world’s
population and 90% of the world’s GDP.
GEM takes a comprehensive snapshot
of entrepreneurs around the world,
measuring the attitudes of a population
and the activities and characteristics of
individuals participating in various phases
of entrepreneurship. Also revealed are
the aspirations these entrepreneurs hold
for their businesses, along with other key
features of their ventures. This effort is
accomplished through the collaborative
work of a consortium of national teams
consisting of academic researchers from
across the globe
20
.
It is important to note that GEM groups
participating countries into three
levels: factor-driven, efficiency-driven
and innovation-driven. These are based
on the World Economic Forum’s (WEF)
and Global Competitiveness Report
21
,
which identifies three phases of
economic development based on
GDP per capita and the share of
exports comprising primary goods.
According to the WEF classification, the
factor-driven phase is dominated by
subsistence agriculture and extraction,
with a heavy reliance on labour and
natural resources. In the efficiency-
driven phase, further development is
accompanied by industrialisation and
an increased reliance on economies
of scale, with capital-intensive large
organisations more dominant. As
development advances into the
innovation-driven phase, businesses
are more knowledge-intensive, and the
service sector expands.
In order to recognise possible geographic
factors, GEM also groups countries into six
geographic regions: sub-Saharan Africa,
the Middle East and North Africa (MENA),
Latin America and the Caribbean, Eastern
Europe, Asia/Pacifc and the United States
and Western Europe.
The research on which this report is
based has been conducted in Angola,
Botswana, Ghana, Malawi, Namibia,
Nigeria, South Africa, Uganda and
Zambia. South Africa and Namibia are
classifed as effciency-driven economies,
while the other surveyed countries are
classifed as factor-driven economies
22
.
For the purpose of this study, ‘youth’ is
defned as young people between the
ages of 18 and 34.
Data was collected from some 20 000
young people from the nine countries
across sub-Saharan Africa as well as
from approximately 320 experts. The
experts comment on the nine essential
conditions of entrepreneurial capacity.
These are: 1) fnancial support; 2)
government policies; 3) government
programmes; 4) education and training;
5) research and development transfer;
6) commercial and professional
infrastructure; 7) internal market
openness; 8) access to physical
infrastructure; and 9) cultural and social
norms. Experts evaluate these conditions
within their own countries, and comment
on how government meets the needs
of entrepreneurs, impedes the activity
of entrepreneurs, and encourages
entrepreneurs to start new ventures.
18 United Nations, 2013, Opportunities and
constraints to youth entrepreneurship
19 World Bank, 2008, Children and the
youth, Volume II, Number 6
20 Kelley, D. Bosma, N. Amorós, J., 2011,
2010 Global Entrepreneurship Monitor Report
21 Schwab, Klaus, ed., 2010, The Global
Competitiveness Report 2010 to 2011
22 Kelley, D. Bosma, N. Amorós, J., 2011,
2010 Global Entrepreneurship Monitor Report
It is imperative that
the youth become
active participants in
the future economic
activity of sub-
Saharan Africa.
Unl ocki ng t he potent i al for a br i ghter f ut ur e 21
Addressing the youth employment
challenge requires specifc policy
initiatives that will allow young people to
fnd sustainable livelihood opportunities.
It is important that such policy initiatives
are driven by actual data, such as that
provided in this report, which seeks
to offer a view of the entrepreneurial
landscape that can be used to enrich and
inform policy discussions.
The report supports a regional
understanding of youth in sub-Saharan
Africa using the data from the GEM
research with a particular focus on
the following:
? whether the youth have an
entrepreneurial attitude and
whether this leads them to become
active entrepreneurs;
? an examination of the factors
influencing/inhibiting the
entrepreneurial activity of this
group; and
? developing an understanding
of the growth potential of youth
enterprises in the region.
Women constitute over half of the
world population; however, GEM has
shown that in many regions women
are still under-represented in the
entrepreneurial arena. This report
looks at the involvement of young
women in entrepreneurial activities
within the sub-Saharan region to see if
they are as active in entrepreneurship
as are young men. More importantly,
the report specifically looks at the
contribution, with respect to actual job
creation and intended growth potential,
of youth female-owned businesses. It
is important to identify whether young
women are as likely as young men to
be involved in high-growth businesses
or whether they are languishing,
in small, low-growth, survivalist
businesses that offer little opportunity
for a sustainable livelihood.
The report addresses the question of
whether the entrepreneurial landscape
within sub-Saharan Africa is likely to
change in the future by looking at the
current business activities of the adult
population with respect to the sectors
in which they operate, the actual impact
on job creation, the growth potential
expressed by adult businesses and the
level of innovation and technology use,
and comparing these fndings with youth
businesses within the region. GEM has
recognised that not all entrepreneurial
businesses have the same impact on
job creation and economic development.
If the youth entrepreneurial landscape
is not suffciently different from that of
adult entrepreneurs, policy directives will
need to focus on specifc areas identifed
in the report that will enable the region
to reduce the levels of under- and
unemployment and the working poor.
Women constitute
over half of the world
population; however,
GEM has shown that
in many regions
women are still under-
represented in the
entrepreneurial arena.
22 Af r i ca’ s Young Ent r epr eneur s
FRED THE CARPENTER
A UGANDAN ENTREPRENEUR
Fred is a 30-year-old primary school
drop-out who was born in rural
Bukomero village. In 1995, he left
his village and came to live with his
brother in the city where he accepted all
work opportunities that came his way,
including working as a porter on building
sites. Next to where Fred stayed was a
carpenter with a small workshop and
Fred helped with mundane tasks like
carrying timber and other petty work.
Over time, Fred became experienced
in using carpentry tools. Sixteen years
ago, he was an unskilled apprentice
in a small carpentry workshop. Today,
he owns a carpentry workshop worth
millions of shillings and employs 10
other young people.
As an apprentice, discipline and hard
work were the keys to his success. “He
was obedient and willing to learn. That
is why he has succeeded,” comments
his former master. Fred had the resolve
to start his own carpentry workshop,
even with meagre resources. He used
all his savings to buy materials and one
machine to refne the timber. As luck
would have it, a good Samaritan, an old
woman in his neighbourhood, agreed
to give him a portion on her plot of
land to set up his workshop. She gave
him a three-month grace period before
he should pay her rent. “To become
a carpenter one must have tools,
labourers and also be able to market
themselves. Doing this with a small
amount of the initial capital is not easy,”
says Fred. In fact, he had to bring in
three brothers from the village to fll his
labour demands. He trained them and
slowly business started picking up, with
customer numbers growing.
He reflectively narrates his starting
hardships, “In the beginning I used so
much energy because I was carrying
the timber on the bicycle to a nearby
town where I hired the trimming
machine. I did not give up. I worked
even harder because I needed to
grow my business.” During the life of
his business, when the capital was
insufficient to keep the business up,
he decided to return to his village and
do some farming until he raised more
capital. When he came back, he had
to work doubly hard to regain his lost
customers and get new ones. At this
point, there was no turning back.
Due to his trustworthiness and excellent
work, Fred has been contracted
by hotels, schools and many other
institutional customers. Although he
does not speak fuent English, he has
still managed to get business contracts
from foreigners and expatriates. “They
trust and respect me. They know that I
do good work,” he says. He is also happy
that he has given many unemployed
youth an opportunity to do something
with their lives because his workshop
has apprentices who are school
dropouts. In addition to the carpentry
workshop, he now has an animal farm in
his village.
Fred’s greatest challenge is an unclear
understanding of the taxation and
licensing policies in Uganda. “We
normally pay licenses that we don’t
understand. We need clarifcation about
taxes from our leaders,” he laments.
Fred now plans to expand his business,
since his location cannot handle the
current volume of activity.
As an apprentice,
discipline and hard
work were the keys to
his success.
Unl ocki ng t he potent i al for a br i ghter f ut ur e 23
CHAPTER 2
Yo u t h E n t r e p r e n e u r s h i p i n
S u b - S a h a r a n Af r i c a
24 Af r i ca’ s Young Ent r epr eneur s
Potential
entrepreneurs
Beliefs and attitudes
Total early-stage
entrepreneurial activity (TEA)
Intentions Nascent New
Established
Discontinuance
Entrepreneurship phases
Table 2.1: Entrepreneurial pipeline classifcations
Potential entrepreneurs
Individuals who believe that they have adequate
entrepreneurial skills and who perceive business
opportunities.
Intentional entrepreneurs
Individuals who have indicated that they intend to pursue a
business opportunity within the next three years.
Nascent entrepreneurs
Individuals who are actively involved in setting up a business
or who already own a business but whose business has not
paid any wages or salaries for zero to 3 months.
New entrepreneurs
Individuals that are owners/managers of an active business
that has been in existence from three to 42 months.
Established business owners
Individuals who own and manage a business that has been
in operation for more than 42 months.
1 Bosma, N. Wennekers and Amorós, J. in
2012 GEM Global Report
2.1 INTRODUCTION
Entrepreneurship is acknowledged as one
of the drivers of sustainable economic
growth because entrepreneurs create new
businesses, drive and shape innovation,
speed up structural changes in the
economy, and introduce new competition
– thereby contributing to productivity.
Entrepreneurship can drive job creation
and contribute to economic growth that is
inclusive and reduces poverty. Research
has attached numerous defnitions and
explanations to the term entrepreneurship.
For the purpose of this report,
entrepreneurship is defned as ‘any
attempt at new business or new venture
creation, such as self-employment,
a new business organisation, or the
expansion of an existing business, by an
individual, a team of individuals, or an
established business
1
’.
2.2 THE ENTREPRENEURIAL
PIPELINE
GEM sees entrepreneurial activity as
a continuous process rather than a
discrete event and we can view this
process as a pipeline, where people
participating in each phase are the
source of those advancing to the next
one. While not everyone in the pipeline
will move on to the next step, each step
will require participants in prior phases
(see Figure 2.1).
The entrepreneurial pipeline begins
with potential entrepreneurs. In this
stage, individuals have not embarked
on any specific actions to start an
enterprise, even though they believe
they have the capacity and believe that
there are plenty of opportunities to
start a business; for this reason they
are called potential entrepreneurs.
The second stage in the pipeline is
intention, where individuals express an
intention to start a business to exploit
these opportunities. The following
stages represent actual entrepreneurial
activity, namely nascent entrepreneurs
and new entrepreneurs, established
business ownership and finally
discontinuance (Table 2.1).
For the purpose of this report, each
respondent was given a unique
classifcation: a potential entrepreneur, an
intentional entrepreneur, an entrepreneur
or a non-entrepreneur. The classifcation
‘entrepreneur’ includes nascent, new and
Entrepreneurship can
drive job creation
and contribute to
economic growth
that is inclusive and
reduces poverty.
Figure 2.1: The entrepreneurial pipeline
Source: GEM Global Report, 2011
Unl ocki ng t he potent i al for a br i ghter f ut ur e 25
established businesses owners (Table
2.1). The classifcation ‘non-entrepreneur’
refers to young people who do not ft into
any of the classifcations indicated in
Table 2.1 above.
Data was collected from some 20 000
young people from nine countries
across sub-Saharan Africa (Angola,
Botswana, Ghana, Malawi, Namibia,
Nigeria, South Africa, Uganda and
Zambia) as well as from approximately
320 experts. The report uses this data
to develop a regional understanding
of youth in sub-Saharan Africa,
with a particular focus on whether
the youth have an entrepreneurial
attitude and whether this leads them
to become active entrepreneurs; the
factors influencing/inhibiting the
entrepreneurial activity in the youth;
and the growth potential of youth
enterprises in the region.
Youth entrepreneurial activity (which
includes nascent, new and established
youth businesses) ranges from a high
of 56% in Uganda to a low of 13% in
South Africa (Figure 2.2). Over half of
the youth in Uganda (56%), Nigeria
(53%) and Zambia (53%) would be
classified as entrepreneurs involved
in nascent, new or established
businesses. A third or more of the
youth in Ghana (41%), Malawi (38%)
and Namibia (33%) also fit this
classification. Only two countries in
our sample – Botswana (22%) and
South Africa (13%) have less than
a quarter of the youth involved in
entrepreneurial activity.
Youth entrepreneurial activity is
discussed in more detail in Chapter 3.
There are a number of similarities
across the countries with respect
to the distribution of the youth as
potential entrepreneurs, intentional
entrepreneurs, entrepreneurs and
non-entrepreneurs, when compared to
adults in the region. The youth in all but
two countries (Botswana and Malawi)
are more likely than adults to believe
that they have the skills and knowledge
to start a business and to indicate an
intention to start a business within the
next three years. However, the youth in
all countries in the sample were less
likely to be classified as entrepreneurs,
compared to adults in the sample.
Potential
Intentional
Non-entrepreneurs
Entrepreneurs
Figure 2.2: The distribution of the youth as potential, intentional, entrepreneurs and non-
entrepreneurs in sub-Saharan countries, 2013
Angola
24%
14%
36%
26%
Botswana
47%
8%
23%
22%
Uganda
8% 8%
28%
56%
South Africa
12%
11%
13%
64%
Ghana
27%
16%
16%
41%
Namibia
34%
10%
23%
33%
Malawi
10% 10%
38%
42%
Zambia
20%
17%
10%
53%
Nigeria
21%
14%
12%
53%
26 Af r i ca’ s Young Ent r epr eneur s
1 ANGOLA 2 BOTSWANA 3 GHANA
4 MALAWI 5 NAMIBIA 6 NIGERIA
7 SOUTH AFRICA 8 UGANDA 9 ZAMBIA
1
2
9
4
8
6
3
7
5
Unl ocki ng t he potent i al for a br i ghter f ut ur e 27
ANGOLA
MALAWI
SOUTH AFRICA
BOTSWANA
NAMIBIA
UGANDA
GHANA
NIGERIA
ZAMBIA
The youth in South Africa are 1.3
times more likely than adults to
believe that they have the skills
and knowledge to start a business.
However, there is no signifcant
difference between the youth and
adults in their stated intentions to
start a business within the next three
years, with respect to being to be
classifed as an entrepreneur, or being
classifed as non-entrepreneurial.
The youth in Zambia are 1.2 times more
likely than adults to believe that they
have the skills and knowledge to start a
business. However, there is no signifcant
difference between the youth and
adults in their stated intentions to start
a business within the next three years,
with respect to being classifed as an
entrepreneur, or being classifed as non-
entrepreneurial.
The youth in Nigeria are 1.4 times
more likely than adults to be classifed
as non-entrepreneurial; they are only
1.2 times less likely to be classifed
as an entrepreneur. The youth is
1.2 times more likely to believe they
have the skills and knowledge to
start a business; however, there is no
signifcant difference in their intention
to start a business within the next three
years, compared to adults in Nigeria.
The youth in Namibia are more likely (1.4
times) than adults to believe that they
have the skills and knowledge to start
a business and to indicate an intention
to start a business within the next three
years. Adults are signifcantly more likely
(1.6 times) than the youth to be classifed
as an entrepreneur. The youth are also
1.5 times more likely than adults to be
classifed as non-entrepreneurial.
In Malawi, there is no signifcant
difference in the rate of youth and adults
with respect to being to be classifed as
an entrepreneur. While adults are 1.2
times more likely to believe that they
have the skills and knowledge to start a
business, the youth are 1.3 times more
likely than adults to indicate an intention
to start a business within the next three
years. Adults in Malawi are also 1.3 times
more likely than the youth to be classifed
as non-entrepreneurial.
The youth in Ghana are 1.4 times more
likely to believe they have the skills and
knowledge to start a business and 1.8
times more likely to indicate an intention
to start a business within the next three
years, compared to adults. However, they
are 1.5 times less likely to be classifed
as an entrepreneur than adults in Ghana.
The youth in Ghana are also 1.5 times
more likely than adults to be classifed as
non-entrepreneurial.
Adults in Botswana are 1.3 times more
likely to believe that they have the skills
and knowledge to start a business; the
youth are 1.3 times more likely than
adults to indicate an intention to start
a business within the next three years.
Adults are 1.3 times more likely to be
classifed as an entrepreneur. There
is no difference in the level of non-
entrepreneurs between the adult and
youth population in Botswana.
The youth in Angola are more likely (1.2
times) than adults to believe that they
have the skills and knowledge to start
a business and to indicate an intention
to start a business within the next
three years. However, adults are more
likely (1.4 times) than the youth to be
classifed as an entrepreneur. There
is no difference in the level of non-
entrepreneurs between the adult and
youth population in Angola.
The youth are signifcantly more likely (1.8
times) than adults to believe that they
have the skills and knowledge to start
a business and to indicate an intention
to start a business within the next three
years. Adults in Uganda are 1.4 times
more likely than the youth to be classifed
as non-entrepreneurial. Adults are only
1.2 times more likely than the youth to be
classifed as an entrepreneur.
4
7 8
5
2 1 3
6
9
28 Af r i ca’ s Young Ent r epr eneur s
2 Turton, N. and Herrington, M. 2013, 2012
GEM South African Report; Xavier, S.R. et al.,
2013, 2012 GEM Global Report
3 Kelley, D., Bosma, N. and Amorós, J., 2011,
2010 GEM Global Report
2.3 ENTREPRENEURIAL
ATTITUDES
The GEM model recognises
entrepreneurial attitudes, activities
and aspirations as dynamic, interactive
components of national entrepreneurial
environments. The adult population survey
includes questions relating to all three
of these components. Entrepreneurial
activity does not take place in a vacuum.
Entrepreneurial attitudes and perceptions
play an important part in creating an
entrepreneurial culture and have a
profound effect on a number of activities
in the entrepreneurial pipeline.
2.3.1 OPPORTUNITY AND SKILLS
PERCEPTIONS
Entrepreneurial propensity, i.e. the
likelihood that young people believe they
have the skills to start a business and
either believe there are good business
opportunities or intend to start a business
in the foreseeable future, is an important
indicator of future entrepreneurial
activity and, as such, includes both
potential and intentional entrepreneurs.
Perceptions about entrepreneurship are
a vital component of the entrepreneurial
process, because before an individual
becomes an entrepreneur she/he
must identify an opportunity and must
believe that she/he has the necessary
capabilities to start a successful business
venture
2
. Societies develop when they
have people who recognise valuable
business opportunities and perceive that
they have the required skills to exploit
them. Therefore, positive or negative
perceptions that societies have about
entrepreneurship strongly infuence
the motivations of people to enter
entrepreneurship.
As indicated earlier, for the purposes
of this report, each individual has been
given a unique classifcation, namely as
a potential entrepreneur, an intentional
entrepreneur, an entrepreneur or a non-
entrepreneur. Potential and intentional
entrepreneurship rates are aggregated to
give an indication of the entrepreneurial
propensity in each country.
Entrepreneurial propensity among the
youth varied signifcantly across the sub-
Saharan African countries (see Figure
2.2). Botswana (55%) recorded the
highest rate of youth entrepreneurial
propensity, followed by Malawi (53%).
South Africa (23%) had the lowest youth
entrepreneurial propensity. All the other
surveyed countries had entrepreneurial
propensity rates of over a third of the
youth population.
As mentioned previously in this section,
young people in sub-Saharan Africa show
higher levels of entrepreneurial propensity
than adults in the region. This difference
is particularly notable in countries such
as Uganda, Ghana and Namibia, where
the youth show entrepreneurial propensity
rates of 1.8 times, 1.6 times and 1.4
times that of adults respectively. It is
important to remember that this does
not necessarily mean that the youth are
more entrepreneurial, as individuals
with entrepreneurial propensity may not
actually start a business in the future.
The relatively high rate of entrepreneurial
propensity is, however, a positive sign
and policies need to ensure that the
entrepreneurial ecosystem in which
these young people function allows them
to convert this propensity into actual
business activity and, more importantly,
business activity that provides a
sustainable livelihood.
GEM reports have shown that on
average, individuals in factor-driven
economies have higher perceptions
that there are good opportunities for
entrepreneurship, and that they have
the capabilities to start businesses.
These attitude measures tend to decline
with greater economic development
levels. GEM argues that while this
seems counter-intuitive, individuals
in economies at different stages of
economic development are likely to
have different kinds of businesses
in mind. This would suggest that the
perception of what is considered
an opportunity and the capabilities
required to create and manage this
entrepreneurial opportunity in factor-
driven economies in sub-Saharan
Africa could differ from the perceptions
in effciency-driven economies in the
region
3
. It would therefore be expected
that South Africa has a lower rate of
potential entrepreneurs than the rest
of sub-Saharan Africa. However, the
extremely high difference is concerning,
particularly given the relatively low
levels of development in certain areas
of South Africa.
GEM reports have
shown that on
average, individuals
in factor-driven
economies have
higher perceptions
that there are good
opportunities for
entrepreneurship, and
that they have the
capabilities to start
businesses.
Unl ocki ng t he potent i al for a br i ghter f ut ur e 29
4 Turton, N. and Herrington, M., 2013, 2012
GEM South African Report
Favourable perceptions with respect
to opportunities and capabilities, i.e.
those of potential entrepreneurs, do not
necessarily lead to the actual intention to
start a business. Of greater importance
in discussions related to future levels of
entrepreneurial activity are individuals
who have indicated that they intend to
start a business within the next three
years. These individuals provide an
indicator of what a country’s early-stage
entrepreneurial activity (TEA) rate could
be over the next few years. In most of the
countries surveyed, the entrepreneurial
propensity rates were predominantly
driven by intentional entrepreneurs
(Figure 2.2). Almost half of the youth
population in Botswana (47%) and Malawi
(42%) indicated an intention to start a
business. These fgures are encouraging
for both economies, and particularly for
Botswana, which has lower than average
youth entrepreneurial activity. Only 11%
of the South African youth indicated that
they intended to start a business in the
next three years.
GEM research suggests that the
entrepreneurial framework conditions
most likely to have an impact on the pool
of potential entrepreneurs are market
dynamics, education, and research and
development
4
, while those most likely to
have an impact on the pool of intentional
entrepreneurs are cultural and social
norms, and education. Providing an
enabling environment and appropriate
entrepreneurship-support policies and
programmes would help actualise the
intentions of these youths. Support
policies to encourage prospective youth
entrepreneurs should include access to
entrepreneurial fnance (including grants
and subsidies) and low-cost access to
physical infrastructure — communication,
utilities, transportation, land or space — at
a price that does not discriminate against
SMEs. It is equally important to focus on
entrepreneurship education to encourage
youth entrepreneurship development.
2.3.2 FEAR OF FAILURE
Another factor taken into account when
assessing entrepreneurial propensity
is the fear of failure. Fear of failure is
the percentage of people who perceive
opportunities in the area in which they
live, yet indicate that fear of failure would
prevent them from starting a business.
Fear of failure can be infuenced by
intrinsic personality traits, as well as by
societal norms and regulations. Much
about entrepreneurship can be taught or
GEM research
suggests that the
entrepreneurial
framework conditions
most likely to have
an impact on the
pool of potential
entrepreneurs are
market dynamics,
education, and
research and
development.
30 Af r i ca’ s Young Ent r epr eneur s
60%
70%
80%
90%
50%
40%
30%
20%
10%
0%
Figure 2.3: Fear of failure among the youth, sub-Saharan African countries, 2013
A
n
g
o
l
a
No
Yes
B
o
t
s
w
a
n
a
G
h
a
n
a
M
a
l
a
w
i
N
a
m
i
b
i
a
N
i
g
e
r
i
a
S
o
u
t
h

A
f
r
i
c
a
U
g
a
n
d
a
Z
a
m
b
i
a
Higher levels of fear
of failure are more
common in developed
economies, probably
because the types
of entrepreneurial
activities in highly
developed countries
demand more
knowledge than many
of the more simple
entrepreneurial
activities prevalent
in factor-driven
economies.
5 Xavier, S.R et al., 2013, 2012 GEM
Global Report
acquired through practical experience,
but propensity for risk cannot. For
the risk-averse person, the downside
risk of failure often outweighs the
most promising opportunities or
expectations, even if the potential
returns are considerably higher than
the next best alternative.
Previous GEM reports
5
have indicated
that, on average, economies in sub-
Saharan Africa exhibit the lowest fear of
failure rates. According to the 2012 GEM
Global Report, the sub-Saharan Africa
region exhibited the lowest average
levels of fear of failure, with only 24.5%
of all respondents indicating that fear of
failure would prevent them from starting
a business. Latin America and the
Caribbean had the second lowest levels
of fear of failure.
Higher levels of fear of failure are more
common in developed economies,
probably because the types of
entrepreneurial activities in highly
developed countries demand more
knowledge than many of the more simple
entrepreneurial activities prevalent in
factor-driven economies. In addition,
other career options in more developed
economies can create the impression
that people have more to lose by
forgoing these other opportunities.
In factor-driven economies, on the
other hand, job opportunities are
more restricted and society often sees
entrepreneurship as a means to improve
economic and social standing.
In sub-Saharan Africa, there is little
to no difference in the levels of fear
of failure expressed by both adults
and the youth. The only countries
that showed any notable differences
are Nigeria, where the youth are 1.2
times more likely to indicate that fear
of failure would prevent them from
starting a business, and Uganda,
where adults are 1.3 times more likely.
Figure 2.3 shows the fear of failure
rates among the youth in the sub-
Saharan countries surveyed. The youth
in Angola are the most risk-averse,
with 43% indicating that fear of failure
would prevent them from starting a
business. The youth in Angola are two
to 2.5 times more likely to limit their
entrepreneurial activity due to fear of
failure than youth in the other factor-
driven economies in sub-Saharan
Africa. This may, in part, explain why
Angola has the lowest level of youth
entrepreneurs when compared to the
other factor-driven economies in sub-
Saharan Africa (Figure 2.2). Adults in
Angola also show the highest rate of
fear of failure within our sample of
countries. Both Namibia (34%) and
South Africa (28%) are efficiency-driven
countries and this may explain the
slightly higher levels of fear of failure
within these countries, when compared
to the sub-Saharan African average
(excluding Angola). The negative legal
and social ramifications of business
failure in certain countries can act as
a strong deterrent, reducing the pool of
potential entrepreneurs.
Unl ocki ng t he potent i al for a br i ghter f ut ur e 31
60%
70%
80%
90%
50%
40%
30%
20%
10%
0%
Figure 2.4: Entrepreneurship as a good career choice, youth aged 18 to 34, 2013
A
n
g
o
l
a
No
Yes
B
o
t
s
w
a
n
a
G
h
a
n
a
N
a
m
i
b
i
a
N
i
g
e
r
i
a
S
o
u
t
h

A
f
r
i
c
a
U
g
a
n
d
a
Z
a
m
b
i
a
6 Kew. J et al., 2012, Generation
entrepreneur
7 OECD, 2004, “Women’s Entrepreneurship:
Issues And Policies”, 2nd OECD Conference Of
Ministers Responsible for Small and Medium-
Sized Enterprises (SMEs), Istanbul, Turkey 3 to
5 June 2004
2.3.3 ENTREPRENEURSHIP
AS A CAREER
Entrepreneurial activity does not take
place in a vacuum – the prevalent
entrepreneurial attitudes and perceptions
play an important part in creating an
entrepreneurial culture in an economy.
GEM assesses broader social attitudes
towards entrepreneurship, which can
indicate the extent to which people are
willing to participate in entrepreneurial
activity, and the level of social support
for their efforts. GEM measures societal
impressions of entrepreneurship by
establishing whether individuals believe
that starting a new business is considered
a good career choice, as well as whether
they feel that successful entrepreneurs
are accorded a high level of status as well
as garnering signifcant media attention.
Available GEM data for the nine sub-
Saharan African countries suggests
that individuals in this region have
higher positive attitudes towards
entrepreneurship than they do in other
geographical regions covered by GEM.
This is the case for both the youth and
the adult population. Figure 2.4 shows
that over 75% of the youth in Botswana,
Ghana, Nigeria, South Africa and Uganda
consider entrepreneurship to be a good
career choice, while over two-thirds of
the youth in Angola, Namibia and Zambia
consider entrepreneurship to be a good
career choice. Although these societal
attitudes seem encouraging, research has
argued that with extremely high levels of
poverty, the working poor, high rates of
under-employment and the lack of formal
employment options in sub-Saharan
Africa, considering entrepreneurship to be
a good career choice may, in fact, be an
acknowledgement that entrepreneurship
may be the only career option available
6
.
This argument is further justifed by
the very similar rates with respect
to highly positive attitudes towards
entrepreneurship as a good career
choice that are indicated by the adult
population. It is only in Uganda, Botswana
and Ghana that some differences are
noted, with the youth in these countries
being 1.2 times more likely to indicate
that entrepreneurship is not a good career
choice, compared to adults.
2.3.4 THE INFLUENCE OF GENDER
ON YOUTH ENTREPRENEURSHIP
Development strategies increasingly
focus on inclusive and sustainable growth
– the creation of policy environments
that foster innovation, facilitate more
productive economies and, critically,
open up new and better job opportunities
for all segments of the population.
Although female entrepreneurship is
increasing around the world, the rate still
varies considerably between countries
and geographical regions. A number of
studies have highlighted that women face
greater diffculties in business than men.
7

These obstacles include: higher levels
of domestic responsibility; lower levels
of education (particularly in developing
countries); lack of female role models

GEM assesses
broader social
attitudes towards
entrepreneurship,
which can indicate
the extent to which
people are willing
to participate in
entrepreneurial
activity, and the level
of social support for
their efforts.
32 Af r i ca’ s Young Ent r epr eneur s
Figure 2.5: Youth entrepreneurial propensity, potential and intention, by gender and
country, 2013
50%
40%
30%
20%
10%
0%
A
n
g
o
l
a
B
o
t
s
w
a
n
a
G
h
a
n
a
M
a
l
a
w
i
N
a
m
i
b
i
a
N
i
g
e
r
i
a
S
o
u
t
h

A
f
r
i
c
a
U
g
a
n
d
a
Z
a
m
b
i
a
Potential male
Potential female
Intentional male
Intentional female
8 Singer, S., Amoros, J. and Arreola, D., 2015,
2014 GEM Global Report
A number of studies
have highlighted
that women face
greater diffculties in
business than men.
in the business sector; fewer business-
orientated networks in their communities;
lack of capital and assets; lower status
in society; and a culturally induced
lack of assertiveness and confdence
in their ability to succeed in business.
These factors may prevent women from
perceiving and acting on entrepreneurial
opportunities.
This report examines potential
gender differences with respect to
entrepreneurial activities in sub-Saharan
Africa. The report specifcally explores
the type of business entities that young
women in sub-Saharan are engaged in,
and identifes whether young women are
as likely as young men to be involved in
high-growth businesses or whether they
languish in small, low-growth, survivalist
businesses that offer little opportunity for
a sustainable livelihood.
GEM surveys (including the GEM
special reports on women) have
consistently confirmed that, in most
regions, early-stage entrepreneurial
activity (TEA) is gender-sensitive,
with entrepreneurial activities being
dominated by men. The sub-Saharan
region, however, has shown that women
participate as much in early-stage
entrepreneurial activities, and in some
cases, such as in Uganda, even more
so than their male counterparts. There
are also no significant differences
found in perceived opportunities
and capabilities to engage in
entrepreneurship, although fear of
failure tends to be higher
among women
8
.
Entrepreneurial propensity among the
sub-Saharan African youth follows a
similar pattern to that of adults in terms
of gender profles (Figure 2.5). The
rates for potential entrepreneurship
tend to be similar for young men and
young women and there is no signifcant
gender difference in young people who
indicate an intention to start a business
in the foreseeable future. As is the case
with adults, young women in Uganda
are slightly more likely (1.2 times) than
their male counterparts to be classifed
as potential as well as intentional
entrepreneurs.
Ghana and South Africa, however, show
a clear gender differential with respect
to both potential and intentional rates of
entrepreneurial propensity, with young
men being 1.4 times more likely to believe
they have the skills and knowledge to
start a business and 1.2 times more
likely to believe that there are good
opportunities. Young men in Ghana are
1.2 times and in South Africa 1.6 times
more likely to indicate an intention to start
a business within the foreseeable future.
GEM has found that individuals who are
confdent that they possess the skills to
start a business are four to six times more
likely to be involved in entrepreneurial
activity, so a higher entrepreneurial
Unl ocki ng t he potent i al for a br i ghter f ut ur e 33
The majority of young
Africans believe there
are good business
opportunities in their
countries and that
they have the skills
and knowledge to
start and manage a
new business.
9 Kew, J. et al., 2012, Generation
Entrepreneur
10 Amorós, J., Bosma, N., 2014, 2013 GEM
Global Report
11 Amorós, J., Bosma, N., 2014, 2013 GEM
Global Report
propensity is an encouraging fnding.
However, potential to start a business
does not necessarily translate into actual
business activity. The important gender
story is not only in the entrepreneurial
rate but largely in measures such as the
sectors in which individuals operate,
their number of employees and growth
aspirations. These issues are reviewed in
Chapter 3 of the report.
In summary, the youth in sub-
Saharan Africa have generally
positive entrepreneurial attitudes and
perceptions. The majority of young
Africans believe there are good business
opportunities in their countries and
that they have the skills and knowledge
to start and manage a new business.
Furthermore, there is a high level of
entrepreneurial intention among the
youth, which is further boosted by their
low level of fear of failure and positive
attitudes towards entrepreneurship as
a career choice. This suggests that the
sub-Saharan African region has a large
pool of potential future entrepreneurs.
However, the sectors into which these
potential entrepreneurs are drawn, as
well as the growth potential of their
enterprises, will determine whether or
not the impact, on the individual as well
as the economy, is muted or not.
2.3.5 ENTREPRENEURIALLY
ACTIVE YOUTH
The previous section focused on attitudes,
as well as entrepreneurial potential and
intention, because a positive attitude
towards entrepreneurship can generate
cultural and social support, fnancial and
business assistance, and networking
benefts that will encourage and facilitate
potential, intentional and existing
entrepreneurs. However, it is important
to recognise that individuals who have
the potential and/or indicate an intention
to start a business do not necessarily
engage in entrepreneurial activities. A
key focus of GEM research is therefore to
capture the actual entrepreneurial activity
within an economy.
The central measure of GEM is the Total
Early-Stage Entrepreneurial Activity (TEA)
rate, which consists of nascent business
owners, i.e. actively involved in setting
up a business or who already own a
business that has not paid any wages
or salaries for zero to three months, and
new business owners, i.e. businesses that
have been in existence from three to 42
months and are paying wages. Measuring
these two types of entrepreneurs is
important because it provides the level
of early-stage activity that could lead to
established businesses. Information on
the level of established businesses (i.e.
businesses in existence for more than
42 months) is important as an indication
of the sustainability of entrepreneurship
in an economy. These businesses
have moved beyond the nascent and
new business phases, and are able to
contribute to a country’s economy through
the on-going introduction of new products
and processes and a more stable base
of employment. While established
businesses are important for preserving
stability, early-stage entrepreneurship
is important for creating dynamism in
economic activity. Advances in economic
development require business activities
exhibiting both dynamism and stability,
i.e. both nascent/new and established
businesses. Dynamism ensures a
continual renewal of ideas and values in
a society, while stability allows those with
the most promise to survive and grow
9
.
Previous GEM reports have reported
that TEA rates generally tend to decline
with increasing levels of GDP per capita.
This decline is linked to the increasing
availability of job opportunities as
economies progress and develop
institutions accordingly
10
. Sub-Saharan
Africa, as a region, has an average TEA
rate of 26.6%
11
and the sampled factor-
driven countries in sub-Saharan Africa
have TEA rates of 20% and above, with
Nigeria and Zambia showing rates as
high as 40% (Figure 2.6). The countries
in sub-Saharan Africa are clustered at
the top of the TEA rates of all the factor-
driven countries. South Africa shows a
signifcantly lower TEA rate of around
10% and is positioned at below mid-way
with respect to all of the effciency-driven
economies. Sub-Saharan Africa has the
highest average TEA of all the regions
surveyed in GEM, with Latin America and
the Caribbean at 18.5% and Asia Pacifc
and South Asia at 12.4% the regions with
the most comparable TEA rates. This
pattern is also found in the youth with
youth TEA activity highest in sub-Saharan
Africa, followed by youth in Latin America
and the Caribbean.
34 Af r i ca’ s Young Ent r epr eneur s
Figure 2.6: Total early-stage entrepreneurial activity (TEA), factor and effciency-driven economies, 2013
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
Source: 2013 GEM Global Report
Factor - driven economies Effciency - driven economies
P
e
r
c
e
n
t
a
g
e

o
f

a
d
u
l
t

p
o
p
u
l
a
t
i
o
n

(
1
8
-
6
4

y
e
a
r
s
)
There is signifcant variation among
the sub-Saharan African countries in
terms of youth involvement in actual
entrepreneurial activity. Early-stage
entrepreneurial activity includes
individuals involved in both nascent
(start-ups) and new businesses. Youth
in South Africa (two times), Namibia (1.5
times), Botswana (1.4 times) and Nigeria
and Zambia (both 1.2 times) are more
likely to be involved in nascent than new
businesses. In contrast, young Ugandans
(3.8 times), Ghanaians (2.2 times),
Angolans and Malawians (both 2 times)
are more likely to be involved in new than
nascent businesses. In addition to their
high TEA rates, Uganda (28%), Ghana
(16%), Zambia (15%) and Nigeria (13%)
also show relatively high levels of youth-
owned established businesses, while
Botswana (1%), South Africa (2%) and
Namibia (3%) show extremely low levels of
established businesses.
Table 2.2 shows that there is no
signifcant difference between the TEA
rates of youth and adults in much of sub-
Saharan Africa, with only Malawi, Uganda
and Namibia showing any signifcant
variation. In Namibia, adults are 1.3 times
more likely than the youth to be actively
starting or running a new business.
The level of TEA could
also be infuenced
by the level of
unemployment in
a country.
Unl ocki ng t he potent i al for a br i ghter f ut ur e 35
Adult TEA Youth TEA
Adult
established
Youth
established
Angola 24% 22% 13% 6%
Botswana 21% 21% 7% 1%
Ghana 27% 26% 38% 16%
Malawi 25% 31% 18% 9%
Namibia 39% 31% 15% 3%
Nigeria 41% 41% 22% 13%
South Africa 10% 11% 4% 2%
Uganda 19% 29% 51% 28%
Zambia 41% 41% 19% 15%
Table 2.2: Adult and youth entrepreneurs by new, nascent and established business by country,
sub-Saharan Africa, 2013
It has been argued
that entrepreneurial
activity on the
continent is motivated
by the need for
survival, given
that many African
governments do not
have supportive social
protection schemes.
The level of TEA could
also be infuenced
by the level of
unemployment in
a country.
The youth in Malawi and Uganda,
unlike the remainder of the sample, are
more likely than adults to be involved
in actively starting or running a new
business, with youth in Malawi being
1.2 times and in Uganda 1.5 times more
likely than adults.
GEM argues that while early-stage
entrepreneurs contribute to dynamism
and innovation in an economy, established
businesses and their owner-managers
often provide stable employment and
exploit the knowledge and social capital
accumulated in past experiences.
Established businesses are also an
important source of new businesses.
Owner-managers of established
businesses may contribute greatly to
their societies, even if they are small
or even solo entrepreneurs
12
. The
signifcant difference in youth and adult
entrepreneurial activity is found in the rate
of established businesses, i.e. businesses
that have been in existence for more
than 42 months. The difference in the
youth-to-adult rate is least noticeable in
Zambia and Nigeria, where adults are 1.2
times and 1.7 times, respectively more
likely than the youth to be involved in an
established business, and most noticeable
in Namibia and Botswana where adults
are 4.7 times and 7.0 times, respectively
more likely than the youth to be involved
in an established business. The low levels,
in general, of established business activity
among the youth raises concerns about the
potential of youth businesses to contribute
meaningfully to sustainable job creation,
and is an area that warrants attention
from policy makers. The perennial problem
of youth access to fnance, as well as
to targeted and professional business-
support programmes, may well contribute
to the lower levels of sustainability of youth
start-ups.
It is clear from Table 2.2 that a relatively
high proportion of the youth is engaged
in entrepreneurial activity in sub-Saharan
Africa. In Uganda, Zambia and Nigeria,
in particular, more than half of the youth
are either starting a business or running
a new or established business. It has
been argued that entrepreneurial activity
on the continent is motivated by the
need for survival, given that many African
governments do not have supportive
social protection schemes. The level
of TEA could also be infuenced by the
level of unemployment in a country. One
would expect entrepreneurial activity to
be higher with higher levels of un- and
under-employment, as established
companies and the formal economy are
unable to meet the demand for jobs.
Under these conditions, it is likely that
people will start up businesses to create
some form of employment for themselves
or to increase their income, since wage
employment is often not enough to
support their families.
12 Amorós, J., Bosma, N., 2014, 2013 GEM
Global Report
36 Af r i ca’ s Young Ent r epr eneur s
CHAPTER 3
T h e I mp a c t o f Yo u t h -
o p e r a t e d E n t e r p r i s e s i n
S u b - S a h a r a n Af r i c a
In order to evaluate the future contribution of youth-owned enterprises to the economic
development of sub-Saharan Africa, it is necessary to establish their current impact.
With such an analysis, it is possible to discern policy paths and options that could hinder
or enhance the youth’s prospects as drivers of the development process.
Unl ocki ng t he potent i al for a br i ghter f ut ur e 37
Figure 3.1: State of youth businesses by country, 2013
50%
60%
Limited
impact
Positive
impact
No
impact
40%
30%
20%
10%
0%
A
n
g
o
l
a
B
o
t
s
w
a
n
a
G
h
a
n
a
M
a
l
a
w
i
N
a
m
i
b
i
a
N
i
g
e
r
i
a
S
o
u
t
h

A
f
r
i
c
a
U
g
a
n
d
a
Z
a
m
b
i
a
3.1 INTRODUCTION
While every person engaged in any
behaviour related to new business
creation, no matter how modest,
contributes to the national level of
entrepreneurship, entrepreneurs
differ in their profiles and impact. It
is therefore important to consider not
just the number of entrepreneurs in an
economy, but other aspects such as
the level of employment they create,
their growth ambitions, and the extent
to which they are innovative in their
product and service provision.
3.2 STATE OF YOUTH
BUSINESSES
To develop an understanding of the
possible economic contribution of
youth businesses, youth entrepreneurs
were asked to indicate which of
the following descriptions best
characterises the current state of
their business:
? the business is struggling to
survive;
? the business is making enough
money to survive and the owner
does not expect much growth in the
near future;
? the business is making enough
money to survive now, and the
owner expects future growth;
? the business is in a growth phase;
or
? the business is not, as yet, active.
Figure 3.1 summarises the current state of
youth businesses. We classify businesses
as having a limited impact on the livelihood
of the entrepreneur if they are struggling
to survive or making enough money to
survive but the owner does not expect
much growth in the near future. If they
are making enough money to survive now,
and the owner expects future growth or
the business is in a growth phase, they
are classifed as having a positive impact.
Those that are not yet active are classifed
as having no impact on the livelihood of
the entrepreneur.
An encouraging fnding is that
approximately half of the youth
businesses in Malawi (54.1%), Angola
(52.9%), Uganda (51.8%), Ghana (49.1%)
and Nigeria (48.7%) are considered to
have a positive effect on the livelihood of
the entrepreneur and are likely to offer
additional beneft in the future.
With a quarter of the youth businesses
in South Africa (25.4%) not as yet active,
and a further 45.8 percent having a
limited impact, youth entrepreneurship
in South Africa, however, does not seem
to be having a signifcant impact on the
livelihood of the youth. Less than a third
of the youth businesses in Botswana
(30.0%), Zambia (29.8%) and Namibia
(29.5%) would be considered to have a
positive impact on the livelihood of the
owners. Botswana, at 44.9 percent, has
the largest number of youth businesses
that are, as yet, not active.
It is important to
consider not just
the number of
entrepreneurs in an
economy, but other
aspects such as the
level of employment
they create, their
growth ambitions, and
the extent to which
they are innovative
in their product and
service provision.
38 Af r i ca’ s Young Ent r epr eneur s
Table 3.1: Actual job creation by youth businesses by country, GEM 2013
Country No jobs 1 - 5 jobs 6 – 19 jobs 20 + jobs
Angola 1% 78% 18% 3%
Botswana 46% 45% 6% 3%
Ghana 68% 32% 1% 1%
Malawi 88% 12% 1% 0%
Namibia 44% 51% 4% 1%
Nigeria 26% 68% 6% 1%
South Africa 33% 56% 8% 2%
Uganda 64% 34% 1% 1%
Zambia 48% 53% 0% 0%
3.3 ACTUAL JOB CREATION
AND GROWTH POTENTIAL
GEM recognises that not all
entrepreneurs have an equal impact
on job creation within a country.
Table 3.1 shows that the majority
of youth entrepreneurs in Malawi
(87.5%), Uganda (63.8%) and Ghana
(67.5%) only create employment for
the business owner. While Uganda
has the highest regional rate of
entrepreneurial activity (Figure 2.2),
with 56% of the youth involved in
business activity, the majority of these
businesses make no contribution to
job creation besides self-employment
for the entrepreneurs themselves. In
the case of Malawi, with a significantly
lower rate of entrepreneurial activity
(38%) and a significantly higher
rate of youth businesses offering no
employment, youth businesses seem
to have a negligible impact on job
creation within the economy. While
self-employment has a minimal impact
on a key developmental focus, namely
to facilitate growth that is sustainable
in order to generate widespread
employment, its impact cannot be
disregarded in regions characterised
by high levels of poverty and chronic
underemployment. In many parts of
sub-Saharan Africa every job counts,
and it is not unusual to find a self-
employed person supporting a large
family and enabling those around him/
her to have a better life.
While Angola’s youth entrepreneurial
rate of 27% is lower than for most
of the region, it has the highest
percentage of youth businesses
offering one to five jobs (78%), six to
19 jobs (18%) as well as businesses
offering more than 20 jobs (3%). While
the percentage of young people in
Angola engaged in entrepreneurial
activity is lower than in most of
the region, the impact that youth
businesses have on employment is
considerably larger (Table 3.1).
The country-specific job creation of
youth businesses in the region mimics
to a large degree the job creation of
adult businesses. Angola is a notable
exception, showing the greatest
variation. Adults in Angola are 1.2
times more likely to have businesses
only offering employment for the owner
and 1.7 times more likely to have
businesses offering six to 19 jobs,
while the youth are 1.2 times more
likely than adults to have businesses
offering one to five jobs and 3.9 times
more likely to have businesses offering
20 or more jobs. The youth in South
Africa (1.9 times) and Nigeria (1.2
times) as well as Ghana and Botswana
are more likely than adults to have
businesses offering 20 or more jobs.
The sample of adults in Ghana and
Botswana did not show any adult
business offering 20 or more jobs,
while 3% of the youth businesses in
both Ghana and Botswana offered 20 or
GEM recognises that
not all entrepreneurs
have an equal impact
on job creation within
a country.
Unl ocki ng t he potent i al for a br i ghter f ut ur e 39
Table 3.2: Job growth expectations for youth businesses by country, GEM 2013
Country No jobs 1 – 5 jobs 6 – 19 jobs 20+ jobs
Angola 2.00% 58.80% 31.40% 7.80%
Botswana 13.30% 47.90% 23.30% 15.40%
Ghana 37.10% 49.60% 10.90% 2.30%
Malawi 68.50% 30.40% 0.60% 0.60%
Namibia 10.90% 65.30% 17.20% 6.60%
Nigeria 8.20% 52.90% 29.20% 9.70%
South Africa 10.30% 58.80% 15.80% 15.20%
Uganda 30.90% 61.40% 5.80% 1.90%
Zambia 5.50% 90.50% 3.90% 0%
more jobs. From a regional perspective,
this is cautiously optimistic because
youth TEA rates are comparable
to adult rates, but established
business rates are heavily weighted
towards adults. GEM has argued that
established businesses have a greater
impact on job creation than early stage
businesses
*
. Even with the significantly
lower rate of youth established
businesses, there are positive signs
of a greater proportion of high-growth
businesses among the youth. It is vital
that policy measures are either put in
place, or strengthened, to support the
development of these business owners.
GEM asks early-stage entrepreneurs
how many employees (other than
the owners) they currently have and
expect to have in the next five years.
The difference between current and
expected employees indicates growth
expectations. GEM research into high-
impact entrepreneurship suggests that
entrepreneurs with realistic high-growth
expectations have a disproportionate
impact on job creation.
Almost all of the youth in Malawi (99%)
have low growth aspirations, with 69%
(the highest in the region by a signifcant
margin) indicating that they do not intend
employing anyone within the next fve
years (Table 3.2). The youth in Zambia
(96%), Uganda (92%) and Ghana (87%)
show similar high percentages of low-
growth youth businesses.
However, in these three countries young
business owners are more likely to
project offering employment to between
one and fve employees within the
next fve years, a more positive trend
than in Malawi. At 61%, Angola has
the lowest level of young low-growth
entrepreneurs. Just under a third of
the youth businesses in Angola (31%)
and Nigeria (29%) have medium growth
expectations, intending to add between
six and 19 employees over the next fve
years. Botswana (15%), South Africa
(15%), Nigeria (10%), Angola (8%) and
Namibia (7%) all show signifcant rates
of high-growth businesses, particularly
in comparison to the actual job creation
rates in Table 3.1 (excluding Angola).
Even with the
signifcantly
lower rate of
youth established
businesses, there
are positive signs of
a greater proportion
of high-growth
businesses among
the youth.
*
GEM classifes low growth businesses
(projecting zero to fve new employees in fve
years), medium growth businesses (projecting
six–19 new employees), or high growth
businesses (projecting 20+ new employees).
40 Af r i ca’ s Young Ent r epr eneur s
Table 3.3: Growth expectations for adult and youth businesses by country, sub-Saharan Africa, GEM 2013
Country Adult low growth Youth low growth
Adult medium
growth
Youth medium
growth
Adult high
growth
Youth high
growth
Angola 49% 61% 41% 31% 9% 8%
Botswana 61% 61% 24% 23% 15% 15%
Ghana 89% 87% 7% 11% 4% 2%
Malawi 98% 99% 1% 1% 1% 1%
Namibia 79% 76% 14% 17% 8% 7%
Nigeria 69% 61% 25% 29% 7% 10%
South Africa 68% 69% 24% 16% 8% 15%
Uganda 93% 92% 5% 6% 1% 2%
Zambia 93% 96% 7% 4% 0% 0%
In most economies,
a relatively small
percentage of
strategic or high-
growth entrepreneurs
generate the bulk of
new jobs attributable
to new frm entries.
(2012 GEM Global Report)
1 Naudé, W. and Havenga, J., 2007, An
overview of African entrepreneurship and small
business research
2 Erkko A., 2007, 2007 Global Report on
High-growth Entrepreneurship
Table 3.3 shows that low growth
expectations are evident in most of the
adult and youth population. Zambia has
one of the highest TEA rates (Figure
2.6); however, not only do no adult or
youth businesses offer employment to
20 or more people, but there are also
no adult or youth businesses that have
high-growth aspirations. The extremely
high rate of low growth perceptions
in the region as a whole emphasises
the need to look beyond the TEA rate
in a country and recognise that the
current job creation and perceived
growth potential are important
indicators of the possible economic
impact of entrepreneurship. The
findings for countries such as Zambia
seem to indicate that the current low
economic impact from the majority of
entrepreneurial businesses is likely to
continue, as the youth landscape with
respect to actual and growth potential
is almost identical to the current adult
landscape. In countries such as Nigeria
(1.5 times), Uganda (1.6 times) and
South Africa (1.9 times), where the
youth exhibit a higher propensity for
high-growth business than adults, the
potential economic contribution could
be more pronounced.
While the expressed growth potential
has, as yet, not been tested and may not
lead to such a dramatic increase in the
actual employment rate, businesses that
do not aspire to grow are signifcantly
less likely to do so than those with
high-growth aspirations. Given that
the majority of the youth businesses
in the countries indicated above are
nascent and new businesses i.e. early-
stage entrepreneurs or TEA (Table 2.2),
interventions aimed at providing the
correct market dynamics and regulatory
framework could enable these
businesses to contribute signifcantly
to socio-economic development in the
region. Business owners in many parts
of Africa often choose to remain small
as they are then better able to avoid the
complexities (such as taxes and other
legal requirements) of formalisation
1
.
However, high-growth businesses
create a disproportionate number
of jobs within an economy, so the
requirements to encourage high-impact
businesses should be a key policy
focus. It is important to identify those
entrepreneurs with realistic high-growth
aspirations, and institute policies aimed
specifcally at supporting them in order
to optimise their impact on economic
growth and job creation. Research
has shown that these enterprises are
extremely mobile and will move from
areas in which they feel their growth
potential is being constrained. Small
businesses and high-growth businesses
have different fnance requirements,
with small businesses needing better
access to grants, subsidies and soft
loans, while policies that promote R&D
loans and innovation grants, business
angel fnance and venture fnance
would be more benefcial in promoting
high-growth entrepreneurs
2
. Alleviating
regulatory burdens, as well as offering
targeted fnancial support is important
in developing an environment that
allows high-growth businesses
to fourish.
Unl ocki ng t he potent i al for a br i ghter f ut ur e 41
Table 3.4: Percentage in early stage entrepreneurial ventures, by age and gender, sub-Saharan
Africa, GEM, 2013
Age Male Female
18 to 34 47% 53%
35 to 64 50% 50%
Table 3.5: Growth expectations for youth businesses by gender, sub-Saharan Africa, GEM 2013
Low growth potential
Medium growth
potential
High growth potential
Male 80% 14% 6%
Female 88% 9% 3%
Male
Female
50%
60%
40%
30%
20%
10%
0%
Figure 3.2: Actual job creation, by gender, sub-Saharan Africa, 2013
No Job 1-5 jobs 6-19 jobs 20+ jobs
3.3.1 GENDER DIFFERENTIAL WITH
RESPECT TO ACTUAL JOB CREATION
AND GROWTH POTENTIAL
Young women in sub-Saharan Africa
are more likely to be involved in
actively setting up or running a new
business than adult women in the
region (Table 3.4). However, the
economic impact of these youth
businesses, both on the individual and
the countries as a whole, varies.
Fifty-seven percent of young women
operate in businesses in which no
employment is created. Young female-
owned businesses are also 1.3 times
more likely than businesses owned
by young men to offer no employment
other than to the owner (Figure 3.2).
Young men are 1.3 times more likely to
offer employment to six to 19 people.
However, the gender differential with
respect to actual job creation is most
noticeable with respect to high-growth
businesses, with young men being five
times more likely to offer employment
to 20 or more employees (Figure 3.2).
Only 0.3% of youth female owned
businesses offer employment to 20 or
more employees.
Young women are 1.4 times more likely
than young men to have no growth
expectations, i.e. do not expect to offer
employment to anyone other than the
owner for the next fve years. There is
also a signifcant gender differential with
respect to engagement in medium- and
high-growth businesses, with young men
1.5 times and two times more likely to
be involved in medium and high-growth
businesses, respectively, than young
women (Table 3.5). The signifcantly
higher rate of young women in businesses
offering no employment (both actual and
potential) as well as the signifcant gender
differential with respect to medium and
high-growth businesses (both actual and
potential) suggests that young women
are still more likely to be languishing in
small, survivalist businesses with lower
economic contribution than are young
men. This is, therefore, an area that needs
targeted policy directives.
Fifty-seven percent of
young women operate
in businesses in
which no employment
is created.
42 Af r i ca’ s Young Ent r epr eneur s
Table 3.6: Percentage of youth businesses per sector, sub-Saharan Africa, GEM 2013
Sector % Youth Participation
Agriculture, Forestry, Fishing 9.2%
Mining, Construction 1.6%
Manufacturing 6.6%
Transport, Storage 2.5%
Wholesale Trade 1.8%
Retail Trade, Hotels, Restaurants 64%
Information, Communication 1.9%
Professional Services Activities 1.6%
Government, Health, Education, Social Services 8.1%
Other* 2.7%
* Includes the fnancial intermediation and real estate (0.7%), administrative services (0.7%)
and personal/consumer service sector (1.3%), all of which have approximately a 1% youth
participation rate
3 Bhorat, H. Naidoo, K., 2013, Africa’s Job
Challenge, DRPU, University of Cape Town
4 Bhorat, H. Naidoo, K., 2013, Africa’s Job
Challenge, DRPU, University of Cape Town
3.4 SECTOR INVOLVEMENT
Only 21% of employment in sub-
Saharan Africa is in wage employment,
with the remainder in various forms
of self-employment
3
. The majority of
the self-employed are found in small-
scale agriculture or in the retail sector,
neither of which offer much potential
for a sustainable livelihood. The
limited involvement in sectors such as
manufacturing and information and
communications inhibit the region’s
ability not only to create employment,
but to improve the quality of jobs and
therefore the capacity to offer sustainable
livelihoods
4
.
Our data reveals the concentration of
youth-owned and operated business
within a limited number of sectors, with
64% of the youth in the sample countries
involved in the retail, hotel and restaurant
trade (see Table 3.6). No other sector has
more than a 10% youth participation rate
in terms of self-employment.
Figure 3.3 reports the youth participation
in four sectors, from an individual country
perspective. Botswana (43.3%) is the
only country in which the majority of the
youth are not involved in the retail sector.
Countries such as Malawi (83.4%), Angola
(71.5%) and Zambia (71.3%) are strongly
biased towards youth participation in the
retail sector. The retail sector is the easiest
sector to join since barriers to entry, in
terms of both skills and capital required,
tend to be lower, and it is common to fnd
young traders with nominal amounts of
capital informally selling by the road side.
The regional average for youth
participation in the retail, hotel and
restaurant sector (64%) mimics the
regional average for adult participation
in this sector (63%). The outlook for
the other sectors in which the youth
are active also mimics the rate for
the adult population, with only the
manufacturing sector showing a
relatively larger participation of adult-
owned businesses (10%).
Ghanaian youth have the highest rate of
business ownership in the manufacturing
sector, with this sector accounting for
10.8% of the youth-based businesses.
Youth in South Africa (8.5%), Botswana
(7.8%), Nigeria (7.5%) and Namibia (7.4%)
have some youth participation in the
manufacturing sector (Figure 3.3).
The other sectors that show some
youth involvement include agriculture,
manufacturing and government, health
and social services, though their share
is very small. The youth in Uganda
(17.6%), Botswana (14.8%) and Ghana
(14.3%) are signifcantly more likely than
elsewhere in the region to be engaged
in the agricultural sector. There is
limited participation in the agricultural
sector as a business by the youth in
much of sub-Saharan Africa, yet many
of these economies could develop this
Our data reveals
the concentration
of youth-owned and
operated business
within a limited
number of sectors,
with 64% of the
youth in the sample
countries involved in
the retail, hotel and
restaurant trade.
Unl ocki ng t he potent i al for a br i ghter f ut ur e 43
Table 3.7: Percentage of youth businesses per sector, by gender, sub-Saharan Africa, GEM 2013
Sector
% Male
participation
% Female
participation
Agriculture, Forestry, Fishing 10.7% 6.4%
Mining, Construction 2.3% 0.9%
Manufacturing 6.5% 5.8%
Transport, Storage 3.7% 1.5%
Wholesale Trade 2.9% 1.0%
Retail Trade, Hotels, Restaurants 57.8% 71.6%
Information, Communication 2.5% 1.1%
Professional Services Activities 2.1% 0.9%
Government, Health, Education, Social Services 7.8% 8.7%
Other* 3.6% 2.1%
* Includes the fnancial intermediation and real estate, administrative services and personal/
consumer service sector
80%
90%
60%
40%
50%
70%
20%
10%
30%
0%
Figure 3.3: Participation in four popular sectors by youth businesses, by country, 2013
Retail trade,
Hotels,
Restaurants
Manufacturing Government,
Health,
Education,
Social Services
Agriculture,
Forestry,
Fishing
A
n
g
o
l
a
B
o
t
s
w
a
n
a
G
h
a
n
a
M
a
l
a
w
i
N
a
m
i
b
i
a
N
i
g
e
r
i
a
S
o
u
t
h

A
f
r
i
c
a
U
g
a
n
d
a
Z
a
m
b
i
a
sector into a high-growth area. Policies
that encourage young people back into
the agricultural sector are required;
however, this will only be effective if
policies focus on allowing this sector to
become globally competitive.
The majority of the youth in the retail
and agricultural sectors have low growth
expectations. The high percentage of
young women (78%) operating in these
sectors (Table 3.7) explains in part the
greater proportion of young women
operating in low–growth businesses
(Table 3.5). Young women are also more
concentrated in a smaller number of
sectors, while young men have a higher
presence in all sectors other than the
retail and government, health and
education sectors.
Our data reveals that the sectors
within which the majority of youth
entrepreneurs are found are low growth,
offering either no jobs or between one
and fve as depicted in Figure 3.4.
The other sectors
that show some
youth involvement
include agriculture,
manufacturing and
government, health
and social services,
though their share is
very small.
44 Af r i ca’ s Young Ent r epr eneur s
Figure 3.4: Actual job creation by popular sector, sub-Saharan Africa, 2013
Retail trade,
Hotels,
Restaurants
Manufacturing Government,
Health,
Education,
Social
Services
Agriculture,
Forestry,
Fishing
50%
60%
40%
30%
20%
10%
0%
No Job 1-5 jobs 6-19 jobs 20+ jobs
It shows the lack of job creation by
youth businesses in the four sectors
in which the youth are most likely to
operate. With 64% of the youth involved
in the retail sector, it is of serious
concern to note that 97% of the youth
businesses in the retail sector are low-
growth, offering either no employment
or up to fve employees. Half of these
businesses (54.2%) offer employment to
only the business owner. This underlines
the fact that a large portion of the
retail sector in Africa is over-traded and
characterised by ‘me too’ operations,
with low margins and low growth
potential. While these young people
are classifed as part of an economy’s
entrepreneurial activity, their small,
undifferentiated businesses are unable
to generate a sustainable livelihood.
This pattern repeats itself in the
agriculture as well as the government,
health and social services sectors.
By contrast, almost 10% of the youth
businesses in the manufacturing sector
offer employment to between six and
19 people. This is a positive fnding and
developing the manufacturing sector
in sub-Saharan Africa should form an
integral part of policy discussions.
Sectors such as retail are not conducive
to future job growth, with 88% of the youth
in the retail sector indicating low-growth
expectations. The over-representation
in low margin, survivalist activities often
found in undifferentiated sectors such
as retail is unlikely to contribute much
to solving the dual crisis of high un- and
underemployment. While participation
by the youth in most of the other sectors
is low (Table 3.6), a greater proportion of
youth businesses in these sectors offer
employment to six to 19 employees (Figure
3.4). Youth businesses in the mining and
construction (11.1%), wholesale trade
(13.2%), information and communication
(12.5%) and the personal and consumer
sector (17.2%) are able to impact more
on job creation than the popular sectors
such as retail. Financial intermediation
and the real estate sector (included
as ‘other’) is the only sector in which
a signifcant number of youth-based
businesses offer employment to over 20
employees. The fnancial intermediation
and real estate, administrative services
and personal/consumer service sectors
also have signifcantly more high-growth
potential entrepreneurs, with 23% of this
grouping indicating that they intend to offer
employment to 20 or more people within
fve years. Education, ICT infrastructure,
funding and development policies need
to identify and develop the skills and
environment to enable the youth to move
towards these high-growth endeavours,
instead of marginal businesses operating
in over-traded sectors.
While young people
are classifed as
part of an economy’s
entrepreneurial
activity, their small,
undifferentiated
businesses are
unable to generate a
sustainable livelihood.
Unl ocki ng t he potent i al for a br i ghter f ut ur e 45
Figure 3.5: Impact of education on growth potential, sub-Saharan Africa, 2013
50%
60%
70%
80%
90%
Primary
Secondary /
Post secondary /
Tertiary
40%
30%
20%
10%
0-5 jobs 6-19 jobs 20+ jobs
0%
3.5 IMPACT OF EDUCATION
ON GROWTH POTENTIAL
Improving secondary school enrolment,
the quality of both primary and
higher education, as well as tertiary
enrolments, are challenges facing
sub-Saharan Africa. Young people in
sub-Saharan Africa report significantly
lower levels of education than those
of other regions. Despite the global
shift towards higher levels of education
for the young, almost a quarter of
the youth in sub-Saharan Africa have
less than a primary school education,
while 55% have not completed their
secondary education.
The situation is exacerbated by
the mediocre quality of education
offered in most sub-Saharan African
countries. The 2014/2015 Global
Competitiveness Index identifies
education as a key area that is
limiting growth and stability in many
sub-Saharan African countries. Low
enrolment rates and the mediocre
quality of education in Botswana
are constraints of concern for a
country in transition to an efficiency-
driven economy. Raising educational
standards, with a focus on the
quality of education, is an important
requirement for South Africa if the
country is to combat the almost 50%
of unemployment among young people.
In Namibia, both school enrolment
rates and the quality of education,
compared to upper-middle-income
countries in sub-Saharan Africa, remain
low. Nigeria is noted for its poor quality
of primary education as well as low
levels of tertiary enrolment. As the
largest economy in Africa, increasing
the number of young people who
complete secondary schooling and
continue into tertiary education is
central to preventing the economy
from slipping further down the Global
Competitiveness Index.
A key developmental focus for the sub-
Saharan African region is sustainable
job creation. Figure 3.5 maps the stated
growth potential of a business, namely
low growth (fve or fewer jobs expected
in the next fve years), medium growth
(six to 19 jobs within the next fve years)
and high-growth (20 or more jobs within
the next fve years) with the educational
attainment of the business owner.
Countries within sub-Saharan Africa have
varying defnitions of post-secondary
and tertiary education. For that reason,
we grouped together secondary, post-
secondary and tertiary phases of
education. Not surprisingly, we observe
a clear relationship between the level of
education and the likelihood of business
owners’ anticipating high growth for
their enterprise. Sixty fve percent of low-
growth businesses operators have only
a primary school education, while 80%
of those running high-growth businesses
have completed secondary, post-
secondary or tertiary education.
Young people in
sub-Saharan Africa
report significantly
lower levels of
education than those
of other regions.
46 Af r i ca’ s Young Ent r epr eneur s
Innovation refers to
the degree of newness
an entrepreneur’s
product or service
represents to
customers and the
extent to which
competitors are not
offering the same
product or service.
Global Entrepreneurship Monitor
Table 3.8: Innovation indicators in youth businesses, sub-Saharan Africa, 2013
Yes No
Is your product or service new to some or all of
your customers?
32% 68%
Do only a few or no other businesses offer the
same product or service?
43% 57%
The signifcant relationship between the
level of education and the likelihood
of higher growth potential underscores
the importance of education within
sub-Saharan Africa. In light of the high-
growth gender bias we have noted earlier,
particular effort is needed to encourage
young women to study subjects such as
mathematics, science and information
technology, areas that are still considered
to be a male domain in many countries.
The focus on educational improvement
should not only be quantity focused,
as the quality and relevance of the
educational offering is as important.
Educational reform needs to consider the
changing requirements for a higher value-
added working environment, and access
to ICT-related subjects is a priority.
3.6 INNOVATION
Innovative products and services add
unique value to societies — entrepreneurs
introduce these benefts into markets and
create a source of competitive advantage
for their businesses. As innovation
indicators, young business owners were
asked whether their product or service is
new to some or all customers and whether
few or no other businesses offered the
same product.
Two-thirds (68%) of the youth businesses
indicated that their product or service
is not new to some or all of their
customers (Table 3.8). Thus, the majority
of customers would not consider
the offerings to be new, and there is
signifcant competition within the markets
in which the youth operate. This reinforces
the concept that many youth businesses
are ‘me too’ businesses operating in over-
traded sectors.
Innovation is also measured by
identifying the extent to which
entrepreneurs believe there are
many, few, or no competitors for their
products and services. Well over half
(57%) of youth businesses indicated
that numerous other enterprises
offered the same items. Selling
undifferentiated products and services
in over-traded markets makes it
extremely difficult for entrepreneurs to
generate a profit and will rarely lead
to viable business creation over the
longer term.
The lack of innovation with respect to
the newness of the product offering
and the amount of competition within
the market with respect to youth
businesses is similar to what we find
among the adult-owned businesses.
Almost two thirds (65%) of adult
businesses indicated that their offering
is not new to some or all of their
customers and 56% of them indicated
that numerous other sellers offered the
same product or service.
Table 3.8 disguises the variability with
respect to new product offerings from
youth businesses within the region.
South Africa (70%), Angola (64%) and
Malawi (50%) have the highest number
of young entrepreneurs who indicated
that their products or services are new
to all customers (see Figure 3.6). Of
the youth in Zambia and Uganda, 80%
and 85% respectively indicated that
their product or service would not be
new to most of their customers. While
the rates in South Africa, Angola and
Malawi may indicate a high degree of
innovation in the type of product or
services offered, which is more likely in
South Africa, entrepreneurs could also
be selling less innovative products into
a new market, where customers are
not familiar with them. This is the more
likely scenario in Malawi, as it has the
highest percentage of youth businesses
offering job opportunities only to the
owner as well as the highest rate of
low-growth entrepreneurs. This would
seem to indicate that it is more likely
that the youth in Malawi are selling less
innovative products into a new market,
where customers are not familiar with
Unl ocki ng t he potent i al for a br i ghter f ut ur e 47
Figure 3.6: Newness of product/service by youth and country, sub-Saharan Africa, 2013
60%
70%
80%
90%
50%
40%
30%
20%
10%
0%
A
n
g
o
l
a
Yes
No
B
o
t
s
w
a
n
a
G
h
a
n
a
M
a
l
a
w
i
N
i
g
e
r
i
a
S
o
u
t
h

A
f
r
i
c
a
U
g
a
n
d
a
Z
a
m
b
i
a
Figure 3.7: The use of technology in youth businesses, sub-Saharan Africa, 2013
12%
15%
No new technology
New technology
Latest technology
73%
them. With respect to Angola, the
long civil war is likely to have limited
business variety and with the advent
of peace, there is greater scope for
businesses offering genuinely new
products and services, as well as the
probability that many of the products
and services would be established but
new to the local market.
3.7 TECHNOLOGY USAGE
The 2014/2015 Global Competitiveness
Index recognises that ICT can play
an important role in developing more
productive higher value-added sectors
within sub-Saharan Africa. Young
entrepreneurs were therefore asked
whether or not they were using newer
technology within their businesses.
Respondents were asked to identify
whether the technology they were using
was the latest – in particular, were the
technologies or procedures available
less than a year ago, one to fve years
ago, or more than fve years ago. Figure
3.7 indicates that the use of new and
latest technology by youth businesses
in sub-Saharan Africa is extremely low.
Almost three-quarters (73%) of youth
businesses indicated that they were
using technologies or procedures that
were available more than fve years
ago. The percentage of adult-based
businesses that use older technology
is slightly lower (66%) than the youth;
however, only 16% of adult-based
businesses use the latest technology.
This is a positive fnding as, even though
youth-based businesses generally have
fewer resources, their uptake of the
latest technology is equivalent to adult-
based businesses.
Figure 3.7 disguises the fact that there
is significant variability with respect
to the use of technology in youth
businesses within the region. South
Africa (41%) and Angola (39%) have a
considerably higher number of youth
businesses that were using the latest
technology, while 82% of the youth
businesses in Ghana, Zambia and
Uganda indicated that they were using
technologies or procedures that were
available more than five years ago.
Almost three-quarters
(73%) of youth
businesses indicated
that they were using
technologies or
procedures that were
available more than
fve years ago.
48 Af r i ca’ s Young Ent r epr eneur s
Figure 3.8: Proportion of customers from outside the country, youth, sub-Saharan Africa, 2013
50%
60%
70%
80%
40%
30%
20%
10%
More than 75% 25 to 75% Under 25% None
20+ jobs
6-19 jobs
Regional
average
0-5 jobs
5 Dinh, H., Palmade, V., Chandra, V., Cossar,
F., World Bank, 2012, Light Manufacturing in
Africa, Targeted Policies to Enhance Private
Investment and Create Jobs
The use of older technology confrms
the fndings of research that identifed
Africa as being located primarily at the
less sophisticated end of the technology
spectrum in the manufacturing sector
5
.
The same can be said about other
sectors. While sub-Saharan Africa
produces a variety of manufactured
goods, the majority of the businesses
offering such goods operate at the low-
end of the market. The lack of newer
technology, as well as appropriate
business skills, keeps these businesses
small and in a market in which they
do not need to compete with imported
goods. However, this also means that
these businesses will not be in a position
to compete in an export environment
and will not be able to look forward to
export-led growth. The lack of technology,
therefore, negatively affects the capacity
of countries to develop a globally
competitive network of entrepreneurs
which, in turn, limits access to individuals
with a broader knowledge of key market
information, new technology, improved
inputs and production practices. This
continues to limit the ability of sub-
Saharan Africa to develop its capacity for
and to beneft from export-led growth.
All economies are now part of the
global economy, so it is important
to track how internationalisation
contributes to the growth of
businesses. GEM measures
internationalisation by the share of
customers living outside the country.
This survey found that two-thirds of youth
businesses in sub-Saharan Africa have no
customers that normally reside outside
of the country in which the business is
based (Figure 3.8). While 46% of high-
growth businesses had no international
clients, a signifcant proportion of both
high- and medium growth businesses
(27% and 23% respectively) were more
likely to have a reasonable proportion
(25% or more) of their sales coming
from export-generated sales. However,
there are variations within the region. In
South Africa and Angola, 16% of youth-
owned businesses have 75% or more of
their sales coming from customers that
normally reside outside of the country
in which the business is based. At the
other extreme, 92% and 82% of the
youth businesses in Malawi and Uganda,
respectively, have no customers who
normally reside outside of the country in
which the business is based.
The regional pattern of
internationalisation with respect to adult
and youth businesses is similar. The
only notable difference is with respect
to businesses that offer 75% of their
products or services to customers who
normally reside outside of the country —
the youth are 1.6 more likely than adults
to be operating these businesses. This
increase in youth businesses, however,
comes off a very low base of adult
businesses (2%) that offer 75% of their
products or services to customers who
normally reside outside of the country.
This survey found
that two-thirds of
youth businesses in
sub-Saharan Africa
have no customers
that normally reside
outside of the country
in which the business
is based.
0%
Unl ocki ng t he potent i al for a br i ghter f ut ur e 49
Table 3.9 Business premises by country and gender, sub-Saharan Africa, GEM 2013
Male Female
Home Street Market Building Online Home Street Market Building Online
Angola 39.2% 19.2% 15.0% 19.2% 0.0% 35.1% 13.7% 21.4% 21.4% 0.0%
Botswana 29.8% 12.8% 16.3% 36.9% 0.7% 41.5% 18.5% 13.8% 20.8% 0.8%
Ghana 24.4% 28.5% 19.5% 18.7% 0.0% 39.1% 24.9% 15.4% 13.0% 0.0%
Malawi 28.1% 9.0% 48.7% 7.0% 0.0% 47.7% 5.6% 32.0% 5.1% 0.0%
Namibia 38.3% 12.3% 17.9% 27.2% 2.5% 48.4% 12.8% 16.5% 20.2% 0.5%
Nigeria 21.6% 27.2% 31.9% 16.4% 0.0% 16.9% 34.2% 29.8% 18.0% 0.3%
South
Africa
49.1% 15.7% 6.5% 22.2% 1.9% 53.4% 9.6% 13.7% 16.4% 6.8%
Uganda 23.7% 14.5% 31.2% 29.5% 0.0% 44.5% 13.3% 22.3% 19.4% 0.0%
Zambia 14.5% 27.4% 28.7% 20.9% 0.5% 19.0% 19.8% 37.9% 17.8% 0.0%
6 World Economic Forum, 2015, The Global
Competitiveness Report 2014–2015 http://
reports.weforum.org/globalcompetitiveness-
report-2014–2015/subsaharan-africa/
7 According to the World Economic Forum
the technological readiness pillar measures the
agility with which an economy adopts existing
technologies to enhance the productivity
of its industries, with specifc emphasis on
its capacity to fully leverage information
and communication technologies (ICTs) in
daily activities and production processes for
increased effciency and enabling innovation for
competitiveness.
3.8 GENDER, CHOICE AND
LOCATION OF BUSINESS
Many countries in Africa have strong
cultural practices that have traditionally
imposed restrictions on women’s
choices and mobility. Young men are
generally more mobile, while women’s
primary role in the care economy limits
their choices and mobility. Young
women in sub-Saharan Africa (other
than in Nigeria and Zambia) are most
likely to trade from home (Table 3.9).
This is unsurprising as young women
are often primary care-givers within
family structures in sub-Saharan Africa
and would need to combine both
home and work responsibilities. In
both Nigeria and Zambia, a significant
proportion of young women trade from
an organised market.
A key disadvantage of trading from
home is the small market-reach offered
due to the business position and a
greater reliance on family, friends and
neighbours as customers. The survey
clearly shows that overall, compared
to young men, young women are most
likely to operate from home and are less
likely to operate from the market or from
an established business. As indicated
previously, this will limit their market to
a signifcantly smaller local reach.
A possible option, to mitigate the limited
reach of home-based businesses, is to
trade online. Only South African youth
show any real online presence and
this is dominated by young women,
with young women being 3.6 times
more likely than young men to use an
online option as their primary trading
space. The poor take-up of the online
space as a trading platform in the rest
of the countries is supported by the
fndings of the Global Competitiveness
Report 2013/2014 which indicates
that technological uptake in sub-
Saharan Africa remains weak with the
exception of three countries (South
Africa, Mauritius and Seychelles) in
the top half of the GCI rankings for
technology. The 2014/2015 Global
Competitiveness Index
6
recognises that
ICT adoption rates in many countries in
sub-Saharan Africa continue to be very
low and that this limits their ability to
enhance productivity through the use of
new technology. The same index ranked
sub-Saharan Africa low with respect to
ICT use and technological readiness
7
.
The fndings from the GEM survey echo
this and highlight that while the use of
cell phones by young entrepreneurs is
widespread, the usage of ICT is much
lower and when used by young business
people, it is predominantly seen as
social media and not a business tool.
Becoming familiar with the possible
business uses of ICT would be an
important step in allowing the youth
to exploit its possibilities for doing
business. An added beneft would be the
ability of these businesses to operate
outside of their own localities.
The survey clearly
shows that overall,
compared to young
men, young women
are most likely to
operate from home
and are less likely
to operate from the
market or from an
established business.
50 Af r i ca’ s Young Ent r epr eneur s
Table 3.10: Business fnancing by country and gender, sub-Saharan Africa, GEM 2013

Male Female
Own/family
/friends
Banks/fnancial
institutions Other
Own/family
/friends
Banks/fnancial
institutions Other
angola 56.8% 35.6% 3.8% 53.1% 38.1% 6.2%
Botswana 51.4% 35.5% 10.9% 69.8% 25.6% 2.3%
Ghana 82.2% 17.9% 0.0% 90.5% 7.8% 0.6%
Malawi 95.9% 1.0% 2.5% 80.9% 5.2% 11.9%
Namibia 68.6% 24.5% 3.8% 72.0% 20.4% 3.8%
Nigeria 84.3% 9.4% 3.0% 91.1% 6.5% 1.0%
South Africa 59.2% 28.2% 7.8% 54.7% 21.3% 14.7%
Uganda 89.0% 5.8% 2.3% 87.8% 5.2% 6.1%
Zambia 82.3% 15.6% 0.9% 81.8% 13.2% 1.8%
8 Kew, J. et al., 2012, Generation
Entrepreneur
3.9 FINANCING
Young people face numerous age-
related difficulties in raising bank
or investor finance, especially the
lack of a credit history that could
limit their ability to raise institutional
funds through normal channels.
Small businesses are most likely to
rely on personal funding and family
and friends to finance the business
operations. With young people’s lack
of a good credit history and generally
meagre resources to offer as security,
it is likely that the youth would be even
more dependent on personal funding
and family and friends to finance
their business operations
8
. Table 3.10
confirms this and using own funding
and/or funding from family or friends
is the primary source of financing for
young people in many sub-Saharan
African countries. This pattern varies
between countries but formal financial
institutions play an important role in
financing youth businesses only in a
handful of countries: Angola, Botswana,
South Africa and Namibia.
Malawi was the only country in which
both young men and young women
indicated that the amount of funding
they had was one of the factors that
most influenced the type of business
they chose to start. Young men in
Malawi are almost completely reliant
on their own resources, family or
friends (95.9%) to provide the primary
resources to start a business, with
only 1% indicating that funding was
provided by banks or other financial
institutions. Young women in Malawi
also rely heavily on their own
resources, family or friends (95.9%) to
provide the primary resources to start a
business. Five percent (5.2%) of young
women in Malawi relied primarily on
bank financing, which is most likely
related to microfinance. As the second
source of finance, 12% of young women
in Malawi indicated ‘other’ and a review
of this highlighted grant/donor funding
as the primary source within this
category in Malawi.
Our data reveals that young men
generally have greater access to banks
and financial institutions than young
women, with the exception of a few
countries. In Ghana, for example,
young men are 2.3 times more likely
than young women to use this form
of financing as their primary source.
Similarly, young men in Botswana and
Nigeria (1.4 times), South Africa (1.3
times) and Namibia and Zambia (both
1.2 times) are also more likely than
young women in these countries to use
bank financing as the primary source of
funding for the business.
Bank fnancing for youth businesses
is unequally spread across the sub-
Saharan region with fnancing ranging
from a third of youth male businesses in
Angola (35.6%) and Botswana (35.5%)
to approximately fve percent or less in
Uganda (5.8%) and Malawi (1%).
With young people’s
lack of a good credit
history and generally
meagre resources
to offer as security,
it is likely that the
youth would be even
more dependent on
personal funding and
family and friends to
fnance their business
operations.
Unl ocki ng t he potent i al for a br i ghter f ut ur e 51
50%
60%
70%
40%
30%
20%
10%
Figure 3.9: Primary sources of guidance with respect to managing a business, by country, 2013
3.10 BUSINESS SUPPORT
Lack of adequate support structures and
a lack of mentorship are barriers to youth
entrepreneurship.
9
Earlier GEM surveys
found that non-fnancial support was a
strong driver of business performance and
capability for young entrepreneurs
10
. Non-
fnancial support included services such
as mentorship, training and networking.
Young people who are able to rely on a
network of people to help them make
business-related decisions are provided
with a potential source of support in the
form of mentorship, additional networking
capacity, as well as the possibility of
additional funding. We asked young
business owners to identify their source
of guidance in creating or managing
their enterprise. Figure 3.9 shows that
family (parents and/or relatives) and
friends are overwhelmingly the primary
source of guidance. One concern with
the combination of family/relatives
being a primary source of guidance, and
a low level of private organisation or
government business support is that this
could hamper technological development,
innovation or the diversifcation of
business into different sectors. Other
business owners are a primary source
of guidance for a signifcant number of
young women in Angola (25%) and South
Africa (24.1%).
Although government-funded business-
support initiatives abound in most
sub-Saharan countries, these initiatives
are rarely well-known at the grassroots
level. Figure 3.10 clearly shows the
small number of young business owners
who have made use of public business-
support programmes and organisations.
Angola is the only exception with almost
a third of both male (34.7%) and
female (30.5%) youth business owners
indicating that they had made use of
government-funded business support.
The use of such initiatives in Malawi,
Nigeria and Zambia is particularly low,
with neither male nor female usage
rated higher than 3.7%.
With the high levels of small-scale, one
person or low-growth businesses in the
region, as we have observed earlier, the
number of youth businesses indicating
that they are struggling to survive raises
a major concern that scarce resources
are not reaching the targeted population.
In summary, the youth in sub-
Saharan Africa have generally
positive entrepreneurial attitudes
and perceptions. The majority of
young Africans believe there are
good business opportunities in their
countries and that they have the skills
and knowledge to start and manage a
new business. Furthermore, there is a
high level of entrepreneurial intention
among the youth, which is further
boosted by their low level of fear of
failure and positive attitudes towards
entrepreneurship as a career choice.
9 Kew, J. et al., 2012, Generation
Entrepreneur
10 Youth Business International, 2011, Global
Youth Entrepreneurship Survey 2011
Angola
Botswana
Ghana
Malawi
Namibia
Nigeria
South Africa
Uganda
Zambia
Male Female
Parent / relative Friend Private organisation Business owner
Male Female Male Female Male Female
0%
Although government-
funded business-
support initiatives
abound in most sub-
Saharan countries,
these initiatives are
rarely well-known at
the grassroots level.
52 Af r i ca’ s Young Ent r epr eneur s
This suggests that the sub-Saharan
African region has a large pool of potential
future entrepreneurs. However, youth
economic activity is concentrated within
a limited number of sectors, with 64% of
the youth in sub-Saharan Africa involved
in the retail, hotel and restaurant trade.
Further, 97% of youth businesses in the
retail sector are low-growth businesses,
offering employment to between zero
and fve employees, and 54% of these
businesses offer employment to only the
business owner. The lack of employment
impact is even more pronounced with
respect to young women, where more
than half of young women operate in
businesses in which no employment in
created. The gender difference related
to actual job creation is most noticeable
with respect to high-growth businesses,
with young men’s being fve times more
likely to offer employment to 20 or more
employees. There is also a signifcant
gender difference with respect to both
medium and high-growth business
aspirations, with young men 1.5 times
and two times more likely to be involved
in medium and high-growth potential
businesses, respectively, than young
women. More than three-quarters
(78%) of young women operate in the
retail and agricultural sectors, which
explains in part the greater proportion of
young women operating in low–growth
businesses. Young women are also more
concentrated in a smaller number of
sectors, while young men have a more
diversifed profle in terms of sector
involvement.
The regional averages for youth
participation in the various sectors within
the economy mimics the regional averages
for adult participation. There is little sign
of a greater diversifcation into sectors
that are currently under-represented or a
movement away from over-traded sectors
such as retail. The country-specifc job
creation of youth businesses in the region
matches to a large degree the job creation
of adult businesses.
It seems, therefore, that without clear
and specifc policy directives, the current
low economic impact from the majority
of entrepreneurial businesses is likely to
continue, as the youth landscape with
respect to actual and growth potential
is almost identical to the current adult
landscape. This is unfortunate and youth
policy directives need to recognise the
low-levels of growth in the retail and
agricultural sector and that the over-
representation in low proft, marginal
activities often found in undifferentiated
sectors such as retail and agriculture is
unlikely to add much to solving the dual
crisis of high un- and underemployment
and the high rates of working poor. If
agriculture in sub-Saharan Africa is
going to assist in the development of
sustainable livelihoods, then policies
focusing on improving technology use in
this sector, as well as opportunities along
the agro-business value chain, will need
to be explored. Without these, this sector
will continue to contribute to the working
poor, rather than to improvements in the
livelihoods of these entrepreneurs.
Figure 3.10: Percentage of young business owners who used government business support,
by country, 2013
30%
35%
40%
25%
20%
15%
10%
5%
0%
A
n
g
o
l
a
Male
Female
B
o
t
s
w
a
n
a
G
h
a
n
a
M
a
l
a
w
i
N
i
g
e
r
i
a
N
a
m
i
b
i
a
S
o
u
t
h

A
f
r
i
c
a
U
g
a
n
d
a
Z
a
m
b
i
a
Without clear and
specifc policy
directives, the current
low economic impact
from the majority
of entrepreneurial
businesses is likely to
continue.
Unl ocki ng t he potent i al for a br i ghter f ut ur e 53
FOUR EXAMPLES OF
INITIATIVES TO PROMOTE YOUTH
SME DEVELOPMENT IN ANGOLA
1. ENTREPRENEURSHIP CURRICULUM PROGRAMME
UNIDO is providing support to the Government of Angola
(Education Ministry) to develop and introduce a new
entrepreneurship curriculum in secondary schools. In 2010,
entrepreneurship was taught in 40 schools in nine provinces of
Angola, with over 2 000 students taking part on a pilot basis.
The government rollout of the entrepreneurship curriculum to
the whole country started in 2012.
2. PROGRAMMA DE FOMENTO AO EMPRESARIADO
This programme is a partnership between the Government of
Angola (Ministry of Economy), with support from the Boston
Consulting Group. Its objective is to provide solutions to the
following problems facing entrepreneurs in Angola: access
to credit (especially micro small enterprises); government
guarantees (to obtain credit); creation of a risk-capital fund (with
state participation); and support and subsidies for entrepreneurs
(e.g. for young entrepreneurs and in specific sectors).
3. INCUBATORS FOR THE FUTURE
This project is jointly implemented by INEFOP and the World
Bank (through InfoDev) and provides legal and technical
assistance for the constitution of small, youth-owned businesses
in Angola. The assistance includes support for financing access,
creation of business partnerships, entrepreneurial training and
management consultancy.
4.
SUPPORTING SPECIFIC YOUTH ENTREPRENEURIAL
ACTIVITIES IN URBAN AREAS
The Ministry of Youth and Sports provides support to young
Angolans and focuses on car washers and loaders or carriers –
common occupations among Angolan youth.
The project provides support by organising the entrepreneurs into co-
operatives and shared work spaces with appropriate equipment.
Af r i ca’ s Young Ent r epr eneur s 54
CHAPTER 4
Co n c l u s i o n s a n d
Re c o mme n d a t i o n s f o r
Po l i c y a n d Pr a c t i c e
Unl ocki ng t he potent i al for a br i ghter f ut ur e 55
There is a relatively high level of
entrepreneurial propensity and activity
among the young people in sub-Saharan
Africa. This could be for a number of
reasons, including the increased policy
initiatives in the region that have been
aimed at encouraging entrepreneurship.
However, the increased and high
entrepreneurial activity should not,
in itself, be the point of focus. The
issue in much of sub-Saharan Africa
seems to be less about developing
entrepreneurial activity (79% of workers
are self-employed
1
) but recognising that
much of the current entrepreneurial
activity within the region is not leading
to sustainable livelihoods. In line
with the critical need in sub-Saharan
Africa to open up new and better job
opportunities for all segments of the
population, the focus should rather be
on how entrepreneurship addresses the
un- and underemployment challenge
and, in turn, can help Africa to gain
a dividend from its youth bulge. In
this regard, the challenge is yet to be
resolved. With many young people’s
enterprises struggling in the retail
sector and employing no one beside
the entrepreneur, the discussion should
turn towards creating more value from
entrepreneurial activity.
The Global Competitiveness Report
2014-2015 notes that most economic
activity in sub-Saharan Africa takes place
in the informal sector, which accounts
for more than half of GDP and provides
employment for more than 80% of the
population. Given the region’s high
population growth, a particular concern
is that only one in two young Africans
participates in wage-earning jobs. It
is estimated that by 2020 more than
half of the continent’s population will
be below the age of 25. More than half
of the 20 lowest-ranked countries in
the Global Competitiveness Index are
in sub-Saharan Africa, with the region
underperforming in many of the basic
requirements of competitiveness.
Inadequate infrastructure, health and
basic education remain problems.
Higher education and training also
need to be further developed to provide
the region’s young population with the
necessary skills to carry out higher-value-
added employment. Key to improving
sub-Saharan Africa’s entrepreneurial
performance, then, is a dual focus
on improving the region’s human
capital through education and skills
training, and creating a more enabling
environment. A strong entrepreneurial
culture cannot develop and fourish in
areas with limited access to resources,
poor infrastructure, little or no consumer
spending and no vibrant markets. A more
enabling environment is also necessary
to reduce the cost of running a business,
and therefore improve the sustainability
of enterprises in the SME sector.
It is clear, then, that the challenge
facing sub-Saharan Africa is to fnd ways
of fostering innovative and effective
entrepreneurial activity among the
youth in order to harness their potential
to contribute in a meaningful way to
sustainable economic development in
the region. This study has highlighted
a number of key areas that need to be
addressed in order to stimulate and
support entrepreneurial activity among
the region’s youth.
4.1 EDUCATION AND
TRAINING
An important constraint affecting the
quality of youth entrepreneurship
in the sub-Saharan African region
is the poor quality of education and
training. Structural problems affecting
the education systems continue to
be a stumbling block in the region’s
efforts to stimulate sustainable
entrepreneurial activity and improve
business productivity. The fndings in
this report suggest that the youth in
sub-Saharan Africa have relatively high
entrepreneurial propensity, including a
robust belief that they have the skills
to start a business. This is in line with
GEM research, which has shown that
individuals in factor-driven economies
(which predominate in the sub-Saharan
African region) tend to have higher
perceptions that there are good
opportunities for entrepreneurship, and
that they have the capabilities to start
businesses. However, GEM has also
indicated that individuals in economies
at different stages of development are
likely to have very different kinds of
businesses in mind — the perception
of the type of skills required in factor-
driven economies is therefore also likely
to differ signifcantly from that in more
developed economies. This is borne
1 Bhorat, H. Naidoo, K., 2013, Africa’s Job
Challenge, DRPU, University of Cape Town
The issue in much of
sub-Saharan Africa
seems to be less
about developing
entrepreneurial
activity (79% of
workers are self-
employed) but
recognising that
much of the current
entrepreneurial
activity within the
region is not leading
to sustainable
livelihoods.
Af r i ca’ s Young Ent r epr eneur s 56
out by the fnding that the youth in this
study indicated that their own skills
were the primary motivator determining
the type of business they started.
The majority of the youth started
small retail-based businesses with
no or limited growth potential, and
it is through this prism that their
perceptions of their own skills need
to be viewed. This report has shown
a clear relationship between the level
of education and the likelihood of
business owners indicating growth
expectations within a business – in
this respect, the fact that enrolment in
secondary and tertiary education is low
and a large proportion of the youth do
not progress beyond primary education
is cause for concern. The result is a
young, undereducated and under-
employed workforce that is pushed into
entrepreneurship as a survival option.
In addition, the problem is not only
a lack of formal education but also
the type of education provided – too
often, the formal education system
does not equip young people for the
realities of the current labour market.
In order for more complex business
entities to be encouraged, for example
in manufacturing or personal services,
it is essential that a different skill set
Business-support
programmes often
fail to distinguish
adequately between
different types of
entrepreneurial
ventures.
Unl ocki ng t he potent i al for a br i ghter f ut ur e 57
needs to be inculcated in the youth.
It is, therefore, critical to address the
quality and relevance of curricula.
Mismatches between the skills
required by industry and the economy
and those provided by schools and
universities are prevalent. Educational
facilities need to improve their capacity
to provide the education and job skills
that will be needed to develop greater
productivity and technology-intensive
industries. In order to engender
an entrepreneurial culture among
the youth, schools need to promote
entrepreneurship as a career path –
inviting successful young entrepreneurs
to participate in the educational
programme is a way to introduce young
people to positive entrepreneurial role
models. Given the high drop-out rates
from the formal school system, it is
also imperative to expand interventions
that deal with key skills gaps, for
example, apprenticeships and technical
and vocational education facilities.
4.2 BUSINESS SUPPORT
AND ADVICE
Sub-Saharan African countries need
to move beyond policy discussion
and creation to effective policy
implementation. Most have a
considerable number of small-business
policies, organisations and committees
– however, a consistent fnding among
the sub-Saharan African countries
participating in the survey is that a very
small percentage of young people are
aware of the entrepreneurship-support
programmes (both public and private)
designed specifcally to help them.
This reduces the potential of these
programmes to deliver tangible benefts to
young entrepreneurs.
Business-support programmes often
fail to distinguish adequately between
different types of entrepreneurial
ventures. They are likely to be more
effective in their use of resources
if they recognise and tailor their
programmes to the specifc support
needs of different categories of young
entrepreneurs. The GEM survey shows
that although the majority of youth
businesses in sub-Saharan Africa are
small, one-person entities with no
growth aspirations and active in the
informal sector, there are also young
entrepreneurs with aspirations to grow
their enterprises. Both are important
sources of livelihoods for young
people, but require different support
structures and interventions. The most
signifcant job-creation impact comes
from the small group of high-growth
entrepreneurs and it is imperative
that businesses in selected sectors
that show export, employment and
technological potential are identifed
and are provided with suffcient targeted
support to enable them to realise their
potential and contribute to sustainable
economic growth within their regions.
Specific recommendations include
the following:
? To increase awareness of existing
programmes to support young
entrepreneurs, a concerted effort
in publicity and youth-oriented
information campaigns is needed.
Government programmes need
to be advertised and explained in
the media used by young people,
especially the social media.
? It is critical to ensure that
entrepreneurship support
programmes are not excessively
bureaucratic and maintain the
drive towards reducing red tape
for young entrepreneurs. The aim
should be to encourage them to
move into the formal sector.
? Existing and new programmes
aimed at young entrepreneurs
would beneft from transparent
evaluation and monitoring of their
effectiveness.
? Many young people lack contact
with successful entrepreneurs and
support networks. Schemes, such
as in-service education and the
linking of entrepreneurial training
to enterprise development, could
equip young people with the skills
and experience to operate their
own enterprises successfully.
This could have positive effects
in terms of profitability, survival
of enterprises and long-term
employment creation.
? Mentoring by colleagues in the
business arena could provide
young entrepreneurs with advice,
as well as indicate to them new
avenues for operation in higher
profit and more lucrative domains.
Young people tend to go into
Educational facilities
need to improve their
capacity to provide
the education and
job skills that will be
needed to develop
greater productivity
and technology-
intensive industries.
Af r i ca’ s Young Ent r epr eneur s 58
the same business areas as
their peers, neglecting the more
innovative and growth-oriented
area of the economy.
? To develop new and innovative
business opportunities, as well
as to reinforce skills already
obtained, there is a need for
experiential incubators that are
easily accessible to young potential
entrepreneurs and can supplement
other forms of education and
training. Such incubators have
been shown to foster innovation
and encourage movement into
sectors with higher profit potential.
These clusters, incubators and
business hubs should include
entrepreneurs as well as
commercial and professional
support structures so that youth
start-ups can be assisted in a
more protected and supportive
environment. This is particularly
important in rural and semi-rural
areas where poor infrastructure
(physical and institutional) is a
major barrier to small businesses.
? Young entrepreneurs need support
beyond formal or on-the-job
training; they need to have access
to professional organisations that
provide advice to businesses, often
through partnerships between
the government and the private
sector. Services – such as access
to low-cost financing, networking,
provision of equipment and
mentoring – are also essential to
support young business.
? Business training and mentoring
must be provided at affordable
rates that do not discriminate
against young entrepreneurs in
start-ups and micro-businesses.
4.3 BUSINESS CAPITAL AND
FINANCIAL SUPPORT
Many young entrepreneurs surveyed
by GEM indicate that lack of access to
fnance is an important disincentive to
starting a business. Securing suffcient
funding is important for all businesses,
but especially for start-ups and for
growing frms. The problem of access to
fnance is a common feature of research
on challenges faced by all entrepreneurs.
Financial institutions generally require
collateral and formal business records as
The problem of
access to fnance is
a common feature
of research on
challenges faced by
all entrepreneurs.
criteria for considering a loan. As a result,
business owners who lack collateral
or who have not kept formal records
for their business are less likely to be
successful in approaches to fnancial
institutions. Young people are, thus,
likely to be particularly disadvantaged in
their attempts to start small businesses.
The majority of the young entrepreneurs
surveyed for this report raised the
start-up capital from their own or family
savings rather than approaching formal
institutions or agencies.
Specific recommendations include
the following:
? There is a need for governments
to ease access to credit through
the banking system, as well as to
facilitate the emergence of new
fnancing sources such as business
angels and venture capitalists.
Government could step in to provide
loan guarantees, itinerant fnancial
advice units and special credit lines
specifcally for young aspirants to
entrepreneurship.
? Introduce incentives for the fnancial
institutions to increase their lending
to small, youth-owned enterprises
as part of their corporate social
responsibility policies.
? Given the additional problems that
female entrepreneurs face, it would
be wise to encourage fnancial
institutions to pay attention to the
particular constraints faced by
young female entrepreneurs, when
assessing their requests for loans.
Young women, for example, are often
less confdent and assertive when
approaching fnancial institutions
and presenting their business plans,
because of cultural biases within
their societies.
? Access to capital, however, is only
part of the equation. Once they
are able to secure fnance, young
people also need to be able to
manage their money. Policies that
aim to provide young people with
money-management skills through
training programmes adapted to their
circumstances would help to ensure
that young entrepreneurs could run
their businesses and contribute to
the economy, generally.
? A signifcant contribution to
formalising small enterprises would
be to provide them with affordable
Unl ocki ng t he potent i al for a br i ghter f ut ur e 59
Many young
entrepreneurs
surveyed by GEM
indicate that lack
of access to fnance
is an important
disincentive to
starting a business.
space in which to carry out their
business activities, for example by
reimbursing stall-rental fees. The
survey shows that young women in
sub-Saharan Africa, in particular, tend
to trade from home and policies to
support these young women should
be encouraged.
? A different approach to the
management of funding should be
encouraged, with attention given
to a state-supported micro-funding
model, coupled with training/
mentoring through the frst year of
operation. This could also be used
to improve access to funding for
youth businesses, where small loans
coupled with technical support are
often needed.
? A lack of accessible venture capital
facilities constrains the development
of innovative SMEs with high-growth
potential. There is a need to make
funds available from government or
provide a tax break for investors to
fund young entrepreneurs who have
the potential to develop high growth
businesses.
4.4 ICT AND TECHNOLOGY
An effcient IT infrastructure reduces cost
of business, increases market reach,
improves access to information and
allows for innovation. Internet access,
as well as internet capacity within
a region, enhances the opportunity
for youth businesses to develop and
expand beyond localised markets
that rely largely on friends and family
as a customer base. As noted, many
young entrepreneurs (particularly
young women) run their businesses
from home or on the side of the street,
which signifcantly limits their access
to suitable markets. With the exception
of South Africa, there are almost no
youth businesses that make use of the
online environment in which to sell their
products/services. The use of the online
platform will enable the many home-
based businesses to expand their market
reach beyond their immediate locale.
ICT can also offer innovative methods of
promoting and diversifying the product/
service offerings as well as ways of
attracting customer attention.
Photo by Erik Hersman
Af r i ca’ s Young Ent r epr eneur s 60 60
However, the cost of internet access can
be prohibitive to young entrepreneurs and
being reliant on cell phone connectivity
can be problematic. Problems with slow or
intermittent internet connections are also
a potential concern – particularly in areas
outside major city centres. Improving IT
infrastructure would allow for a reduction
in the cost of technology – this, as well
as the potential to reach new markets,
could have a signifcant impact on the
sustainability of youth businesses.
Apart from encouraging and supporting
the extension of ICT infrastructures,
policy makers should promote training
in the business use of ICT generally
as a medium for sales, market and
product research, innovation and
seeking sources of fnance. Regulations
covering the provision of internet and
ICT services should also be streamlined
for young business customers. High-
growth businesses are more likely to use
the latest technology compared to both
medium- and low-growth businesses.
As job creation is of fundamental
importance to sub-Saharan Africa,
acknowledging the link between latest
technology and growth aspirations is
crucial. Access to new information and
other technologies therefore needs
to be brought within reach of younger
people — this implies the introduction of
pricing mechanisms adapted to young
people’s means.
4.5 CONCLUSION
This report has identified a number of
factors that seem to be holding sub-
Saharan African youth hostage and
preventing them from fully benefitting
from a relatively high entrepreneurial
propensity as well as a high number of
actual entrepreneurs. The key issues
that can be identified from this report
are that the youth are predominantly
trapped in the retail sector in low
growth, low innovation businesses that
make use of older technology.
Our conclusions and recommendations
focus on four primary areas – these
areas have been identified by GEM
as creating an enabling environment
in which entrepreneurship can be
promoted. It is clear that without
focused improvement in the type of
education offered, suitably tailored
business support, youth-oriented
finance options and better access to
ICT and other technology, there will
not be the development of a large
enough network of high-growth, export-
led entrepreneurs. This is essential to
enable the young entrepreneurs in sub-
Saharan Africa to tap into a network
that will provide access to market
information, technological expertise
and a global market and be able to
participate meaningfully in their own as
well as the region’s brighter future.
Improving IT
infrastructure
would allow for a
reduction in the
cost of technology
– this, as well as the
potential to reach new
markets, could have a
signifcant impact on
the sustainability of
youth businesses.
Unl ocki ng t he potent i al for a br i ghter f ut ur e 61
APPENDIX 1:
Ab o u t GE M
62 Af r i ca’ s Young Ent r epr eneur s
THE GEM CONCEPTUAL
FRAMEWORK
Since its inception, the GEM survey
was conceptualised to check
the interdependency between
entrepreneurship and economic
development. During the last 16
years, this conceptual framework and
the basic definitions have evolved
gradually without compromising
the comparability of the collected
information, but bringing more clarity
into assumed relationships. This
process was supported by the work
of many researchers who, using GEM
data, contributed to building the
entrepreneurship paradigm (Alvarez
et al., 2014, Bosma, 2013, Levie and
Autio, 2008, Reynolds et al, 2015).
Three questions that originally opened the
way to the GEM survey were formulated as
(Reynolds, P. et al, 1999, p. 3):
? Does the level of entrepreneurial
activity vary between countries,
and, if so, to what extent?
? Does the level of entrepreneurial
activity affect a country’s rate of
economic growth and prosperity?
? What makes a country
entrepreneurial and what factors
influence it?
In order to answer these questions, GEM
had to depart from the conventional
approach of thinking about national
economic growth and this brought about
the existing conceptual framework,
which has been through a series of
adjustments since its inception in
1999. The GEM conceptual framework,
as identifed in 1999 (Figure 1.3A),
in contrast to conventional model
of national economic growth (Figure
1.1A), depicted the basic assumption
that national economic growth is the
result of the personal capabilities of
individuals (Figure 1.2A), wherever they
are located (regardless of the size of
businesses or if they are self-employed),
to identify and seize opportunities, and
that this process is happening in the
interaction with the environment.
Social cultural political context
General national
framework conditions
National
economic
growth
(GDP, jobs)
Figure 1.1A: Conventional model of national economic growth
Source: Reynolds, P. D., Hay, M. Camp, S.M. Global Entrepreneurship Monitor, 1999 Executive Report, p. 9
Major established firms
(Primary economy)
Micro, small, and
medium firms
(secondary economy)
During the last 16
years, this conceptual
framework and the
basic defnitions
have evolved
gradually without
compromising the
comparability of the
collected information,
but bringing more
clarity into assumed
relationships.
Unl ocki ng t he potent i al for a br i ghter f ut ur e 63
Social cultural political context
Entrepreneurial
framework conditions
Business dynamics
National economic growth
(GDP, jobs)
Figure. 1.2A: Model of entrepreneurial processes affecting national economic growth
Source: Reynolds, P. D., Hay, M. Camp, S.M. Global Entrepreneurship Monitor, 1999 Executive Report, p. 10
Entrepreneurial opportunities
Entrepreneurial capacity
64 Af r i ca’ s Young Ent r epr eneur s
Figure 1.3A: The GEM Conceptual Framework, used in GEM surveys up to 2014
Social
Cultural
Political
Context
From other
available
sources
From GEM
National Expert
Surveys (NES)
Established firms
Employee
entrepreneurial
activity
From GEM Adult
Population
Surveys (APS)
Entrepreneurship profile
Attitudes:
perceived opportunities and
capabilities; fear of failure;
status of entrepreneurship
Activity:
opportunity/necessity-driven,
early-stage; inclusiveness;
industry; exits
Aspirations:
Growth, innovation
international orientation
social value creation
From GEM Adult
Population
Surveys (APS)
Socio-
Economic
Development
(Jobs,
innovation,
Social value)
Basic requirements
? Institutions
? Infrastructure
? Macroeconomic stability
? Health and primary education
Efficiency enhancers
? Higher education and training
? Goods market efficiency
? Labour market sophistication
? Technological readiness
? Market size
Innovation and
entrepreneurship
? Entrepreneurial finance
? Government policy
? Government entrepreneurship
? Entrepreneurship education
? R&D transfer
? Internal market openness
? Physical infrastracture for
entrepreneurship
Commercial,legal
infrastructure for
entrepreneurship
? Cultural and social norms
Unl ocki ng t he potent i al for a br i ghter f ut ur e 65
Using the fndings from many years and of
numerous GEM surveys, the conceptual
framework presented in Figure 1.3A
evolved into the current GEM conceptual
framework as presented in Figure 1.4A.
The primary revision of the GEM
conceptual framework was due to
a further exploration of the area
referred to as ‘Entrepreneurship
Profile’ in Figure 1.3A. From the start
of GEM, the implicit assumption of
mutual relationships among attitudes,
aspirations and activities was built into
Figure 1.4A: The Revised GEM Conceptual Framework
the conceptual framework; however,
the nature of these relationships had
not been explored.
The revised GEM conceptual framework
depicted in Figure 1.5A, the area
referred to as ‘Entrepreneurship
Profile’ has been explored and the
assumed relationships between social
values, personal attributes and various
forms of entrepreneurial activity has
been tested. The work was carried out
by members of the GEM Research and
Innovation Advisory Committee (RIAC).
From the start of
GEM, the implicit
assumption of
mutual relationships
among attitudes,
aspirations and
activities was built
into the conceptual
framework.
Social, cultural, political,
economic context
National
framework
conditions
Outcome (socio-economic development)
Entrepreneurial output
(new jobs, new value added)
Social values towards
entrepreneurship
Individual attributes
(psychological,
demographic,
motivation)
Entrepreneurial Activity
? By phases of organisational life cycle
? Nascent, new, established,
discontinuation
? Types of activity -
High growth
innovative
Internationalisation
? Sectors of activity
TEA
SEA
EEA
Entrepreneurial
framework
conditions
Basic requirements
Efficiancy enhancers
Innovation and business
sophistication
+

_
+

_
+

_
+

_
+

_
+

_
66 Af r i ca’ s Young Ent r epr eneur s
The revised conceptual framework
is still based on the following basic
assumptions:
? Entrepreneurial activity is not
a heroic act of an individual,
regardless of the environment in
which the activity is performed; and
? Entrepreneurial activity is an output
of the interaction of an individual’s
perception of an opportunity and
capacity (motivation and skills) to act
upon this AND the distinct conditions
of the respective environment in
which the individual is located.
GEM surveys confirmed that the level
of entrepreneurial activity varies among
countries at quite a constant rate, and
has additionally confirmed that it takes
time and consistent policy interventions
to build and/or improve the factors
contributing to entrepreneurial
activity. GEM has also confirmed that
entrepreneurial activity (nascent, start-
up and intrapreneurship) is positively
correlated with economic growth, but
that this relationship differs along
phases of economic development (Acs
and Amorós, 2008; Van Stel et al.,
2005; Wennekers et al., 2010).
GEM continues to contribute to global
economic development through
improving research-based education
and research-based formulation
of public policies in the field of
entrepreneurship.
The revised GEM conceptual framework
specifies the following three objectives:
? To determine the extent to which
entrepreneurial activity influences
economic growth within individual
economies;
? To uncover factors that encourage
or hinder entrepreneurial activity,
especially the relationships
between National Entrepreneurship
Conditions, social values, personal
attributes and entrepreneurial
activity; and
? To identify policy implications for
enhancing entrepreneurial capacity
in an economy.
GEM surveys
confrmed that
the level of
entrepreneurial
activity varies among
countries at quite a
constant rate, and has
additionally confrmed
that it takes time
and consistent policy
interventions to build
and/or improve the
factors contributing
to entrepreneurial
activity.
Unl ocki ng t he potent i al for a br i ghter f ut ur e 67
From 2008 (Bosma et al, 2009), GEM
followed the World Economic Forum’s
typology of countries based on Porter’s
(Porter et al, 2002) defnitions of
economic development levels: resource-
driven, effciency-driven and innovation-
driven economies. It contributed to show
how the uniqueness of the GEM survey of
entrepreneurship (based on individuals) is
complementing other major new business
creation surveys, by providing important
information on individuals (attributes,
values, activities) and their interaction
with the environment in practicing
entrepreneurial behaviour (proactiveness,
innovativeness and responsible choices).
COMPONENTS OF THE REVISED
GEM CONCEPTUAL FRAMEWORK
INCLUDE:
Social, cultural, political and
economic context is defned by using
twelve pillars for profling phases of
economic development in surveying
competitiveness by the World Economic
Forum and nine components of the GEM
National Entrepreneurial Conditions.
It is important to emphasise that
those components can be dispersed
in different combinations in different
economies, but the levels of economic
development are determined by the
dominant presence of the identifed
group of pillars.
It is important to note that all components
of the environment in which women and
men act entrepreneurially (or cannot act
proactively and innovatively) are mutually
dependent. This dependency demands
a holistic approach, not only in research
but also in designing appropriate
policies for building a supportive
environment in which entrepreneurial
behaviour can be performed.
Social values towards
entrepreneurship include such
aspects as how the society values
entrepreneurship as a good career
choice, if entrepreneurs have high
societal status and how media
attention to entrepreneurship is
contributing (or not) to development of
entrepreneurial culture of a country.
It is important
to note that all
components of the
environment in which
women and men act
entrepreneurially are
mutually dependent.
68 Af r i ca’ s Young Ent r epr eneur s
Individual attributes, include different
demographic factors (like gender, age,
geographic location), psychological
(perceived capabilities, perceived
opportunities, fear of failure) and
motivational aspects (necessity-
vs. opportunity-based venturing,
improvement-driven venturing, etc.)
Entrepreneurial activity is defned
according to the phases of the life cycle
of venturing (nascent, new venture,
established venture, discontinuation),
according to types of the activity (high
growth, innovation, internationalisation)
and sector of the activity (total early-
stage entrepreneurial activity – TEA,
social entrepreneurial activity – SEA,
employee entrepreneurial activity – EEA).
GEM METHODOLOGY
In order to provide for reliable
comparisons across countries, GEM
data is obtained using a research
design that is harmonised over all
participating countries. The data
is gathered on an annual basis
from two main sources, namely the
National Experts Survey and the Adult
Population Survey:
THE NATIONAL EXPERT SURVEY
The National Expert Survey (NES)
provides information on the local
environment faced by start-up
entrepreneurs. Information is gathered
within nine economic framework
conditions: financing for entrepreneurs,
government policies, governmental
programmes, entrepreneurial
education and training, research and
development transfer, commercial and
professional infrastructure, internal
market openness, physical and
services infrastructure, and social and
cultural norms.
NES data is collected by interviewing
experts identified by the local team.
Each team interviews 36 experts
according to the Entrepreneurial
Framework Conditions (EFCs). The
experts are made up of four experts
per framework condition. Additional
aspects such as geographical
distribution, gender, public versus
private sector and the level of
experience are also taken into account
in selecting the sample.
ADULT POPULATION SURVEY (APS)
This data set is a survey of the adult
population, generally people between
the ages of 18 and 64 years, however
countries may sample people between
the ages of 18 and 99. Each of the
participating countries conducts the
survey among a random representative
sample of at least 2 000 adults. The
surveys are conducted at the same
time of year (between April and July)
using a standardised questionnaire
provided by the GEM global data team.
Each national team conducts the
survey using a preferred vendor, and
the raw data is then sent directly to the
data team analysts at GERA (Global
Entrepreneurship Research Association)
for checking and uniform statistical
calculations before being made available
to the participating countries for analysis
and interpretation, and, ultimately, to
compile the annual national report. The
individual countries only gain access to
the data once the raw data has been
analysed by experts at the London
Business School for quality assurance,
checking and uniform statistical
calculations. As the GEM research design
harmonises the data, it is possible to
conduct reliable cross-national and intra-
country comparisons over time.
Accredited research companies in
different countries around the world
interviewed between 2 000 and 30 000
respondents during May and June 2012
in the 18 to 64 year-old age cohort.
The questionnaire is translated into
the local languages. To ensure that
the sample is representative, area
stratifed probability sampling is used.
The sample is stratifed by gender,
age and population group, and where
appropriate, by region and community
size. Metro, cities and large towns, small
towns and villages, and rural areas are
also used. Certain countries may use
national, non-stratifed survey designs.
In order to provide for
reliable comparisons
across countries, GEM
data is obtained using
a research design
that is harmonised
over all participating
countries.
Unl ocki ng t he potent i al for a br i ghter f ut ur e 69
APPENDIX 2:
De t a i l e d Co u n t r y -
s p e c i f i c I n f o r ma t i o n
70 Af r i ca’ s Young Ent r epr eneur s
Table 1A: Attitudes and activity, 2013
Good career Fear of failure Nascent New TEA Established
Angola 66.90% 43.00% 7.40% 14.50% 21.90% 5.60%
Botswana 79.50% 20.40% 12.20% 8.90% 21.10% 1.00%
Ghana 80.40% 26.30% 8.00% 17.50% 25.50% 16.30%
Malawi Not asked 17.10% 10.50% 20.20% 30.70% 8.90%
Namibia 73.20% 33.90% 18.60% 12.60% 31.20% 3.20%
Nigeria 81.20% 19.70% 22.20% 18.80% 41.00% 12.70%
South Africa 75.40% 28.30% 7.50% 3.70% 11.20% 1.80%
Uganda 87.60% 15.70% 6.10% 23.10% 29.20% 27.70%
Zambia 66.00% 19.60% 21.90% 18.70% 40.60% 15.30%
As percentage of 18 to 34 year-old entrepreneurs
Table 2A: Activity, 2013
Actual jobs Growth potential
0 jobs 1 – 5 jobs 6 – 19 jobs 20+ jobs 0 jobs 1 – 5 jobs 6 – 19 jobs 20+ jobs
Angola 1.30% 77.50% 18.10% 3.10% 2% 59% 31% 8%
Botswana 46.40% 44.50% 6.40% 2.70% 13% 48% 23% 15%
Ghana 67.50% 31.50% 0.50% 0.50% 37% 50% 11% 2%
Malawi 87.50% 11.70% 0.80% 0% 69% 30% 1% 1%
Namibia 44.40% 50.60% 4.30% 0.60% 11% 65% 17% 7%
Nigeria 25.50% 68.00% 5.60% 0.90% 8% 53% 29% 10%
South Africa 33.30% 56.00% 8.30% 2.40% 10% 59% 16% 15%
Uganda 63.80% 34.20% 1.10% 0.80% 31% 61% 6% 2%
Zambia 47.50% 52.50% 0% 0% 6% 91% 4% 0%
As percentage of 18 to 34 year-old entrepreneurs
Photo by Francois Swanepoel
Unl ocki ng t he potent i al for a br i ghter f ut ur e 71
Table 3A: State of TEA business, 2013
Struggling No future growth Future growth Growth phase Other Not active
Angola 34.60% 9.30% 22.40% 30.50% 1.20% 2.00%
Botswana 16.10% 7.30% 17.90% 12.40% 1.50% 44.90%
Ghana 28.70% 9.30% 32.50% 16.60% 0.30% 12.50%
Malawi 13.70% 8.50% 34.50% 19.60% 0.50% 23.20%
Namibia 37.00% 5.20% 19.20% 10.30% 4.00% 24.40%
Nigeria 26.30% 8.80% 29.80% 18.90% 0.20% 16.10%
South Africa 34.50% 11.30% 14.10% 11.30% 2.30% 26.60%
Uganda 32.30% 11.90% 25.30% 26.50% 4.00% 0%
Zambia 24.00% 15.80% 18.70% 11.10% 2.30% 28.10%
As percentage of 18 to 34 year-old entrepreneurs
72 Af r i ca’ s Young Ent r epr eneur s
Table 4A: TEA Export intensity, 2013
More than 75% 25 to 75% Under 25% None
Angola 16% 8% 30% 47%
Botswana 4% 9% 35% 52%
Ghana 1% 5% 16% 78%
Malawi 1% 2% 4% 92%
Nigeria 2% 9% 26% 63%
South Africa 15% 20% 23% 43%
Uganda 2% 3% 14% 82%
Zambia 1% 8% 47% 43%
As percentage of 18 to 34 year-old entrepreneurs
Table 5A: TEA Innovation, 2013
New product New market
Angola 64% 25%
Botswana 36% 55%
Ghana 20% 42%
Malawi 49% 52%
Nigeria 31% 39%
South Africa 70% 68%
Uganda 16% 36%
Zambia 20% 35%
As percentage of 18 to 34 year-old entrepreneurs
Table 6A: TEA technology, 2013
Very latest technology New technology No new technology
Angola 39% 30% 32%
Botswana 8% 13% 79%
Ghana 7% 12% 82%
Malawi 19% 9% 72%
Nigeria 15% 16% 70%
South Africa 41% 18% 41%
Uganda 5% 12% 82%
Zambia 14% 5% 82%
As percentage of 18 to 34 year-old entrepreneurs
DEVELOPMENT UNIT FOR NEW ENTERPRISE
UNIVERSITY OF CAPE TOWN
PRIVATE BAG X3 RONDEBOSCH 7701
SOUTH AFRICA
CONTACT: [email protected]

doc_729541077.pdf