As Global Entrepreneurship Week celebrates innovation, Dr Nicola Banks warns that youth entrepreneurship is no magic solution to mass youth unemployment.
The Apprentice is one of my TV highlights. Watching through open fingers as Lord Alan Sugar tries to find his next business partner amongst a bunch of hapless contestants makes one thing very clear. No amount of self-belief can make you a successful entrepreneur. Enthusiasm can’t make up for a lack of customer awareness or critical business skills.
Yes, contestants have been selected to make quality viewing, and yes, they face the pressures of short-timelines, the chance of winning £250,000 and a business partnership with Lord Sugar, plus an editing process that puts customer entertainment first. But watching each of the 20 contestants make poor decision after poor decision, and feeling relief as Lord Sugar fires one after another, it is clear that we are far from all being natural born entrepreneurs. If we were, there would be many more millionaires.
When we use the term ‘entrepreneur’ in the UK, it becomes unique and intrinsic – it implies things like initiative, ingenuity, skills and risk willingness that you can’t learn in school, university, or through work experience.
So why in global policy have we focused on ‘youth entrepreneurship’ as a promising solution to the global youth unemployment challenge? The reality for most youth in developing countries is that work is informal and poorly paid, while vast numbers are unemployed.
In 2013, 73.4 million young people were out of work – an increase of 3.5 million since 2007. Worsening economic outcomes for young people are evident in persistent and increasing unemployment and a proliferation of poor quality, informal and subsistence jobs. Is this an environment in which entrepreneurship can thrive? Can we really envisage entrepreneurship absorbing the growing youth populations who are faced with the continuing prospect of jobless growth?
UNFPA has just launched its State of the World’s Population Report 2014 called The Power of 1.8 Billion: Adolescents, Youth, and the Transformation of the Future. Its message is clear: young people matter. They constitute nearly one-third of the world’s population and their developmental outcomes are a game-changer that can make or break national development goals. That they have been so overlooked for so long has severe implications for many of the 1.8 billion youth as they struggle to secure their livelihoods and invest in their futures. But it also affects economies and societies across the globe. Future forecasts for youth unemployment across all regions look bleak.
Entrepreneurship is an obvious solution in such a difficult labour market. High levels of poverty mean that finding some form of income is among young peoples’ own top priorities. It is also an intervention amenable to finding quick-fix solutions, so is attractive to governments and NGOs. It lends itself to tangible and measurable interventions, whether this be the number of youths trained, loans given or small businesses started.
For many years the microfinance industry cultivated a false confidence and policy rhetoric that “one loan equals one thriving business”. I see a similar danger with youth entrepreneurship. In reality, the link is not so clear.
Vocational training does not necessarily translate into successful businesses. What about focusing on the quality of skills training, proper certification processes and making sure that training aligns with local labour markets? And what about over-saturated markets and limited client bases? Of course, drawing on impact evaluations into ‘what works for youth entrepreneurship’, many programmes supporting youth entrepreneurship offer multi-pronged packages of assistance that combine locally-relevant vocational skills with financial management, customer awareness and other business skills. Many also offer access to loans so that young people can invest and utilise these new-found skills.
My concern is not that these programmes are better than an alternative scenario in which they do not exist. Rather, my concern is that such widespread promotion of youth entrepreneurship removes responsibility away from governments and private sectors in their roles for creating and expanding access to decent jobs for young people. Other major stakeholders are now driving the agenda.
Partnering with the Guardian in their ‘Tackling Youth Employment Hub’, for example, is Barclays Bank. It is unsurprising, therefore, that the key messages of youth entrepreneurship include the concept that teaching entrepreneurship in schools will help young people transform their own futures – and that by giving out loans for small enterprise we can accelerate this process.
Have we not learnt from the pitfalls of microfinance as a solution to poverty? The ‘swift and systematic’ action this ‘sponsored by Barclays’ article proposes cannot address the bigger systemic issues we must address. It cannot meet the multitude of social and economic problems the world’s young people face in scale or substance.
We discuss elsewhere how the project-isation of ‘development’ has limited our capacity for facilitating transformative and more socially-inclusive development. Others apply the same argument to the focus on youth unemployment and entrepreneurship, arguing that this has ‘magic-ked away’ the politics of a globalised world and left us with well-intentioned, country-specific projects.
Some youth are, of course, changing their futures through self-employment. Despite their limited financial resources, many others are changing the futures of others through social entrepreneurship, drawing on an abundance of creativity, leadership skills and support from inspirational organisations like Ashoka or Educate!.
Herein lies another huge difference between young entrepreneurs in Sub-Saharan Africa and Lord Sugar’s protégés. For Africa’s youth, it is genuinely a case of people before profits. You wouldn’t see that in the boardroom. Now is the time for a call to arms in global policy away from youth entrepreneurship towards a two-fold focus on youth engagement – in which employment is but one improved outcome as young people create a critical mass and place themselves at the core of transformations and solutions – and youth inclusion, so they can strive in this process helped by a more supportive social, political and economic environment.
In this, I join the State of the World’s Population’s call to harness the power of 1.8 billion in transforming not only their own lives, but also our global future.