South Africa is struggling to grow, youth unemployment is at an all-time high, and about 80% of startups in SA are failing within the first two years. Also, 11.6m South Africans are unemployed, of which 8.7m — some 75% — are youths, aged 15–34. Youths make up one-third of the SA population, yet they are the group with the highest level of unemployment.
It is interesting to note that government’s National Development Plan states that, in order for SA to meet its 2030 development goals, this country’s unemployment rate should have fallen from 24.9% in June 2012, to 14% by 2020, and to 6% by 2030. The latest figures show that unemployment increased to 26.7%, up from 24.5% in the first quarter of 2015. We’re a long, long way off from the target set by the development plan of some 90% of the expected 11m jobs that need to be created by small and growing businesses.
According to the Banking Association of SA, small- and medium-sized enterprises provide employment to about 60% of the labour force, while this sector’s total economic output accounts for roughly 34% of GDP. The big challenge, however, is that SA has one of the highest failure rates of new businesses in the world. Why do these businesses fail?
The root of the problem lies in education. Entrepreneurship education is not given significance at primary level, and not enough people are being up-skilled at tertiary institutions or through apprenticeships. Those who are meant to be gaining experience in the workplace are not, because businesses can provide few jobs for school-leavers due to the low literacy and numeracy levels that are currently being produced by the education system.
Research done by Africa Check found that some 80% of SA’s 25 000 public schools are ‘dysfunctional’ — most of them in black townships and rural areas. Dropout rates are high, and even those who manage to acquire a matric certificate are often still functionally illiterate and innumerate. The need to survive has created a culture of ‘survivalist’ entrepreneurship — informal traders, spaza shops and hawkers. These are generally one-person operations that make a day by day living.
The only solution is to create an entrepreneurial mindset and promote entrepreneurship as an attractive career choice. Children should be encouraged from a very young age to take up an entrepreneurial activity and we need to empower and capacitate our kids to become the authors of their own destiny.