South African Generation Y entrepreneurs lag globally

In the current uncertain economic climate and unpredictable job market, global research has revealed that ‘emerging adults’, also known as ‘Generation Y’ (born between 1980 and 1995), are attempting to adapt to these environmental conditions by seeking al

According to Kobus Engelbrecht, of the Sanlam / Business Partners Entrepreneur of the Year® competition, entrepreneurship is not only crucial in stimulating economic growth and job creation, but plays an important role in determining the future economic outlook of a nation. However, he says that research indicates that the same trend is not materialising among Generation Y’ers in South Africa.

Engelbrecht, says that today’s Generation Y is faced with a barrage of unique challenges when entering the work environment that are distinctive to their generation. “Today’s youth are joining an unpredictable job market plagued by poor global economic conditions that has resulted in an escalating mass of unemployed youths.”

However, Engelbrecht believes that these obstacles have produced a generation of problem solvers in countries like America, who possess a strong entrepreneurial culture. “A study conducted by Employers Insurance found that 46% of Americans from Generation Y wanted to start a business within the next five years, while only 35% of ‘Generation X’ers’ (born between 1965 and 1979) and 21% of the ‘Baby Boomers’ generation (born between 1946 and 1964) were interested in pursuing a career in entrepreneurship within the next five years.”

He says a strong entrepreneurial culture is important in shaping and developing the future of an economy. “It is commonly believed that a strong entrepreneurial culture laid the foundation for building one of the world largest economies. In 1970, 90% of the American population comprised of self-employed entrepreneurs. Today many of those companies are global leaders and drivers of economic growth. It is hence of utmost importance that entrepreneurialism is encouraged amongst the youth in order to encourage sustainable economic growth in the future.”

However, he believes that the South African Generation Y has fallen behind in this regard and not only lag behinds the United States but behind its fellow BRICS (Brazil, Russia, India, China and South Africa) economies.

According to Engelbrecht, research indicates that South Africa’s Generation Y is not interested in becoming entrepreneurs. “Data from the recently released 2011 Global Entrepreneurship Monitor (GEM) South Africa report found that only 6.8% and 10.2% of South Africans, aged between 18 and 24 and 25 and 34 respectively, were involved in entrepreneurship. In comparison to other BRICS countries, members of Generation Y in Brazil and China are approximately two to three times more likely to be entrepreneurs when compared to South Africa.”

He believes that this is a great cause of concern considering South Africa’s relatively high youth unemployment rate. “According to the GEM report, South Africa’s youth unemployment rate is currently as high as 48.2%, which is considerably higher than Brazil’s rate, currently at 17.8%. In poor economic conditions young people are generally the first to lose their jobs and last to be hired.

“Many young people in South Africa feel the need to find employment in the formal job market directly after school. However, given South Africa’s very low established business rate, which is the lowest of the BRICS nations and one of the lowest across all GEM countries, few jobs are available.

“With limited jobs available and a soaring youth unemployment rate, one would expect the unemployed youth of South Africa to seek alternative forms employment.” However, as Engelbrecht explains, this is not the case in South Africa. “According to GEM research, only 14.3% of South Africans are interested in starting their own business in the next three years. The study indicated that South Africa has the fifth lowest entrepreneurial intent amongst all efficiency-driven economies in the world.”

He says that more needs to be done to create a positive entrepreneurial culture that supports a fruitful business environment where young entrepreneurs can flourish. “Encouraging entrepreneurship amongst this generation could serve as a very viable solution to the rising youth unemployment rate, income inequality and rising poverty levels.

“This can be done by promoting and recognising entrepreneurs that have not only been successful in their own right, but in doing so have benefitted others. These ‘economic heroes’ show true courage, vision and leadership and should be positioned as the true champions for South Africa’s aspiring youth,” concludes Engelbrecht.