Entrepreneurship has often been identified as one of the possible solutions to combat South Africa’s extremely high unemployment rate. Socio-economic researchers have proposed that entrepreneurship be included in the school curricula in order to help tackle the unemployment crisis.
A study by Old Mutual shows that there are five critical challenges that face school leavers in terms of what to do. These include the extremely high tertiary education fees, illiteracy, the high rate of unemployed graduates, the high tertiary drop-out rate and difficulty in finding internships.
In an interview with City Press, Leon Lategan, the founder and CEO of The School of Entrepreneurship, said schools needed to equip their students with practical education on how to start a business. Lategan said the education system needs to include practical online training programmes that assist individuals with the essential business skills required to make one a capable entrepreneur.
He said those who have completed school and find themselves unemployed should enrol in an entrepreneurship programme that offers practical support and the assistance one needs in order to start and run their own business.
“This includes assistance and support with establishing a market, pitching to investors and how to go about obtaining funding,” said Lategan.
South Africa’s unemployment rate jumped to 30.8% in the third quarter of last year – from 23.3% in the second quarter. The expanded definition of unemployment suggests an even worse picture. Statistics SA places the expanded definition of unemployment at 43.1% from 42% the previous quarter, a 1.1-percentage point increase.
Research shows that 1.7 million people lost their jobs since the start of the Covid-19 lockdown in March last year.
At the end of last month, there were 11.1 million unemployed people in the country, according to the expanded definition, which includes discouraged work seekers.
The numbers are even worse for the black people with their rate of unemployment at 47.4% for Africans men and at 51.4% for African women.
Most who find themselves unemployed become “survivalist” entrepreneurs.
Melinda du Toit, a post-doctoral research fellow at the Centre for Social Development in Africa, said unemployed job seekers are likely to engage in small survivalist businesses.
“They do this while looking for secure and more stable employment. These small business owners were securing an income amid a sea of challenges,” Du Toit said.
However, there are challenges. She said to start a successful business, a person needs, among others, finances, business acumen, an interest in entrepreneurship, a marketing strategy, a space ideal for attracting customers and a steady customer base.
“Starting a business without an income, far from the economic urban hub, and with inadequate access to facilities. Furthermore, potential clients in the community are mostly in a precarious financial situation, with limited buying power, may be challenging and will impact success rate,” said Du Toit.
“There is also no government support for small businesses. Lack of funds and basic business and marketing know-how and skills as crucial handicaps in running and growing their businesses.”
She added that in South Africa, budding entrepreneurs have had to learn through experience. “They have no mentors and no role models. This is because successful entrepreneurs and businesspeople generally left the area as soon as they became affluent,” she said, adding that very few businesses in the townships are owned by South Africans.