Youth Development Notes | June 008
Youth entrepreneurship –an avenue of opportunity
Entrepreneurship can unleash the economic potential o youngpeople and be a source o new jobs and growth, while improvingtheir economic independence. Young people can no longerexpect to nd ‘job-or-lie’ careers but rather ‘portolio careers’(contract employment, reelancing, periods o sel-employment,etc.). Entrepreneurial experience and/or education help youthdevelop new skills that can be applied to other challenges inlie. Non-cognitive skills, such as opportunity recognition,innovation, critical thinking, resilience, decision making,teamwork, and leadership will benet all youth whether or notthey intend to become or continue as entrepreneurs.However, youth entrepreneurship is not by itsel a solution tothe problem o youth unemployment; it should be seen as animportant complement
broader youth employment andinvestment climate policies. Markets in developing countries areoen weak and volatile, and while inormal activities especially present relatively ew barriers to entry, urther research is requiredto understand the specic needs o young entrepreneurs.
Crucial factors forentrepreneurial engagement
Factor 1: Promoting an entrepreneurial cultureamong young people
Promoting an entrepreneurial culture is one o the mostessential and neglected components o entrepreneurshipdevelopment.
Changing cultural practices and belies aroundentrepreneurship is a long-term process. Tese eorts generally ocus on our issues:•
Understanding cultural inuences on entrepreneurship and assessing the attitude o young people.
Beore launchingpolicy measures and initiatives or youth entrepreneurship,it is essential to know more about the attitudes, awarenessand aspirations towards entrepreneurship among youngpeople. Attitude surveys such as the Youth EntrepreneurshipBarometer (Bertelsmann Stiung) have become a useulresearch tool in this regard.•
Promoting role models.
Successul entrepreneurs are excellentambassadors or promoting entrepreneurship. Againstthis backdrop, various initiatives ocus on establishing andstrengthening direct contacts between young people and“role-model” entrepreneurs.•
Youth business airs, expositions and competitions.
Tese areuseul initiatives or introducing entrepreneurship to youthwhilst simultaneously tapping into youth culture.•
Public relations campaigns, internet and media coverage.
Te internet is an ideal medium or the transmission o entrepreneurial values and technical skills.
Factor 2: Improving entrepreneurial education
Entrepreneurship education equips youth “to be innovative andto identiy, create, initiate and successully manage personal,community, business and work opportunities, includingworking or themselves.”
Entrepreneurial education can alsooster greater personal responsibility, exibility and creativity necessary to cope with today’s uncertain employment paths.Entrepreneurship education has expanded dramatically over thepast ve years. In 2004, the European Commission proposedthat all EU member states introduce entrepreneurship educationinto the national curriculum, rom primary school to university.
Organizations such as Aatoun promote the integration o nancial and business education in school curricula aroundthe world to children as young as six years old.
Yet even incountries that do have active enterprise education programs, thetopic still aces numerous constraints:
Inadequate and poorly integrated curricula.
eachingentrepreneurial skills and behaviors is oen not properly integrated into school curricula and may not teach students tothink and act independently, to be sel-reliant and take risks.•
Outdated learning methods.
Most education systems still lack practical, experiential and teamwork learning.•
Inadequately trained teachers
Insucient career inormation and assistance.
Weak links between schools and businesses.
Inadequate ICT inrastructure/capability
Factor 3: Improving access to fnancing
Lack o adequate start-up capital is a dilemma that acesentrepreneurs o all ages, but it is particularly difcult or youngpeople due to their lack o security (substantive credit history,sufcient collateral or guarantees) and o credibility (lack o experience). Beore targeting youth with particular creditstrategies and initiatives, it is important to understand the natureo the problem. Do young people present a higher risk to lenders?Is there a price at which lenders are willing to provide nancingto young entrepreneurs (in which case the dierence betweenthat price and the “market” price can be thought o as the risk premium)? I young people are no more likely to deault thanolder borrowers, but still cannot nd nancing, then the marketis ailing or other, nontransparent reasons. It is also importantto understand and
evaluate the need or start-up nance amongyoung entrepreneurs. Te nancing requirements can be ullledby various types o unding mechanisms, which may present someadvantages over relatively short-run credit. Tese are explainedbelow:
•Grant-based schemes are a common approach to stimulateentrepreneurship and start-up activity. It can be an importantsource o nance or people who lack access to bank loans.It has been argued that programs should deal with theconstraints to access to commercial nance rather thanproviding ree money, and these programs may be raught with“moral hazard”: that is, when the recipient is not entirely liableor the money or or the ull consequences o her actions.
involve the provision o credit at no or very low-interest terms. Tere are
generally no collateral requirements,although there may be eligibility criteria such as having abusiness plan,
demonstrating commitment, ability to repay the loan and having reasonable equity participation. Some