Start-ups – are they the answer to youth unemployment?


Munya Gwanzura | In-House Lawyer, Commercial Mediator, Thought Leader and Motivational Speaker | Barloworld Equipment | mail me |

Most governments in Africa share the common problem of high youth unemployment. Global economic forces and decisions of powerhouses like Britain and America are increasingly impacting growth of African economies. African countries have thus found themselves on the back foot and unable to stimulate their economies sufficiently to create jobs, especially in the formal sector.

In South Africa, many big corporates have significantly restructured their businesses and have implemented large scale retrenchments. The mining sector, on which the South African economy relies heavily, has also experienced challenges over the past few years. Policy uncertainty had deterred investors, not to mention the impact of global market trends on the price of commodities and currency exchange rates.

As a result, year on year, the number of unemployed youth increases as more graduates exit South African universities, seeking employment without any luck. The increasing levels of frustration among young graduates is concerning. The days of finding a job immediately after graduating are long gone and a university degree no longer guarantees a job and a better life. And government alone cannot create jobs for every young person.

We need to explore other avenues if we are to create more employment opportunities for the youth. As such, inculcating a culture of entrepreneurship and encouraging the emergence of start-ups is one way of tackling the problem.


Research suggests that many economies are supported by small to medium size businesses and that such businesses play an important role in stimulating economies and creating jobs.

Governments that have prioritized start-ups and made it easy for entrepreneurs to establish small businesses while supporting them, have reaped the fruit of doing so, and have made great inroads in addressing youth unemployment and poverty.


There are many different reasons why start-ups fail.

Some fail due to their business ideas not being relevant to the market. Others fail due to poor strategy and execution despite having commercially viable ideas.

Whatever the reason, there is a need for start-ups to be properly supported if we are to see a greater number of them survive and scale up to become successful businesses that contribute to the national purse and to resolving the issue of youth unemployment.

Advisors, partnership and mentors

The basics of running a business are often not as obvious to owners of start-ups as they are to those of us in established businesses.

There is a need for strategic partnerships, strong sincere mentorship, and for access to affordable professional services, for example, from lawyers and accountants.

Where start-ups do business with government, government should pay them on time as start-ups are generally not able to survive for long periods without a steady cash flow. Banks should also come on board and pro-actively support start-ups by providing flexible financial support products that take into account all the unique financial challenges that start-ups face.


There is also a need to ensure that the right technologies are made available to start-ups at an affordable cost to enable them to minimize and manage operating costs, which tend to spiral out of control and often lead to their demise.

In the tech era and with the fourth industrial revolution upon us, the opportunities for start-ups are endless. Technology and innovation is undoubtedly a key ingredient for the success of start-ups.


Addressing these issues, President Cyril Ramaphosa said in his State of the Nation Address on Thursday 20 June 2019 that the government would expand the country’s high tech industry by ensuring that the legal and regulatory framework promotes innovation, scaling up skills development for young people in new technologies, and reducing data costs.

He also said the government would roll out small business incubation centres to provide youth-driven start-ups with financial and technical advice as they begin their journeys. He noted that the country’s youth were brimming with ideas, at the forefront of innovation and wanting to do things for themselves.

We have to support the fire of entrepreneurship, because the fortunes of this country depend on the energies and creative talent of our young people,” he said.


In tackling youth unemployment and fostering a spirit of entrepreneurship, it is important that the youth feel that they will be adequately supported not just by government, but by banks and the professional services sector as well.

Further, barriers to entry must be removed to ensure that we see more start-ups emerging and surviving in the market to become significant contributors to job creation and economic growth.



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