Youth and graduate unemployment have been an issue in South Africa, often attributed to many factors, including unequal access to high-quality education, the structure of the economy, and a lack of jobs suitable for recent graduates’ skill sets.
According to Stats SA, the past 10 years has seen graduate unemployment increase from 5.5% in the first quarter of 2013 to 10.6% in the first quarter of 2023, with youth aged 15-24 years and 25-34 years recording the highest unemployment rates, of 62.1% and 40.7% respectively.
A comprehensive strategy that acknowledges the interdependence of political, social and economic issues is required to address youth unemployment.
Through the implementation of specific policies on small and medium enterprises (SMEs), including the prioritisation of youth entrepreneurship, South Africa can use the potential of its youth population and foster wealth and sustainable development for all.
South Africa can
use the potential
of its youth and
foster wealth
and sustainable
development for all
Consequently, the report developed by the UN Development Programme (UNDP) and the Human Sciences Research Council (HSRC), the "South Africa National Human Development Report 2022: Harnessing the Employability of South Africa’s Youth", looks at youth unemployment in South Africa through a human development lens.
It is highlighted in the report that youth unemployment in South Africa is not merely a problem but a defining development challenge that limits the earning potential of youth, stymies economic growth, threatens social cohesion and puts pressure on public resources.
Creating economic opportunities that address South Africa’s high unemployment rate directly is key.
The major objectives are to create prosperous jobs and economic growth to strengthen the underserved and previously disadvantaged communities.
Stats SA’s Quarterly Labour Force Survey for the first quarter of 2023 echoes that South Africa’s official unemployment rate stands at 32.9% and increased by 0.2 of a percentage point between the fourth quarter of 2022 and the first quarter of 2023.
The unemployment rate among the black African population group (37.2%) remains higher than the national average and other population groups when compared to white (7.5%), Indian/Asian (14.3%) and coloured (22.4%).
By their nature, entrepreneurs offer innovative business models that could disrupt markets with new products and services; the resilience/creativity and risk-taking allows for employment opportunities and development impact. Youth can create jobs by engaging in entrepreneurship, actively seeking out other young people and fostering sustainable communities.
The impact of the May 29 election results is yet to be seen based on how the various parties’ manifestos deliver on their promises or lack thereof.
Furthermore, the outcomes of the government negotiations will determine how issues impacting employment are affected or implemented. Growth will presumably be stimulated or affected, for example by government initiatives/funding instruments such as loans/equity/grants from development finance institutions or commercial banks mandated for entrepreneurs.
The UNDP’s policy brief of May 2024, "Unlocking Financial Inclusion for Small and Medium Enterprises (SMEs) in South Africa", reflects on the SME legislative environment. This policy brief is an output of the strategic policy and research unit of the UNDP South Africa country office. It was prepared to stimulate policy debates on inclusive finance for SMEs in South Africa.
The paper says South Africa’s policymakers have become increasingly aware of the need to support the cultivation and growth of resilient, innovative and agile entrepreneurs, as can be seen in the implementation of various legislations, policies and the National Integrated Small Enterprise Development master plan of 2022.
The National Small Business Act of 1996 was amended in 2004 to establish the Small Enterprise Development Agency and the Small Enterprise Finance Agency, tasked with providing development support to SMEs.
Furthermore, the government has drafted the South African Small, Micro and Medium Enterprises (SMMEs) and Co-operatives Funding Policy to deepen access to finance and in the process increase the number of SMMEs and co-operatives.
The proposed government structure should prioritise the creation of just communities that overcome the status quo of high unemployment and symbolise robustness and renewal, and the removal of structural barriers which persist, hindering youth from fully participating in the economy.
A social discourse with the various stakeholders and political parties is required with key stakeholders such as economists, religious bodies, civil society and business to discuss ethical values, principles and social values that impact and influence South Africa.
Changes should foster an atmosphere which makes funding more accessible for incubation, skills development, partnerships/collaboration, offering incentives to businesses and streamlining bureaucratic processes.
The FinScope MSME Survey South Africa conducted in 2020 revealed that the country is home to approximately
2.6-million entrepreneurs, 46% of whom are women, operating 3.2-million SMEs. Among these entrepreneurs, 37% are young business owners.
It is said that SMEs contribute 40% to South Africa’s GDP, with the majority (84%) operating in the personal services (such as hairdressing, landscaping, auto repair) or wholesale/retail trade sectors.
The survey further states that over the last decade the level of entrepreneurship and the number of SMMEs in South Africa have remained relatively stable.
As we mark June 16, it is imperative that there be a fertile legislative environment with policies aimed at improving education and skills development to stimulate entrepreneurship and innovation while promoting public-private partnership for the capacity building of SMEs.
By providing targeted support to underprivileged young populations, combined with initiatives to address youth unemployment, a road towards inclusive economic growth will be solidified.
• Ndlovu is director of SME at Old Mutual. She writes in her personal capacity
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