Factors affecting young prospective entrepreneurs in the Umdoni Local Municipal Area

Abstract

Given the current, global, economic situation, the status of youth entrepreneurship in South Africa is no different to that of the youth in other countries. It is debatable whether similar support and mechanisms used by other countries can be used without contextualising them for the South African environment. Cultural differences, level of education, different market standards, and a different socio-political environment are some of the factors that should be taken into consideration, when aiming to create an enabling environment that will open entrepreneurial opportunities for South African youth. A major threat for youth, especially in South Africa, is that if their needs and desires are not addressed, the youth will lose faith in starting their own entrepreneurial activities and in that way, become more dependent on the government to create employment opportunities for them. This situation certainly could add to the currently high unemployment rate and in the long-term, high youth unemployment could destabilise the country.

This study is aimed at investigating entrepreneurship activities in a semi-rural area, with the aim of identifying the inherent weaknesses that prevent young people from pursuing entrepreneurial activities, as well as those enabling factors that can mitigate against these identified weaknesses. The study is conducted in the UGu District Municipality, specifically, the Umdoni Local Municipal area has been selected.

A mixed methods research approach was used and 120 respondents from the selected municipal area participated in this study, including the municipal official.

The study highlighted that access to financial support is one of the primary obstacles for the setting-up of a new business, since the majority of young people in the area tend to come from disadvantaged backgrounds. In addition, the research pointed to other challenges, including the business registration process, lack of adequate entrepreneurial training and mentoring programmes, the impact of crime in starting a fledging business and general support from government departments and agencies. Should these challenges not be addressed through an enabling environment, young people will, in the process, be discouraged from engaging in entrepreneurial activities.

Given that the study was conducted in a semi-rural area, there are certainly greater challenges to the development of youth entrepreneurship. Therefore, the recommendations include municipalities creating a special relationship with government agencies to obtain greater assistance; that Government and its agencies consider setting up a designated fund to assist young people who want to open business in semi-rural and rural areas; that the administrative requirements for such a group of young entrepreneurs, in respect of funding, training, support, mentoring and business registration, be much more accessible and easier to obtain.