Speaker’s notes for Minister’s engagement with the North West Youth on the occasion of the Imbizo Programme led by the Deputy President
The fundamental story of the youth of our country is that South Africa has undergone dramatic change over the last two decades. Before 1994, young people were in the streets fighting for the liberation of their country and its people. In the post-liberation era, young people are on the streets, but this time looking for employment and the opportunity to taste a better life.
Twenty years since our freedom, the participation of young people in the country’s economy is still less than adequate. This is partly a result of constraints and obstacle placed in the way of youth economic empowerment as well as lack of access to information.
This reality challenges the whole of government, civil society and the private sector to redouble our collective effort to ensure that our future leaders are sufficiently empowered to approach the future with confidence.
Economic participation by young people
Youth Unemployment remains very high in the 15-24 years of age group in South Africa. Females in this age group are the most affected with over 50% unemployment recorded since 2002.
Of the total unemployed labour force, over 70% of them are young people between the ages of 15-35 years. White youth unemployment remained stable below the 10% level since 2002. Black African youth unemployment rate consistently remained above national youth unemployment from 2002-2011.
It is only the Indian/Asian youth population group that have experienced some significant decline in unemployment during this period.
Youth ownership of Small Businesses
Youth between the ages of 16-35 years owned about 33% of business in South Africa.
More than half (58%) of these youth owned businesses were in Gauteng, KwaZulu-Natal, Eastern Cape and Western Cape.
Gauteng and KZN were the only provinces that showed to have between 17% - 20% entrepreneurs being young.
It is quite encouraging to note that in the North West province youth in the 16-35 years category own more businesses than adults older than 35 years old.
Call to action
As we enter the Second Phase of our Transition, the call to action is to ensure that the economic empowerment of young people is placed high on the national agenda. This we must do as part of recognising that South Africa is a youthful country and that the youth are the ones who will inherit this country and its resources.
Given the current state of youth unemployment in our country, the question is not whether we should encourage our young people to look in the direction of entrepreneurship, but rather, can we afford not to?
Young people must continue to occupy the front trenches in the reconstruction and development of our country. They must continue to be a force for progressive change and radical transformation. They must be empowered to occupy their rightful place as change agents, rather than being mere spectators in the unfolding story of economic emancipation in our country.
We must challenge young people of today to seize the opportunities created by our democracy in order to create a better life for themselves and their fellow compatriots. In line with the spirit of vukuzenzele, our young people we must stand up and do things for ourselves. Government is there to create an enabling environment for young people’s businesses to thrive.
Government interventions
Government has recognised the problem of poor economic participation of young people in the economy and has put in place numerous policy interventions aimed at bringing young people into the mainstream of the economy:
Youth Employment Accords
The recent signing of the Youth Employment Accord represents a comprehensive approach to address youth unemployment based on:
- The need to expand the number of jobs in the economy;
- The need to develop holistic, integrated and comprehensive responses to youth unemployment; and
- The need to address structural limitations within the economy that impede youth economic participation, like for instance, improving education and skills training, as well as creating more opportunities for work exposure and school to work transition programmes.
More specifically, the Youth Employment Accord focuses on 6 keys areas of Commitment, namely:
- Education and training programmes that improves the transition from school to work.
- Work Exposure that connect young people with work opportunities through job placement schemes and work readiness programmes.
- Public Sector Measures, that aim to increase the number of people employed in the public sector, through coordinating and scaling-up existing programmes under a ‘youth brigade’ programme coordinated with the National Youth Service programme.
- Youth Target Set-asides in priority industries identified in Industrial Policy (IPAP2), that have the potential to draw in large numbers of youth because of the high job creating potential and ability to contribute substantively to GDP, for instance, Renewable energy, Green Economy, Government’s Infrastructure Development Programme, Information Communications Technologies and Tourism Development.
- Youth Entrepreneurship and Youth Cooperatives – Public agencies like SEFA, SEDA and the Jobs fund will develop and strengthen dedicated programmes for youth enterprises and youth cooperatives. Furthermore, the Revised BBBEE Codes will be used as an additional measure to encourage private sector supplier development initiatives aimed at growing youth enterprises and cooperatives.
- Private Sector Measures aimed at expanding the intake of young people with targeted youth support and incentives approved by all constituencies that are party to the Youth Employment Accord.
How will the Department of Small Business Development address High Youth Unemployment
The Small Business Development Department’s Youth Enterprise Development Strategy (YEDS) is the Department’s primary contribution to the Youth Employment Accord. This policy instrument seeks to provide support schemes for young entrepreneurs with an objective of creating and managing sustainable and efficient businesses capable of providing decent permanent jobs and employment growth.
The interventions included in this instrument include mentorship and coaching; youth business incubation; business infrastructure support; linkages to procurement opportunities; youth entrepreneurship awards; youth entrepreneurship promotion and awareness; youth special projects and sector-specific enterprise creation; national youth service programme; and the youth entrepreneurship collateral fund.
Interesting statistics about youth-owned enterprises
Youth between the ages of 16-35 years own approximately 33% of all businesses in South Africa.
It also recognises that about two thirds (63%) of youth entrepreneurs are self-taught or acquired their skills from spouses (14%).
Furthermore, less than 2% of the youth entrepreneurs reported tertiary institutions as a source of skills and training.
Finally, over 80% of youth owned enterprises are not registered. According to the classical definition these businesses will be regarded as informal, but from a perspective of their level of sophistication they are not. My department, through the development of its Informal Sector Business Development Strategy is attempting to modernise these businesses, and through organic growth steer them towards to formalisation, and also towards other mechanisms available at the department to promote their expansion.
Given the above facts, the Department of Small Business Development is developing unique programmes/instruments aimed specifically at addressing gaps in youth enterprise development or creation.
Furthermore, as a department, we are mainstreaming existing departmental programmes and instruments, like those concerned with Export Promotion, to ensure we reach our youth enterprises.
What are some of our key accomplishments in working with Youth thus far?
In line with it Youth Enterprise Development Strategy, the department has partnered with the National Youth Development Agency (NYDA) to train 69 young people on deal origination and micro-finance. These young people will graduate at the end of June 2013 and the next phase will focus on placement of these graduates within commercial and development financial institutions and DSBD COTII agencies, to gain practical work experience for a period of one year or more.
Another key project where the department has partnered the NYDA is to establish ten youth co-operatives that own Cheesa Nyama franchise stores in the 20 priority townships in the Gauteng province. The project is being funded through the Cooperative Incentive Scheme of the DSBD, with the NYDA providing bridging funding.
The department’s Small and Enterprise Development Agency has provided business development support services to SMMEs, including youth-owned enterprises across the country through its network of outlets. The services provided through the network of outlets include the following: starting or running a business, as well as, more complex and specialised business development needs such as business registrations, business planning, access to markets, and access to finance, co-operative support, small enterprise training and mentorship and access to technology.
The department’s SEDA Technology Programme (STP) focuses on supporting small and micro enterprises particularly those operating in the 2nd economy. The objective is to provide a range of technology transfer services that enable small and micro enterprises access to technology, technical advice and support. An impact study commissioned in the 2011/12 financial year revealed that some enterprises which were in the second economy prior to the STP intervention have since formalised their businesses and progressed into mainstream economy while the turnover generated by the small firms during their first year ranged between R30 000 and R4.6 million.
Due to additional funds received, the total number of STP supported enterprises increased from 33 to 85 in 2012/13 of which 43 are women-owned. Although the numbers provided in most of these areas are generic in nature, however, in most cases, 70% of these numbers invariably constitute support provided to young people and particularly young women.
On the financial support area for young people focusing on co- operatives, the department, through the Cooperative Incentive Scheme (CIS), has provided grant funding to cooperatives with youth membership. During the 2012/13, approximately 119 youth members have benefited from the CIS scheme.
Priority Youth Programmes of the department
Having finalised its Youth Enterprise Development Strategy, the department is in the process of developing key programmes that it will launch as part of its contribution to the Youth Employment Accord. These programmes will contribute significantly to the creation, growth and expansion of youth enterprises, and allow job creation and growth of our Gross Domestic Product. These programmes are:
The Youth Black Business Supplier Development Programme (YBBSDP)
This is a cost-sharing grant offered to youth black-owned small enterprises to assist them to improve their competitiveness and sustainability. The maximum grant that can be approved for qualifying machinery, equipment, tools and BDS support is one hundred and fifty thousand (R150 000) per eligible applicant, at a sharing cost of 80:20. Skills development and (technical) training will be limited to fifty thousand rand (R50 000) for eligible applicants.
Youth Enterprise Development Grant (YEDG)
It is a non-refundable, once-off grant of between R10 000 and R50 000 to young entrepreneurs, that will serve as start-up capital for a micro-enterprise.
The Youth Enterprise Collateral Fund (YECF)
It targets young entrepreneurs who have an approved business plan but do not have the collateral to secure the loan they seek. It will be made available to these young entrepreneurs as a non- refundable, once off grant of between R50 000 and R4 000 000, that will serve as a collateral guarantee to secure a business loan needed to start their own businesses
Sector Specific Youth Catalytic Projects
The strategic aim of this intervention is to identify, plan and facilitate the creation of sector specific youth catalytic projects with higher impact through leveraging on existing opportunities in the priority Sectors and Infrastructure Development Programmes of Government as expressed in the IPAP and the Regional Industrial Development Strategy.
Entrepreneurship Mentorship and Coaching Programme
To facilitate business to business mentorship, which entails the twinning of a youth owned enterprise facing economic challenges as a result of poor management skills and experience with well- established and successful business to provide coaching and mentorship support services to mitigate the risk and ensure sustainability of the entity.
Business Incubation for Young Entrepreneurs
To establish five national youth incubation centers which will be used to support the growth of youth owned enterprises.
Youth Entrepreneurship Competition Awards
The strategic aim of the Competition Awards is to provide national recognition to aspirant young entrepreneurs, existing youth owned enterprises and individual entrepreneurs with the aim of promoting entrepreneurship among the youth in South Africa.
Youth Entrepreneurship Data System and Research Programme (YEDSRP)
To develop an integrated data system that will aid the development of youth owned and managed enterprises and entrepreneurship in terms of acting as a repository of information, aids research, coordination and reporting purposes.
Youth Entrepreneurship Promotion and Awareness Programme (Outreach)
The strategic aim of this programme is to promote and raise awareness of entrepreneurship, targeting young people, throughout the country to encourage them to view entrepreneurship as the first option in their economic participation endeavors.
Business Development Support Services for Youth Enterprises
To grow youth enterprises and ensure sustainability through the provision of business infrastructure, access to markets and skills and capacity building which constitute Business development Support Services
These key youth programmes of the DSBD are designed to create a South Africa that has a dynamic youth entrepreneurship culture and developed youth owned enterprises, operating in all sectors of the economy, which contribute to economic growth, poverty reduction and employment creation, as well as, assist in bringing about economic transformation and an equitable society.
I thank you.
