recommendations for action

8/3/2019 Recommendations for Action

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Youth entrepreneurshipRecommendations or action

The rst report in YBIs Making Entrepreneurship Work series

How businesses,governments and civilsociety organisations

can help youngpeople get started

in business


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IntroductionBusiness, governments, and othersectors o society are increasingly

recognising that supporting youngentrepreneurs can be a highly eectiveway to reduce youth unemployment andstimulate growth in local communities.

The question is, what is the most eective wayto do this? For nearly 10 years Youth BusinessInternational has been helping to grow a networko independent in-country initiatives around theworld that help young people to start their ownbusiness and create employment.

This report draws on best practice rom the memberso our network and other organisations in order tomake cross-sectoral recommendations or creatinga culture o youth enterprise. It is not intended to

provide complete answers but to give a snapshoto what is working in dierent parts o the world togive young people a chance to become a successulentrepreneur.

Through sharing our insights, we aim to encouragegovernments and other organisations to give theirsupport to young people who have a great businessidea but lack the means, and the support, to set uptheir own enterprise.

This report is the rst in our Making Entrepreneurship

Work series providing recommendations or actionand examples o best practice in order to promoteyouth entrepreneurship.

Five key messages It is an economic and social imperative to

address the youth unemployment challenge especially at a time o economic slowdown

Boosting youth enterprise deliverssubstantial benets both or the entrepreneurand or the wider economy and society

Entrepreneurship is not or everybody, but or

many it can provide a long-term route out opoverty

Making entrepreneurship work is not theresponsibility o one sector alone; it requiresdedicated actions rom all sectors o thecommunity

Young people need to be encouragedand supported to take advantage o theopportunities o entrepreneurship

This report was launched or GlobalEntrepreneurship Week 2009, o which YBIis a global partner, to show what can be doneto promote a youth enterprise culture aroundthe world.

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The case for MakingEntrepreneurship Work

The entrepreneurshipchallengeEmployment is established as the major routeout o poverty1 and increasingly entrepreneurshipis being recognised or the economic and socialopportunities it can create.

The World Bank estimates that by 2015 target year or the Millennium Development Goals

(MDGs) there will be three billion people in theworld under the age o 25. However, although thisgeneration will be the most educated ever,International Labour Organisation statistics orecasta sustained rise in unemployed youth. Theyestimate that young people already make up asmuch as 40% o the worlds total unemployed, andare almost three times as likely to be unemployedas adults a situation exacerbated by the recentworld economic crisis.

The youth unemployment rate is projected to

increase rom 12% in 2008 to between 13 and15% in 2009. The projected increase in theunemployment rate or adults is between 0.5 to1%2. As the ILO concludes: young people still suerdisproportionately rom a decit o decent workopportunities3.

The ILO has said that 2009 will represent theworst global perormance on record in terms oemployment creation4. Young people are particularlyvulnerable to the eects o an economic downturn:during and ater a crisis, it is the youth who arehit hardest in terms o losing jobs and joining theunemployment queues. The increased gap betweenyouth and adult unemployment rates remains,even ater the economy has begun to recover.5

As much as 89% o the worlds total youthpopulation is born in developing countries6.A global economic crisis makes living conditions and job prospects worse in developing countriesthrough a range o impacts: private capital fowsand investments slow; export earnings all throughreduced commodity prices; and remittances decline.

The entrepreneurshipopportunityDespite these challenges and vulnerabilities, thetransition rom childhood to adulthood is a period ogreat potential or young people to begin making acontribution to amily, society and community.

Participation in the job market helps to break thecycle o poverty and unlock the potential o young

people, providing a route towards social integrationand economic independence. It is vital, both or theirown ullment as well as in the broader economicinterest, that their talents and energies areharnessed in productive work opportunities.

Given estimates that hal o the global workorce seven times more than the number o unemployed are likely to be in vulnerable employment this year,actions must target the substantial decent work decits 7.

Entrepreneurship is not suitable or everyone, but it

is vital that opportunities are open to young people and properly understood by them on completiono education and training.

Entrepreneurship can provide a successul routeto long-term participation in the job market,especially i the entrepreneur receives robustsupport and advice in the business start-up phase.Furthermore, entrepreneurship can be an engineo economic growth.

In the UK, small and medium-sized enterprises(SMEs) account or 99.9% o all enterprises, and areresponsible or 59% o private sector employmentand 52% o private sector turnover 8. In the USmore than 87% o all businesses have ve or eweremployees9. These microenterprises create new jobson average at a rate o 900,000 per year. Between2000 and 2006 they created 36% o all new jobsin the US 10.

In view o this job creation potential, it is particularlyimportant to oster the conditions or an enterpriseculture at a time o economic crisis when the jobmarket is stalling.

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The case for MakingEntrepreneurship Work

The entrepreneurshipimpactEnterprise has a multiplier eect both economicand social. As the ILO concludes, decent work oryoung people unleashes multiplier eects throughoutthe economy and society, boosting investment andconsumer demand and ensuring more stable andcohesive social ties across generations11.

Halving the worlds youth unemployment ratecould add an estimated US$2.2 to 3.5 trillion tothe world economy. This represents 4.4% to 7.0%o the 2003 value o global gross domestic product(GDP). The largest relative gains rom supportingyouth into decent and productive work would bein Sub-Saharan Arica, with an estimated rise o12% to 19% in GDP 12.

Running a business helps young people achieveeconomic independence, reducing their reliance onstate welare. Young entrepreneurs are more likely

to engage in their local community, spreading theirexperience and energy, and creating additional jobs.

Employment also boosts a young persons sel-esteem, making them more productive memberso a amily and community. Research hasdemonstrated a link between youth unemploymentand social exclusion:13 a productive youngpopulation is less likely to cause social unrestor even confict.

Given this generation is the most educatedever, there is huge potential locked in todaysunemployed youth. However, as FranoisBourguignon, the World Banks ormer ChieEconomist and Senior Vice President orDevelopment Economics warns: The opportunitiesare great, as many countries will have a larger,more skilled labour orce and ewer dependents.But these young people must be well-preparedin order to create and nd good jobs.14

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The youth

unemploymentrate is projected to

increase rom 12%

in 2008 to between13 and 15%

in 2009.

In the US morethan 87% o all

businesses havefve or ewer

employees


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Recommendations

Recommendation1. Companies shouldencourage their

employees to provideadvice and support toyoung people startingout in business especially inmentoring capacities.

Why? & How?Creating links between newentrepreneurs and establishedcompanies can bring multiplebenets. The value o supportthrough advice, networks andother relationships cannotbe overestimated or a newentrepreneur. In addition,business start-ups provide aboost to their local economy,increasing overall market sizeand potentially contributing tosupply and distribution chainso existing companies.

Case study:Youth Business Chinasmentoring programme issupported by major Chineseand international companies.Mentors provide adviceand support to the youngentrepreneurs, as well as accessto other business networks.They themselves benetthrough Youth Business ChinasMentor Clubs that oer orumsor the mentors to exchangeideas and explore new tradingopportunities. www.ybc.org.cn

Recommendation2. Companies should

provide work experience

schemes, togetherwith internships,apprenticeships andtraining programmes,in order to strengthenthe local enterpriseculture.

Why? & How?For those leaving the ormaleducation system, oneo the main challenges isunderstanding, and being

equipped or, the world o work.Direct and early insights willraise jobseekers condence andnew entrants eciency, and theprivate sector can play a valuablerole in this respect.

Case study:Business in the CommunitysWork Inspiration is a businessled campaign to strengthenthe relevance and impact o

work experience or thebenet o both the youngpeople and the companiesinvolved. The programmeboosts young peoplesmotivation, condence,experience and capabilityto be enterprising.www.workinspiration.com

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This section sets out actions that businesses,governments and civil society organisations cantake to create an enterprise culture in their community.

The recommendations are based on the practicalexperience o the member organisations within

the YBI Network as well as o other youth enterpriseorganisations around the world. There are verecommendations each or businesses, national and

local governments, and or civil society organisations.

Businesses


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Recommendation3. Companiesshould support thedevelopment oeective educational

initiatives that includeteaching the beneftsand opportunities osel-employment.

Why? & How?During the challengingschool-to-work transitionphase that young people ace,business can make a signicantcontribution: in shapingeducation policies that ensure

those leaving ull-time educationhave the skills and qualicationsneeded or uture employmentor enterprise.

Case study:The InternationalYouth Foundations entra21 programme oersdisadvantaged young peoplein Latin America and theCaribbean employment

training and job placementservices. Importantly,employers are activelyinvolved in the designo the programme, andtraining content is drawnrom the needs o the labourmarket. The skills that theyoung people gain havebeen shown to increasetheir employability andtheir enterprise credentials.www.iynet.org

Recommendation4. Companies shouldcreate partnershipswith youth enterpriseorganisations tostrengthen theiroperational capacity

and efciency.

Why? & How?Companies that partner withyouth enterprise charities canmake a signicant impact on thelocal communities they serve andin which their employees live.Through sharing their experienceand expertise companies canmake a tangible dierence to theservices that the charities provide.

Case study:As part o a larger collaborationeort, in 2009 Accentureprovided The Princes Trust witha pro bono project team whoworked to integrate the Trustsstrategic reporting platormwith their nancial systems.In the process, the Accentureemployees also concentrated

on imparting invaluableskills and knowledge toThe Princes Trusts internal ITteam, enabling it to move thereporting programme orwardwith minimised dependenceon external expertise.www.princes-trust.org.uk

Recommendation

5. Banks andmicrofnanceinstitutions should

partner withcommunityorganisations toimprove young

peoples accessto fnancing.

Why? & How?Banks and even somemicronance institutions(MFIs) are unable or unwilling to reach vulnerable sectors osociety excluded rom nance,such as disadvantaged youth.Organisations establishedto help these groups do notnecessarily have the (nancial)capacity to administer lendingand borrowing unctions. Byworking with local organisationsthat better understand the risk

prole o young people, nancialinstitutions become able to extendservices to new sections o society.

Case study:YBIs partner in India,Bharatiya Yuva Shakti Trust(BYST), established a partnershipwith National Bank o Barodato enable the bank to manageBYSTs loan portolio. BYSTmaintains responsibility or allother aspects o its operations,such as selecting andmentoring entrepreneurs.The partnership takes awaythe portolio risk rom BYSTand increases the overall level

o nancing available or newbusiness loans or youngpeople. www.bystonline.org


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Recommendation1. National and localgovernments shouldwork together to makebusiness registrationas efcient as possible,by learning rom

private sectorinnovations.

Why? & How?In many countries, the time andcost involved in registering anew business creates signicantdeterrents, in particular to young

people who lack the means orthe condence to persist againstadministrative obstacles. Inmany countries there is littlecoordinated support or emergingentrepreneurs in the micro andinormal business sectors.

Case study:Established as a publicprivate partnership in the cityo Johannesburg and backedby public unding, Business

Place is an expandingnetwork o walk-in inormationcentres or predominantlyyoung entrepreneurs acrossSouth Arica. The branches arelocated at accessible venues,and their services are designedto stimulate local business andassist communities in reducingon their government.www.thebusinessplace.co.za

Recommendation2. Governments andeducation authoritiesshould include selemployment as aviable alternativewithin an overall

careers advicestructure.

Why? & How?Traditionally, advice to youngpeople about the world o workis biased towards the benetso working in a large companyor within government. Oten thebenets o supporting youngpeople into new enterprise are notcaptured, nor the eectivenesso initiatives deployed. As the

United Nations World YouthAction Plan states: the challengeis to scale up the successulaspects o [youth] initiatives.

Case study:The Consortium orEntrepreneurship Educationwas established in the USto bring entrepreneurshipexperiences to young peoplethrough schools andcommunity programmes.Comprising State Boardso Education, student

organisations and others,the Consortium aims to: promoteentrepreneurship educationopportunities; set nationalcurriculum standards; andshare resources to trainyoung entrepreneurs to advancetheir local economies.www.entre-ed.org

Recommendation3. Governmentsshould utilise existingstructures, such aschambers o commerceand other businessnetworks, to supportthe developmento youth

entrepreneurship.

Why? & How?

Business networks canbe valuable to businessesthroughout their lie cycle,but perhaps especially duringthe start up phase. Given theeconomic, social and politicalbenets o a productive youngpopulation, it is in a governmentsinterests to promote and supportentrepreneurship using structuresalready in place.

Case study:

For a decade, HambantotaYouth Business Trust (HYBT)had been successully supportingyoung entrepreneurs at thedistrict level. Recognisingthe strategic importanceo strengthening youthentrepreneurship in Sri Lanka,the Ceylon Chamber o Commerce in collaboration with itsregional branch in Hambantota scaled up HYBT operations

and launched Youth BusinessSri Lanka across the whole othe country. www.ybsl.lk

Government


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Recommendation4. Governments shouldencourage schools andcolleges to run business

plan competitions

that promote start-upopportunities.

Why? & How?Business plan competitionshave been shown to providean eective and engagingmeans to introduce a varietyo business-related subjects tonew audiences. Competitions

can generate even more tangiblebenets i winners are given anopportunity to turn their businessproposition into reality.

Case study:With the support o all levelso government, Students inFree Enterprise (SIFE) runsnational and global businesscompetitions or universitystudents to develop socially

responsible enterprises in theircommunities that meet localneed. It provides hands-oninsights into setting up andrunning a company. Many othe students involved in SIFEcompetitions go on to developtheir own social enterprises.www.sie.org

Recommendation

5. Governments shouldprioritise investment inyouth entrepreneurshipinitiatives to tackleyouth unemploymentand as a means toreduce welare costs.

Why? & How?

Targeting investment at youthentrepreneurship schemes canbring long-term benets togovernments, both in reducingunemployment and other welarepayments, and in increasingtax revenue.

Case study:

In March 2009 the CanadianGovernment invested C$10million with the CanadianYouth Business Foundation(CYBF) to support youngentrepreneurs, as part o itswork to stimulatethe national economy.CYBF has calculated that thebusinesses supported by thegrant will generate C$135million in sales revenue andC$32 million in tax revenueor the nations economy,through the creation o 900new businesses and anestimated 5,000 new jobs.www.cyb.ca


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Recommendation2. Non-governmentalorganisations workingin apparently dierentareas should identiyand develop synergiesin order to deliver more

eective levels osupport to youngentrepreneurs.

Why? & How?The combined expertiseand outreach o dierentorganisations can have atransormative eect on a localcommunity. Even when theoverlap o two organisationsdoes not seem obvious, therecan be very useul collaboration especially in tackling the

complex underlying causeso youth unemployment anddisenranchisement.

Case study:International Alert and YouthBusiness Sri Lanka (YBSL) worktogether to assist young peopleto set up in business in areasvulnerable to violence.Economic and social progressis not possible without peace,and vice versa. Improving thelie chances o young people

can make a signicant impacton reducing confict and,most importantly, the causeso confict. www.ybsl.lk /www.international-alert.org/srilanka

Recommendation3. Community

organisations shouldprovide volunteeropportunities or young

people to work in thecommunity.

Why? & How?Grassroots organisations canbenet rom tapping into

the resource o unemployedyouth. Equally, local voluntaryexperience can equip youngpeople with useul skills tocontinue along the pathtowards employment andentrepreneurship, as well as asense o commitment to theircommunity.

Case study:The Youth Volunteer Network(VNET), established by The

Hong Kong Federation oYouth Groups (HKFYG),encourages young peopleto participate in voluntaryservices and to servetheir community. Thevolunteers involved areexposed to a range o dierentorganisations, raising theirawareness o andpreparedness or the dierentwork opportunities available

to them later in lie.www.hkyg.org.hk

Recommendation1. Youth enterpriseorganisations should

engage in communityoutreach andmobilisation to ostera culture and spirit oentrepreneurship.

Why? & How?Awareness o the opportunitieso entrepreneurship is lowacross many countries. Thoseorganisations that specialise in

supporting young entrepreneurshave a valuable role to play incommunicating the potentialbenets o starting a business towider audiences.

Case study:The Barbados YouthBusiness Trust (BYBT) hasinvested in raising the proleo entrepreneurship in

Barbados. Through schools,community centres, churchesand other institutions, as wellas broadcast media, since itsinception in 1996 BYBT hascome into contact with morethan 10,000 youngunemployed people,introducing them to selemployment as a career option.www.youthbusiness.bb

Civil society organisations


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Recommendation5. Environmental NGOsshould target supportto young people tohelp them capitalise onthe opportunities o thelow carbon economy.

Why? & How?There is an increasing demandor eective environmentalprojects in communities toaddress challenges such asrenewable energy, access to cleanwater and waste management.Many o these are particularlysuitable or start-up businesses.

Moreover, young people otenhave a greater awareness oenvironmental issues andclimate change.

Case study:GVEP International (GlobalVillage Energy Partnership)operates a network programmeto build the capacity o over1,800 small and micro energyenterprises in rural areas oKenya, Uganda and Tanzania.Experts in energy technology,

business development andnancing provide training,mentoring and access tonance to help turn low carboninitiatives into reality. Thissupport is providing thousandso households with accessto renewable energy.www.gvepinternational.org

Recommendation4. NGOs should tailorvocational and lie skillstraining according tolocal community needs

in particular to cateror rural areas.

Why? & How?Many countries ace a challengeo developing poor ruralcommunities, to prevent massmigration to urban centres.It is thereore essential thatskills training is aimed at those

activities most appropriate andrelevant or current and utureenterprise in rural communities.

Case study:Fundacin Paraguaya andthe San Francisco AgriculturalHigh School provide a holisticeducation in agriculture andentrepreneurship to thechildren o very low-income

armers in Paraguay. Thearm school integratestraditional high schoolsubjects with trainingin small-scale agriculturalenterprises. On graduation,students have the skills tostart their own rural enterprises(with a business plan andmicro-loan in hand), to securejobs in the modern agriculturalsector or to attend university.www.undacionparaguaya.org.py


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ConclusionYouth unemployment presents asignifcant challenge, and uture

orecasts demonstrate the need oran immediate, robust and coordinatedresponse.

Enterprise can provide a long-term route out opoverty or many unemployed young people, and

as the recommendations set out in this report show,each sector can play its part in makingentrepreneurship work.

The real benets are derived when sectors worktogether to create a culture o entrepreneurship,with opportunities open to young people:

For young people, it helps them achieve economicindependence and make a valuable socialcontribution, and it raises their sel-esteem.

For companies, it encourages the developmento a dynamic small business sector, boostsdemand in the local economy, and strengthenscommunity involvement.

For society, it reduces the costs associated withyouth unemployment, helps spread prosperity,and reduces youth disenranchisement and socialconfict.

For governments, it can reduce welfare costs andincrease revenue, and it provides opportunities to

benet rom the talent, enthusiasm and energy othe young people they serve.

About Youth Business Internationaland its global networkYouth Business International is a not-or-protorganisation that leads a global network oindependent country initiatives helping youngpeople to start their own business and createemployment.

All o the members o the network operateaccording to three common principles:

i.) They support young people, typically agedbetween 18-30, who have a good businessidea but who cannot obtain help elsewhere;

ii.) They provide access to start-up unds in theorm o a loan without the need or guaranteesor collateral; and

iii). They provide young entrepreneurs with avolunteer business mentor and access tobusiness development services.

This approach signicantly increases business

survival and growth key actors in sustainablejob creation.

The goal o Youth Business International is toenable our network to support 100,000 new youngentrepreneurs annually by 2020. In doing so we willhave created more than one million jobs, making asignicant contribution to the global employmentchallenge.

YBI was ounded in the UK in 2000 and is oneo The Princes Charities, a group o not-or-prot

organisations o which HRH The Prince o Walesis President.

YBIs global network is currently supportingyoung entrepreneurs in 40 countries across sixcontinents. In 2008, the YBI Network helped nearly7,000 new entrepreneurs get started in business.

More at www.youthbusiness.org


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The Princes Youth BusinessInternationalThe Princes Charities,PO Box 50473, London W8 9DN, UKT: +44 (0)20 3326 2060F: +44 (0)20 7937 8474E: [email protected]

Registered in England no. 6550164Charity no. 1123946

Designwww.re-everything.com

ImagesCover images show (rom let to right):Juan Ramn Nuez rom Argentina,Sarala Bastian rom India and FadiElobra rom Israel all successul youngentrepreneurs who were supported byorganisations within Youth BusinessInternationals global network. All threeentrepreneurs were recognised in YBIs2009 Entrepreneur o the Year competition.

11. Resolutions adopted by the International Labour Conerence at its 93rd Session, Geneva, June 2005http://www.ilo.org/public/english/standards/relm/ilc/ilc93/pd/resolutions.pd

12. http://www.ilo.org/public/english/employment/strat/download/getyen.pd13. http://www.ilo.org/public/english/region/ampro/cinteror/news/unemploy.htm14. http://econ.worldbank.org/WBSITE/EXTERNAL/EXTDEC/EXTRESEARCH/EXTWDRS/EXTWDR2007/0,,

contentMDK:20601683~pagePK:64167702~piPK:64167676~theSitePK:1489834,00.html

7. Global Employment Trends - Update, ILO, May 2009http://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/documents/publication/wcms_106504.pd

8. SME Statistics 2007, DBIS http://stats.berr.gov.uk/ed/sme/smestats2007-ukspr.pd9. Microenterprise Business State-Level Analysis, 2002-2006, The Association or Enterprise Opportunity

http://www.microenterpriseworks.org/microenterpriseworks/les/ccLibraryFiles/Filename/000000001330/MEBS%205%20year%20analysis.pd10. The Association or Enterprise Opportunity (AEO) www.microenterpriseworks.org

1. OECD Policy Guidance note: Employment, Promoting Pro-Poor Growth: Employment, 2009http://www.oecd.org/dataoecd/46/40/43573231.pd

2. Global Employment Trends - Update, ILO, May 2009http://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/documents/publication/wcms_106504.pd

3. Global Employment Trends or Youth, ILO, October 2008, p.2 http://www.ilo.org/public/libdoc/ilo/P/09316/09316(2008).pd4. Ibid.6. Who Is Hit Hardest during a Financial Crisis? The Vulnerability o Young Men and Women to Unemployment in an Economic Downturn,

Sher Verick, International Labour Organization (ILO) and IZA, Discussion Paper No. 4359, August 2009, p.33 http://tp.iza.org/dp4359.pd6. Global Employment Trends or Youth, ILO, October 2008, p.7 http://www.ilo.org/public/libdoc/ilo/P/09316/09316(2008).pd

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