Youth entrepreneurshipRecommendations for action          How businesses,        governments and civil        society orga...
IntroductionBusiness, governments, and othersectors of society are increasinglyrecognising that supporting youngentreprene...
The case for MakingEntrepreneurship WorkThe entrepreneurship The entrepreneurshipchallenge            opportunityEmploymen...
The case for MakingEntrepreneurship WorkThe entrepreneurshipimpactEnterprise has a multiplier effect – both economic      ...
RecommendationsThis section sets out actions that businesses,             the YBI Network as well as of other youth enterp...
Recommendation             Why?  How?                            Case study:                           During the challeng...
GovernmentRecommendation              Why?  How?                           Case study:                            In many ...
Recommendation             Why?  How?                          Case study:                           Business plan competi...
Civil society organisationsRecommendation             Why?  How?                          Case study:                     ...
Recommendation               Why?  How?                         Case study:                             Many countries fac...
ConclusionYouth unemployment presents asignificant challenge, and futureforecasts demonstrate the need foran immediate, ro...
The Prince’s Youth BusinessInternationalThe Prince’s Charities,PO Box 50473, London W8 9DN, UKT: +44 (0)20 3326 2060F: +44...
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Recommendationsfor action

  1. 1. Youth entrepreneurshipRecommendations for action How businesses, governments and civil society organisations can help young people get started in businessThe first report in YBI’s Making Entrepreneurship Work series
  2. 2. IntroductionBusiness, governments, and othersectors of society are increasinglyrecognising that supporting youngentrepreneurs can be a highly effectiveway to reduce youth unemployment andstimulate growth in local communities.The question is, what is the most effective wayto do this? For nearly 10 years Youth Business Five key messagesInternational has been helping to grow a network • It is an economic and social imperative to of independent in-country initiatives around the address the youth unemployment challengeworld that help young people to start their own – especially at a time of economic slowdownbusiness and create employment. • Boosting youth enterprise delivers This report draws on best practice from the members substantial benefits both for the entrepreneurof our network and other organisations in order to and for the wider economy and societymake cross-sectoral recommendations for creatinga culture of youth enterprise. It is not intended to • Entrepreneurship is not for everybody, but for provide complete answers but to give a snapshot many it can provide a long-term route out ofof what is working in different parts of the world to povertygive young people a chance to become a successfulentrepreneur. • Making entrepreneurship work is not the responsibility of one sector alone; it requiresThrough sharing our insights, we aim to encourage dedicated actions from all sectors of thegovernments and other organisations to give their communitysupport to young people who have a great business • Young people need to be encouraged idea but lack the means, and the support, to set up and supported to take advantage of thetheir own enterprise. opportunities of entrepreneurshipThis report is the first in our ‘Making Entrepreneurship This report was launched for GlobalWork’ series – providing recommendations for action Entrepreneurship Week 2009, of which YBIand examples of best practice in order to promote is a global partner, to show what can be doneyouth entrepreneurship. to promote a youth enterprise culture around the world. 2
  3. 3. The case for MakingEntrepreneurship WorkThe entrepreneurship The entrepreneurshipchallenge opportunityEmployment is established as “the major route Despite these challenges and vulnerabilities, theout of poverty”1 – and increasingly entrepreneurship transition from childhood to adulthood is a period ofis being recognised for the economic and social great potential for young people to begin making aopportunities it can create. contribution to family, society and community.The World Bank estimates that by 2015 – Participation in the job market helps to break thetarget year for the Millennium Development Goals cycle of poverty and unlock the potential of young(MDGs) – there will be three billion people in the people, providing a route towards social integrationworld under the age of 25. However, although this and economic independence. It is vital, both for theirgeneration will be the most educated ever, own fulfilment as well as in the broader economicInternational Labour Organisation statistics forecast interest, that their talents and energies area sustained rise in unemployed youth. They harnessed in productive work opportunities.estimate that young people already make up asmuch as 40% of the world’s total unemployed, and Given estimates that half of the global workforce –are almost three times as likely to be unemployed seven times more than the number of unemployed –as adults – a situation exacerbated by the recent are likely to be in vulnerable employment this year,world economic crisis. actions must target the substantial decent work deficits 7.The youth unemployment rate is projected to Entrepreneurship is not suitable for everyone, but itincrease from 12% in 2008 to between 13 and is vital that opportunities are open to young people15% in 2009. The projected increase in the – and properly understood by them – on completionunemployment rate for adults is between 0.5 to of education and training.1%2. As the ILO concludes: “young people still sufferdisproportionately from a deficit of decent work Entrepreneurship can provide a successful routeopportunities3”. to long-term participation in the job market, especially if the entrepreneur receives robustThe ILO has said that 2009 will represent the support and advice in the business start-up phase.worst global performance on record in terms of Furthermore, entrepreneurship can be an engineemployment creation4. Young people are particularly of economic growth.vulnerable to the effects of an economic downturn:“during and after a crisis, it is the youth who are In the UK, small and medium-sized enterpriseshit hardest in terms of losing jobs and joining the (SMEs) account for 99.9% of all enterprises, and areunemployment queues. The increased gap between responsible for 59% of private sector employmentyouth and adult unemployment rates remains, and 52% of private sector turnover 8. In the USeven after the economy has begun to recover.5” more than 87% of all businesses have five or fewer employees9. These microenterprises create new jobsAs much as 89% of the world’s total youth on average at a rate of 900,000 per year. Betweenpopulation is born in developing countries6. 2000 and 2006 they created 36% of all new jobsA global economic crisis makes living conditions – in the US 10.and job prospects – worse in developing countriesthrough a range of impacts: private capital flows In view of this job creation potential, it is particularlyand investments slow; export earnings fall through important to foster the conditions for an enterprisereduced commodity prices; and remittances decline. culture at a time of economic crisis when the job market is stalling. 3
  4. 4. The case for MakingEntrepreneurship WorkThe entrepreneurshipimpactEnterprise has a multiplier effect – both economic The youthand social. As the ILO concludes, “decent work foryoung people unleashes multiplier effects throughout unemploymentthe economy and society, boosting investment andconsumer demand and ensuring more stable and rate is projected tocohesive social ties across generations”11. increase from 12%Halving the world’s youth unemployment rate in 2008 to betweencould add an estimated US$2.2 to 3.5 trillion tothe world economy. This represents 4.4% to 7.0% 13 and 15%of the 2003 value of global gross domestic product(GDP). The largest relative gains from supporting in 2009.youth into decent and productive work would bein Sub-Saharan Africa, with an estimated rise of12% to 19% in GDP 12 .Running a business helps young people achieveeconomic independence, reducing their reliance onstate welfare. Young entrepreneurs are more likelyto engage in their local community, spreading theirexperience and energy, and creating additional jobs.Employment also boosts a young person’s self-esteem, making them more productive membersof a family and community. Research has In the US moredemonstrated a link between youth unemploymentand social exclusion: 13 a productive young than 87% of allpopulation is less likely to cause social unrest businesses haveor even conflict. five or fewerGiven this generation is the most educatedever, there is huge potential locked in today’s employeesunemployed youth. However, as FrançoisBourguignon, the World Bank’s former ChiefEconomist and Senior Vice President forDevelopment Economics warns: “The opportunitiesare great, as many countries will have a larger,more skilled labour force and fewer dependents.But these young people must be well-preparedin order to create and find good jobs.14 ” 4
  5. 5. RecommendationsThis section sets out actions that businesses, the YBI Network as well as of other youth enterprisegovernments and civil society organisations can organisations around the world. There are fivetake to create an enterprise culture in their community. recommendations each for businesses, national andThe recommendations are based on the practical local governments, and for civil society organisations.experience of the member organisations withinBusinesses Recommendation Why? How? Case study: Creating links between new Youth Business China’s 1. Companies should entrepreneurs and established mentoring programme is encourage their companies can bring multiple supported by major Chinese benefits. The value of support and international companies. employees to provide through advice, networks and Mentors provide advice advice and support to other relationships cannot and support to the young young people starting be overestimated for a new entrepreneurs, as well as access entrepreneur. In addition, to other business networks. out in business – business start-ups provide a They themselves benefit especially in boost to their local economy, through Youth Business China’s mentoring capacities. increasing overall market size Mentor Clubs that offer forums and potentially contributing to for the mentors to exchange supply and distribution chains ideas and explore new trading of existing companies. opportunities. Recommendation Why? How? Case study: For those leaving the formal Business in the Community’s 2. Companies should education system, one Work Inspiration is a business provide work experience of the main challenges is led campaign to strengthen understanding, and being the relevance and impact of schemes, together equipped for, the world of work. work experience – for the with internships, Direct and early insights will benefit of both the young apprenticeships and raise jobseekers’ confidence and people and the companies new entrants’ efficiency, and the involved. The programme training programmes, private sector can play a valuable boosts young people’s in order to strengthen role in this respect. motivation, confidence, the local enterprise experience and capability to be enterprising. culture. 5
  6. 6. Recommendation Why? How? Case study: During the challenging The International3. Companies school-to-work transition Youth Foundation’s entrashould support the phase that young people face, 21 programme offersdevelopment of business can make a significant disadvantaged young people contribution: in shaping in Latin America and theeffective educational education policies that ensure Caribbean employmentinitiatives that include those leaving full-time education training and job placement have the skills and qualifications services. Importantly,teaching the benefits needed for future employment employers are activelyand opportunities of or enterprise. involved in the designself-employment. of the programme, and training content is drawn from the needs of the labour market. The skills that the young people gain have been shown to increase their employability and their enterprise credentials. www.iyfnet.orgRecommendation Why? How? Case study: Companies that partner with As part of a larger collaboration4. Companies should youth enterprise charities can effort, in 2009 Accenturecreate partnerships make a significant impact on the provided The Prince’s Trust withwith youth enterprise local communities they serve and a pro bono project team who in which their employees live. worked to integrate the Trust’sorganisations to Through sharing their experience strategic reporting platformstrengthen their and expertise companies can with their financial systems. make a tangible difference to the In the process, the Accentureoperational capacity services that the charities provide. employees also concentratedand efficiency. on imparting invaluable skills and knowledge to The Prince’s Trust’s internal IT team, enabling it to move the reporting programme forward with minimised dependence on external expertise. Why? How? C ase study: Banks and even some YBI’s partner in India,5. Banks and microfinance institutions Bharatiya Yuva Shakti Trustmicrofinance (MFIs) are unable – or unwilling (BYST), established a partnership – to reach vulnerable sectors of with National Bank of Barodainstitutions should society excluded from finance, to enable the bank to managepartner with such as disadvantaged youth. BYST’s loan portfolio. BYSTcommunity Organisations established maintains responsibility for all to help these groups do not other aspects of its operations,organisations to necessarily have the (financial) such as selecting andimprove young capacity to administer lending mentoring entrepreneurs.people’s access and borrowing functions. By The partnership takes away working with local organisations the portfolio risk from BYSTto financing. that better understand the risk and increases the overall level profile of young people, financial of financing available for new institutions become able to extend business loans for young services to new sections of society. people. 6
  7. 7. GovernmentRecommendation Why? How? Case study: In many countries, the time and Established as a public1. National and local cost involved in registering a private partnership in the citygovernments should new business creates significant of Johannesburg and backed deterrents, in particular to young by public funding, Businesswork together to make people who lack the means or Place is an expandingbusiness registration the confidence to persist against network of walk-in informationas efficient as possible, administrative obstacles. In centres for predominantly many countries there is little young entrepreneurs acrossby learning from coordinated support for emerging South Africa. The branches areprivate sector entrepreneurs in the micro and located at accessible venues,innovations. informal business sectors. and their services are designed to stimulate local business and assist communities in reducing on their government. Why? How? Case study: Traditionally, advice to young The Consortium for2. Governments and people about the world of work Entrepreneurship Educationeducation authorities is biased towards the benefits was established in the USshould include self of working in a large company to bring entrepreneurship or within government. Often the experiences to young peopleemployment as a benefits of supporting young through schools andviable alternative people into new enterprise are not community programmes. captured, nor the effectiveness Comprising State Boardswithin an overall of initiatives deployed. As the of Education, studentcareers advice United Nation’s World Youth organisations and others,structure. Action Plan states: “the challenge the Consortium aims to: promote is to scale up the successful entrepreneurship education aspects of [youth] initiatives.” opportunities; set national curriculum standards; and share resources to train young entrepreneurs to advance their local economies. www.entre-ed.orgRecommendation Why? How? Case study: Business networks can For a decade, Hambantota3. Governments be valuable to businesses Youth Business Trust (HYBT)should utilise existing throughout their life cycle, had been successfully supporting but perhaps especially during young entrepreneurs at thestructures, such as the start up phase. Given the district level. Recognisingchambers of commerce economic, social and political the strategic importanceand other business benefits of a productive young of strengthening youth population, it is in a government’s entrepreneurship in Sri Lanka,networks, to support interests to promote and support the Ceylon Chamber of Commercethe development entrepreneurship using structures – in collaboration with itsof youth already in place. regional branch in Hambantota – scaled up HYBT operationsentrepreneurship. and launched Youth Business Sri Lanka across the whole of the country. 7
  8. 8. Recommendation Why? How? Case study: Business plan competitions With the support of all levels4. Governments should have been shown to provide of government, Students inencourage schools and an effective and engaging Free Enterprise (SIFE) runscolleges to run business means to introduce a variety national and global business of business-related subjects to competitions for universityplan competitions new audiences. Competitions students to develop sociallythat promote start-up can generate even more tangible responsible enterprises in their benefits if winners are given an communities that meet localopportunities. opportunity to turn their business need. It provides hands-on proposition into reality. insights into setting up and running a company. Many of the students involved in SIFE competitions go on to develop their own social enterprises. www.sife.orgRecommendation Why? How? Case study: Targeting investment at youth In March 2009 the Canadian5. Governments should entrepreneurship schemes can Government invested C$10prioritise investment in bring long-term benefits to million with the Canadian governments, both in reducing Youth Business Foundationyouth entrepreneurship unemployment and other welfare (CYBF) to support younginitiatives to tackle payments, and in increasing entrepreneurs, as part of itsyouth unemployment tax revenue. work to stimulate the national economy.and as a means to CYBF has calculated that thereduce welfare costs. businesses supported by the grant will generate C$135 million in sales revenue and C$32 million in tax revenue for the nation’s economy, through the creation of 900 new businesses and an estimated 5,000 new jobs. 8
  9. 9. Civil society organisationsRecommendation Why? How? Case study: Awareness of the opportunities The Barbados Youth1. Youth enterprise of entrepreneurship is low Business Trust (BYBT) hasorganisations should across many countries. Those invested in raising the profileengage in community organisations that specialise in of entrepreneurship in supporting young entrepreneurs Barbados. Through schools,outreach and have a valuable role to play in community centres, churchesmobilisation to foster communicating the potential and other institutions, as well benefits of starting a business to as broadcast media, since itsa culture and spirit of wider audiences. inception in 1996 BYBT hasentrepreneurship. come into contact with more than 10,000 young unemployed people, introducing them to self employment as a career option. www.youthbusiness.bbRecommendation Why? How? Case study: The combined expertise International Alert and Youth2. Non-governmental and outreach of different Business Sri Lanka (YBSL) workorganisations working organisations can have a together to assist young people transformative effect on a local to set up in business in areasin apparently different community. Even when the vulnerable to violence.areas should identify overlap of two organisations Economic and social progressand develop synergies does not seem obvious, there is not possible without peace, can be very useful collaboration and vice versa. Improving thein order to deliver more – especially in tackling the life chances of young peopleeffective levels of complex underlying causes can make a significant impactsupport to young of youth unemployment and on reducing conflict and, disenfranchisement. most importantly, the causesentrepreneurs. of conflict. / srilankaRecommendation Why? How? Case study: Grassroots organisations can The Youth Volunteer Network3. Community benefit from tapping into (VNET), established by Theorganisations should the resource of unemployed Hong Kong Federation ofprovide volunteer youth. Equally, local voluntary Youth Groups (HKFYG), experience can equip young encourages young peopleopportunities for young people with useful skills to to participate in voluntarypeople to work in the continue along the path services and to serve towards employment and their community. Thecommunity. entrepreneurship, as well as a volunteers involved are sense of commitment to their exposed to a range of different community. organisations, raising their awareness of – and preparedness for – the different work opportunities available to them later in life. 9
  10. 10. Recommendation Why? How? Case study: Many countries face a challenge Fundación Paraguaya and4. NGOs should tailor of developing poor rural the San Francisco Agriculturalvocational and life skills communities, to prevent mass High School provide a holistictraining according to migration to urban centres. education in agriculture and It is therefore essential that entrepreneurship to thelocal community needs skills training is aimed at those children of very low-income– in particular to cater activities most appropriate and farmers in Paraguay. The relevant for current and future ‘farm school’ integratesfor rural areas. enterprise in rural communities. traditional high school subjects with training in small-scale agricultural enterprises. On graduation, students have the skills to start their own rural enterprises (with a business plan and micro-loan in hand), to secure jobs in the modern agricultural sector or to attend university. Why? How? Case study: There is an increasing demand GVEP International (Global5. Environmental NGOs for effective environmental Village Energy Partnership)should target support projects in communities to operates a network programme address challenges such as to build the capacity of overto young people to renewable energy, access to clean 1,800 small and micro energyhelp them capitalise on water and waste management. enterprises in rural areas ofthe opportunities of the Many of these are particularly Kenya, Uganda and Tanzania. suitable for start-up businesses. Experts in energy technology,low carbon economy. Moreover, young people often business development and have a greater awareness of financing provide training, environmental issues and mentoring and access to climate change. finance to help turn low carbon initiatives into reality. This support is providing thousands of households with access to renewable energy. 10
  11. 11. ConclusionYouth unemployment presents asignificant challenge, and futureforecasts demonstrate the need foran immediate, robust and coordinatedresponse.Enterprise can provide a long-term route out of All of the members of the network operatepoverty for many unemployed young people, and according to three common principles:as the recommendations set out in this report show,each sector can play its part in making i.) They support young people, typically aged entrepreneurship work. between 18-30, who have a good business idea but who cannot obtain help elsewhere;The real benefits are derived when sectors work ii.) They provide access to start-up funds in the together to create a culture of entrepreneurship, form of a loan without the need for guaranteeswith opportunities open to young people: or collateral; and iii). They provide young entrepreneurs with a • or young people, it helps them achieve economic F volunteer business mentor and access to independence and make a valuable social business development services. contribution, and it raises their self-esteem. This approach significantly increases business• or companies, it encourages the development F survival and growth – key factors in sustainable of a dynamic small business sector, boosts job creation. demand in the local economy, and strengthens community involvement. The goal of Youth Business International is to enable our network to support 100,000 new young• or society, it reduces the costs associated with F entrepreneurs annually by 2020. In doing so we will youth unemployment, helps spread prosperity, have created more than one million jobs, making a and reduces youth disenfranchisement and social significant contribution to the global employment conflict. challenge.• or governments, it can reduce welfare costs and F YBI was founded in the UK in 2000 and is one increase revenue, and it provides opportunities to of The Prince’s Charities, a group of not-for-profit benefit from the talent, enthusiasm and energy of organisations of which HRH The Prince of Wales the young people they serve. is President.About Youth Business International YBI’s global network is currently supportingand its global network young entrepreneurs in 40 countries across sixYouth Business International is a not-for-profit continents. In 2008, the YBI Network helped nearlyorganisation that leads a global network of 7,000 new entrepreneurs get started in business.independent country initiatives helping youngpeople to start their own business and create More at www.youthbusiness.orgemployment. 11
  12. 12. The Prince’s Youth BusinessInternationalThe Prince’s Charities,PO Box 50473, London W8 9DN, UKT: +44 (0)20 3326 2060F: +44 (0)20 7937 8474E: info@youthbusiness.orgwww.youthbusiness.orgRegistered in England no. 6550164Charity no. images show (from left to right):Juan Ramón Nuñez from Argentina,Sarala Bastian from India and FadiElobra from Israel – all successful youngentrepreneurs who were supported byorganisations within Youth BusinessInternational’s global network. All threeentrepreneurs were recognised in YBI’s2009 Entrepreneur of the Year competition.1. OECD Policy Guidance note: Employment, Promoting Pro-Poor Growth: Employment’, 2009 ‘ Global Employment Trends - Update’, ILO, May 2009 ‘ ‘Global Employment Trends for Youth’, ILO, October 2008, p.2 Ibid.6. Who Is Hit Hardest during a Financial Crisis? The Vulnerability of 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 ‘Global Employment Trends for Youth’, ILO, October 2008, p.7 Global Employment Trends - Update’, ILO, May 2009 ‘ SME Statistics 2007, DBIS icroenterprise Business State-Level Analysis, 2002-2006, The Association for Enterprise Opportunity M The Association for Enterprise Opportunity (AEO) www.microenterpriseworks.org11. Resolutions adopted by the International Labour Conference at its 93rd Session, Geneva, June 2005’ ‘ ttp://,, h contentMDK:20601683~pagePK:64167702~piPK:64167676~theSitePK:1489834,00.html 12