Youth entrepreneurship - recommendations for action

Youth entrepreneurship
Recommendations for action

How businesses,
governments and civil
society organisations
can help young
people get started
in business

The first report in YBI’s Making Entrepreneurship Work series

Introduction
Business, governments, and other
sectors of society are increasingly
recognising that supporting young
entrepreneurs can be a highly effective
way to reduce youth unemployment and
stimulate growth in local communities.
The question is, what is the most effective way
to do this? For nearly 10 years Youth Business Five key messages
International 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 challenge
world that help young people to start their own – especially at a time of economic slowdown
business and create employment.
• Boosting youth enterprise delivers
This report draws on best practice from the members substantial benefits both for the entrepreneur
of our network and other organisations in order to and for the wider economy and society
make cross-sectoral recommendations for creating
a 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 of
of what is working in different parts of the world to poverty
give young people a chance to become a successful
entrepreneur. • Making entrepreneurship work is not the
responsibility of one sector alone; it requires
Through sharing our insights, we aim to encourage dedicated actions from all sectors of the
governments and other organisations to give their community
support 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 the
their own enterprise.
opportunities of entrepreneurship
This report is the first in our ‘Making Entrepreneurship
This report was launched for Global
Work’ series – providing recommendations for action
Entrepreneurship Week 2009, of which YBI
and examples of best practice in order to promote
is a global partner, to show what can be done
youth entrepreneurship.
to promote a youth enterprise culture around
the world.

2

The case for Making
Entrepreneurship Work

The entrepreneurship The entrepreneurship
challenge opportunity
Employment is established as “the major route Despite these challenges and vulnerabilities, the
out of poverty”1 – and increasingly entrepreneurship transition from childhood to adulthood is a period of
is being recognised for the economic and social great potential for young people to begin making a
opportunities it can create. contribution to family, society and community.

The World Bank estimates that by 2015 – Participation in the job market helps to break the
target 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 integration
world under the age of 25. However, although this and economic independence. It is vital, both for their
generation will be the most educated ever, own fulfilment as well as in the broader economic
International Labour Organisation statistics forecast interest, that their talents and energies are
a sustained rise in unemployed youth. They harnessed in productive work opportunities.
estimate that young people already make up as
much 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 it
increase from 12% in 2008 to between 13 and is vital that opportunities are open to young people
15% in 2009. The projected increase in the – and properly understood by them – on completion
unemployment rate for adults is between 0.5 to of education and training.
1%2. As the ILO concludes: “young people still suffer
disproportionately from a deficit of decent work Entrepreneurship can provide a successful route
opportunities3”. to long-term participation in the job market,
especially if the entrepreneur receives robust
The 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 engine
employment 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 enterprises
hit hardest in terms of losing jobs and joining the (SMEs) account for 99.9% of all enterprises, and are
unemployment queues. The increased gap between responsible for 59% of private sector employment
youth and adult unemployment rates remains, and 52% of private sector turnover 8. In the US
even after the economy has begun to recover.5” more than 87% of all businesses have five or fewer
employees9. These microenterprises create new jobs
As much as 89% of the world’s total youth on average at a rate of 900,000 per year. Between
population is born in developing countries6. 2000 and 2006 they created 36% of all new jobs
A global economic crisis makes living conditions – in the US 10.
and job prospects – worse in developing countries
through a range of impacts: private capital flows In view of this job creation potential, it is particularly
and investments slow; export earnings fall through important to foster the conditions for an enterprise
reduced commodity prices; and remittances decline. culture at a time of economic crisis when the job
market is stalling.

3

The case for Making
Entrepreneurship Work

The entrepreneurship
impact
Enterprise has a multiplier effect – both economic The youth
and social. As the ILO concludes, “decent work for
young people unleashes multiplier effects throughout unemployment
the economy and society, boosting investment and
consumer demand and ensuring more stable and
rate is projected to
cohesive social ties across generations”11. increase from 12%
Halving the world’s youth unemployment rate in 2008 to between
could add an estimated US$2.2 to 3.5 trillion to
the 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 be
in Sub-Saharan Africa, with an estimated rise of
12% to 19% in GDP 12 .

Running a business helps young people achieve
economic independence, reducing their reliance on
state welfare. Young entrepreneurs are more likely
to engage in their local community, spreading their
experience and energy, and creating additional jobs.

Employment also boosts a young person’s self-
esteem, making them more productive members
of a family and community. Research has In the US more
demonstrated a link between youth unemployment
and social exclusion: 13 a productive young
than 87% of all
population is less likely to cause social unrest businesses have
or even conflict.
five or fewer
Given this generation is the most educated
ever, there is huge potential locked in today’s employees
unemployed youth. However, as François
Bourguignon, the World Bank’s former Chief
Economist and Senior Vice President for
Development Economics warns: “The opportunities
are great, as many countries will have a larger,
more skilled labour force and fewer dependents.
But these young people must be well-prepared
in order to create and find good jobs.14 ”

4

Recommendations
This section sets out actions that businesses, the YBI Network as well as of other youth enterprise
governments and civil society organisations can organisations around the world. There are five
take to create an enterprise culture in their community. recommendations each for businesses, national and
The recommendations are based on the practical local governments, and for civil society organisations.
experience of the member organisations within

Businesses
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. www.ybc.org.cn

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. www.workinspiration.com

5

During the challenging The International
3. Companies school-to-work transition Youth Foundation’s entra
should support the phase that young people face, 21 programme offers
development of business can make a significant disadvantaged young people
contribution: in shaping in Latin America and the
effective educational education policies that ensure Caribbean employment
initiatives 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 actively
and opportunities of or enterprise. involved in the design
self-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.org

Companies that partner with As part of a larger collaboration
4. Companies should youth enterprise charities can effort, in 2009 Accenture
create partnerships make a significant impact on the provided The Prince’s Trust with
with youth enterprise local communities they serve and a pro bono project team who
in which their employees live. worked to integrate the Trust’s
organisations to Through sharing their experience strategic reporting platform
strengthen their and expertise companies can with their financial systems.
make a tangible difference to the In the process, the Accenture
operational capacity services that the charities provide. employees also concentrated
and 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.
www.princes-trust.org.uk

Banks and even some YBI’s partner in India,
5. Banks and microfinance institutions Bharatiya Yuva Shakti Trust
microfinance (MFIs) are unable – or unwilling (BYST), established a partnership
– to reach vulnerable sectors of with National Bank of Baroda
institutions should society excluded from finance, to enable the bank to manage
partner with such as disadvantaged youth. BYST’s loan portfolio. BYST
community 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 and
improve 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 BYST
to 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. www.bystonline.org

6

Government
In many countries, the time and Established as a public
1. National and local cost involved in registering a private partnership in the city
governments should new business creates significant of Johannesburg and backed
deterrents, in particular to young by public funding, Business
work together to make people who lack the means or Place is an expanding
business registration the confidence to persist against network of walk-in information
as efficient as possible, administrative obstacles. In centres for predominantly
many countries there is little young entrepreneurs across
by learning from coordinated support for emerging South Africa. The branches are
private 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.
www.thebusinessplace.co.za

Traditionally, advice to young The Consortium for
2. Governments and people about the world of work Entrepreneurship Education
education authorities is biased towards the benefits was established in the US
should include self of working in a large company to bring entrepreneurship
or within government. Often the experiences to young people
employment as a benefits of supporting young through schools and
viable alternative people into new enterprise are not community programmes.
captured, nor the effectiveness Comprising State Boards
within an overall of initiatives deployed. As the of Education, student
careers 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.org

Business networks can For a decade, Hambantota
3. 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 the
structures, such as the start up phase. Given the district level. Recognising
chambers of commerce economic, social and political the strategic importance
and 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 Commerce
the development entrepreneurship using structures – in collaboration with its
of youth already in place. regional branch in Hambantota
– scaled up HYBT operations
entrepreneurship. and launched Youth Business
Sri Lanka across the whole of
the country. www.ybsl.lk

7

Business plan competitions With the support of all levels
4. Governments should have been shown to provide of government, Students in
encourage schools and an effective and engaging Free Enterprise (SIFE) runs
colleges to run business means to introduce a variety national and global business
of business-related subjects to competitions for university
plan competitions new audiences. Competitions students to develop socially
that promote start-up can generate even more tangible responsible enterprises in their
benefits if winners are given an communities that meet local
opportunities. 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.org

Targeting investment at youth In March 2009 the Canadian
5. Governments should entrepreneurship schemes can Government invested C$10
prioritise investment in bring long-term benefits to million with the Canadian
governments, both in reducing Youth Business Foundation
youth entrepreneurship unemployment and other welfare (CYBF) to support young
initiatives to tackle payments, and in increasing entrepreneurs, as part of its
youth unemployment tax revenue. work to stimulate
the national economy.
and as a means to CYBF has calculated that the
reduce 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.
www.cybf.ca

8

Civil society organisations

Awareness of the opportunities The Barbados Youth
1. Youth enterprise of entrepreneurship is low Business Trust (BYBT) has
organisations should across many countries. Those invested in raising the profile
engage 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, churches
mobilisation to foster communicating the potential and other institutions, as well
benefits of starting a business to as broadcast media, since its
a culture and spirit of wider audiences. inception in 1996 BYBT has
entrepreneurship. come into contact with more
than 10,000 young
unemployed people,
introducing them to self
employment as a career option.
www.youthbusiness.bb

The combined expertise International Alert and Youth
2. Non-governmental and outreach of different Business Sri Lanka (YBSL) work
organisations working organisations can have a together to assist young people
transformative effect on a local to set up in business in areas
in apparently different community. Even when the vulnerable to violence.
areas should identify overlap of two organisations Economic and social progress
and develop synergies does not seem obvious, there is not possible without peace,
can be very useful collaboration and vice versa. Improving the
in order to deliver more – especially in tackling the life chances of young people
effective levels of complex underlying causes can make a significant impact
support to young of youth unemployment and on reducing conflict and,
disenfranchisement. most importantly, the causes
entrepreneurs. of conflict. www.ybsl.lk /
www.international-alert.org/
srilanka

Grassroots organisations can The Youth Volunteer Network
3. Community benefit from tapping into (VNET), established by The
organisations should the resource of unemployed Hong Kong Federation of
provide volunteer youth. Equally, local voluntary Youth Groups (HKFYG),
experience can equip young encourages young people
opportunities for young people with useful skills to to participate in voluntary
people to work in the continue along the path services and to serve
towards employment and their community. The
community. 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.
www.hkfyg.org.hk

9

Many countries face a challenge Fundación Paraguaya and
4. NGOs should tailor of developing poor rural the San Francisco Agricultural
vocational and life skills communities, to prevent mass High School provide a holistic
training according to migration to urban centres. education in agriculture and
It is therefore essential that entrepreneurship to the
local 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’ integrates
for 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.
www.fundacionparaguaya.org.py

There is an increasing demand GVEP International (Global
5. 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 over
to young people to renewable energy, access to clean 1,800 small and micro energy
help them capitalise on water and waste management. enterprises in rural areas of
the 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.
www.gvepinternational.org

10

Conclusion
Youth unemployment presents a
significant challenge, and future
forecasts demonstrate the need for
an immediate, robust and coordinated
response.
Enterprise can provide a long-term route out of All of the members of the network operate
poverty 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 guarantees
with opportunities open to young people: or collateral; and
iii). They provide young entrepreneurs with a
• For young people, it helps them achieve economic 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
• For companies, it encourages the development 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
• For society, it reduces the costs associated with 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.

• For governments, it can reduce welfare costs and 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 supporting
and its global network young entrepreneurs in 40 countries across six
Youth Business International is a not-for-profit continents. In 2008, the YBI Network helped nearly
organisation that leads a global network of 7,000 new entrepreneurs get started in business.
independent country initiatives helping young
people to start their own business and create More at www.youthbusiness.org
employment.

11

The Prince’s Youth Business
International
The Prince’s Charities,
PO Box 50473, London W8 9DN, UK
T: +44 (0)20 3326 2060
F: +44 (0)20 7937 8474
E: info@youthbusiness.org
www.youthbusiness.org
Registered in England no. 6550164
Charity no. 1123946

Design
www.re-everything.com

Images
Cover images show (from left to right):
Juan Ramón Nuñez from Argentina,
Sarala Bastian from India and Fadi
Elobra from Israel – all successful young
entrepreneurs who were supported by
organisations within Youth Business
International’s global network. All three
entrepreneurs were recognised in YBI’s
2009 Entrepreneur of the Year competition.

1. ‘OECD Policy Guidance note: Employment, Promoting Pro-Poor Growth: Employment’, 2009
http://www.oecd.org/dataoecd/46/40/43573231.pdf
2. ‘Global Employment Trends - Update’, ILO, May 2009
http://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/documents/publication/wcms_106504.pdf
3. ‘Global Employment Trends for Youth’, ILO, October 2008, p.2 http://www.ilo.org/public/libdoc/ilo/P/09316/09316(2008).pdf
4. 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 http://ftp.iza.org/dp4359.pdf
6. ‘Global Employment Trends for Youth’, ILO, October 2008, p.7 http://www.ilo.org/public/libdoc/ilo/P/09316/09316(2008).pdf
7. ‘Global Employment Trends - Update’, ILO, May 2009
http://www.ilo.org/wcmsp5/groups/public/---dgreports/---dcomm/documents/publication/wcms_106504.pdf
8. SME Statistics 2007, DBIS http://stats.berr.gov.uk/ed/sme/smestats2007-ukspr.pdf
9. Microenterprise Business State-Level Analysis, 2002-2006, The Association for Enterprise Opportunity
http://www.microenterpriseworks.org/microenterpriseworks/files/ccLibraryFiles/Filename/000000001330/MEBS%205%20year%20analysis.pdf
10. The Association for Enterprise Opportunity (AEO) www.microenterpriseworks.org
11. ‘Resolutions adopted by the International Labour Conference at its 93rd Session, Geneva, June 2005’
http://www.ilo.org/public/english/standards/relm/ilc/ilc93/pdf/resolutions.pdf
12. http://www.ilo.org/public/english/employment/strat/download/getyen.pdf
13. http://www.ilo.org/public/english/region/ampro/cinterfor/news/unemploy.htm
14. http://econ.worldbank.org/WBSITE/EXTERNAL/EXTDEC/EXTRESEARCH/EXTWDRS/EXTWDR2007/0,,
contentMDK:20601683~pagePK:64167702~piPK:64167676~theSitePK:1489834,00.html

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Youth entrepreneurship - recommendations for action

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