Youth for Youth: Entrepreneurship policies that work!
In our second Capstone interview, Trade Forum talked again with three young researchers from the Graduate Institute of International Development Studies in Geneva to find out which challenges young people are facing.
As part of ITC’s collaboration with the Graduate Institute, called Capstone Project, read what the young students suggest policymakers should do differently – to enable a business environment for young entrepreneurs that drives employment.
The world’s growth and development rests in the hands of current and future generations of youth. The youth population will largely increase, especially in developing countries.
According to United Nations estimates, in 2019 there were 1.2 billion persons aged 15 to 24 years, accounting for 16% of the global population. By 2030—the target date for the Sustainable Development Goals (SDGs)—the number is projected to grow by 7%, to nearly 1.3 billion. In least developed countries, the youth population is set to increase even more, by 62% in the next three decades, rising from 207 million in 2019 to 336 million in 2050.
That means that youth entrepreneurship is a means for more employment. In our research we analysed the current youth entrepreneurship policies in four countries—Ghana, Kenya, Colombia, and the Philippines—, and identified their effectiveness and limitations to derive optimal policy recommendations that could lead to an enabling business environment for youth entrepreneurship.
For this study, we relied on an in-depth review of the international literature pertinent to youth entrepreneurship next to primary qualitative data collected through semi-structured interviews with young entrepreneurs, entrepreneurship hubs, and governmental agencies of development.
According to the national strategies for entrepreneurship, there are five main policy action fronts capable of fomenting entrepreneurship on the part of the youth:
- Laws and regulations
- Education and skills
- Technology and innovation
- Access to finance
- Awareness and networking.
Strong regulations and complex registration processes are common challenges in all targeted countries. In the Philippines especially, regulations and laws are outdated, with several hurdles for business.
Entrepreneurial education and training are scarce even though the necessity of accelerating Science, Technology and Innovation (STI) skills has been recognized as an important driver for youth entrepreneurship by all countries. Their regional gaps between urban and rural areas are a common challenge to address training programmes.
Access to finance is one of the most crucial challenges in most developing countries. There is consistency in the causes of why accessing finance is challenging for youth entrepreneurs in the targeted countries. Lack of collateral, credit history, and entrepreneurial experience continue to be barriers for the youth.
The level of awareness and networking among youth entrepreneurs appears to vary across the countries listed. Some programmes are stagnant or have difficulty reaching networking level.
To enhance the existing policies and ecosystem of youth entrepreneurship, more specific and practical policies will be essential under each section of the five youth entrepreneurship policy areas.
Our report incorporates general policy recommendations as well as country-specific recommendations according to specific challenges in each targeted country. In a nutshell, we recommend to:
1. Optimize the regulatory environment by
- Modernizing entrepreneurship-related laws and regulations for inclusive formalization access.
- Formulating strategies to enhance awareness about these regulations and laws.
2. Enhance entrepreneurial education and skills by
- Introducing a reward structure (credits, grades) for students who are also entrepreneurs.
- Strengthening entrepreneurial education and training in all levels of the education system.
3. Facilitate technology exchange and innovation by
- Offering more courses on IT skills open to everyone in collaboration with universities across regions.
- Investing in innovation through incentives, including tax breaks and grants.
4. Improve access to finance by
- Introducing low-interest loans from banks, targeting high potential youth entrepreneurs and developing government-based financial products/loans, dedicated to youth and women entrepreneurs.
- Attracting financing alternatives with smaller ticket sizes so that young entrepreneurs with smaller ventures can access more affordable funding options through principles of innovative finance and impact investing.
5. Promote awareness and networking by
- Developing mentoring programmes to connect aspiring entrepreneurs with experts in their respective fields.
- Creating a national online platform where youth entrepreneurs can find relevant business data on existing startups, active incubators, accelerators and innovation hubs, a practical guide on navigating business/entrepreneurship support policies and a space for entrepreneurs to share their challenges and seek support.