Youth Entrepreneurship in South Africa – Key to Developing the Economy

Youth Entrepreneurship - The Key to Developing South Africa’s Economy

According to research, youth entrepreneurship is the key to developing South Africa’s economy.

The South African National Youth Development Agency (NYDA) has, in a working paper titled “Youth Entrepreneurship in South Africa: Accelerating Economic Transformation”, highlighted the need and benefits of increased youth entrepreneurship.

According to a study by the Global Entrepreneurship Monitor (GEM), 60% of 18 to 34-year-olds in Sub-Saharan Africa are turning to entrepreneurship given the poor situation of the continent’s official job sector.

The proportion of young people who felt likewise in the European Union is slightly over 17%, that of Asia Pacific and South Asia is also around 17%, while North America sits at about 30%. Latin America and the Caribbean were the only other regions that came close to matching Sub-Saharan Africa’s optimism, with 40% of the youth there believing they have the opportunities, skills, and knowledge they need to start a small business.

Naturally, as the report notes, these numbers refer to potential entrepreneurs i.e. those who have not yet followed through on their aspirations or interests of launching a business. Even so, Sub-Saharan Africa continues to have the greatest proportion of young people working for startups or early-stage companies in the world at 29%. 

Context: South Africa’s Job Market

According to the UNCTAD report, “Youth Unemployment in Africa,” more than two-thirds of the 45 million young people who are unemployed do not have access to formal education.

Youth unemployment is especially high in South Africa due to a lack of job creation and economic growth. The report notes that some countries have made significant efforts in empowering youth entrepreneurship, such as Kenya and Zambia, where they have partnered with NGOs to reach youth at risk of falling behind academically and socially through innovative programs (e.g., Youth Leadership Program). YLP equips youth with tools to develop their own unique and innovative solutions to address real-life challenges and further the 2030 Agenda and its 17 goals.

Why South Africa Needs More Young Entrepreneurs

Young entrepreneurs are crucial to developing both communities and the nation as they are prepared to take risks and acquire the necessary skills to benefit society. They also create work opportunities for those within and outside their towns. Supporting youth entrepreneurship, which equips young people with the skills they need to succeed, is crucial if a nation wants to eliminate poverty.

Benefits of Youth Entrepreneurs:

Reduce Unemployment and Poverty

The most disadvantaged youth in South Africa are in the job market. According to Statistics South Africa’s most recent Quarterly Labour Force Survey, the unemployment rate for people between the ages of 15 and 24 was 64%. The national rate, in contrast, is 34.5%.

Of the 10 million young people in South Africa between the ages of 15 and 24, only about 2.5 million are actively seeking employment. The majority are discouraged and have given up on finding a job that uses their talents or is located near where they live. The solution is for the youth to create their own jobs in the communities where they reside.

In addition, unemployment is the leading contributor to poverty, especially among the youth. By equipping the youth with the skills to start and build a sustainable business, we enable them to generate an income and create jobs which ultimately results in poverty alleviation.  

Build the Informal Sector

There are more young entrepreneurs working in the informal sector than in the formal one. While historically underprivileged areas sometimes lack access to resources and education, their unregulated economies present a chance for young entrepreneurs to create long-lasting change. The 22 million South Africans who live in townships and other informal settlements make up more than half of the country’s unemployed population. In places that most need it, entrepreneurial activity is likely to have some of the most significant effects. 

Create Job Stability

Not all business owners employ workers, and those that do typically have between two and four employees. Entrepreneurs are unlikely to hire ten or more individuals, particularly in the informal sector. As a result, reducing unemployment through entrepreneurship requires widespread entrepreneurial activity and cannot be dependent on a small number of entrepreneurs.

Stimulate Economic Activity

It has been discovered that entrepreneurship in townships stimulates broader economic activity. Nearly half of the township entrepreneurs depend on other small businesses as their main clientele, which in turn generates job possibilities and forms a crucial network that supports small firms in the township economy.


South Africa needs more young entrepreneurs to have a long-lasting impact on job creation and poverty reduction if it is to truly develop its economy. This calls for us, as a society, to support these young people in starting businesses by encouraging entrepreneurship as a career path rather than as a last resort.

Seed Academy is creating a new narrative for entrepreneurship in South Africa where women and youth entrepreneurs are builders & leaders of high-growth businesses that positively impact the economy and uplift communities. Unlike many other entrepreneur development programs, our approach harmonizes technical skills and personal development within a holistic, multi-faceted experience.