Youth unemployment is a major issue affecting not only governments but society as a whole throughout the world – with South Africa a prime example. Thobile N. Radebe, Stellenbosch Business School, and her fellow researchers, call for a youth-driven entrepreneurship economy that can provide a beacon of hope, wealth and meaning to the young and how government and society can make the necessary changes to make it happen.

The Phoenix and the Load Shedding: Youth entrepreneurship as South Africa’s radical cure by CoBS Editor Antonin Delobre. Related research: Contextualising Entrepreneurship as a Panacea to Youth Unemployment in South Africa, Sbonelo Gift Ndlovu, Thobile N. Radebe, Victor H. Mlambo, and Sipho D. Nkonde, Prizren Social Science Journal, 2024.

With youth unemployment in South Africa standing at 46.5%, meaning nearly 4.8 million young people aged 15 to 34 are without work, the traditional “job seeker” model seems to have reached its limit. Based on the statistics, South Africa stands at a precipice where the demographic dividend—a young, vibrant population risks turning into a disaster. These statistics are not merely figures on a page; they represent a complex enigma that has mystified both the public and private sectors for decades.

The South African economy, at odds with an influx of individuals it cannot absorb, has seen a rise in demand for skilled labour even as its educated youth remain locked out of the market. In this volatile landscape, a group of researchers proposes a shift in perspective: entrepreneurship must move from being a survival tactic to becoming the country’s primary economic panacea.

Entrepreneurship in South Africa and the Schumpeterian Spark

To understand how entrepreneurship can heal a fractured labour market, we must return to the foundations of classical economic thought. Thobile N Radebe et al’s study has its roots in Schumpeter’s 1934 Theory of Economic Development, which views the entrepreneur not just as a business owner, but as the central agent of “creative destruction”.

In a Schumpeterian world, the entrepreneur revitalises the economy by identifying opportunities that disrupt outdated systems. For South Africa, this implies a radical evolution: entrepreneurship should no longer be seen as an accidental or secondary path, but as a deliberate “developmental process” led by government and organisational programmes.

When entrepreneurs thrive and grow, they create a productive and competitive environment that expands the nation’s total production capacity. The implication for the South African pool of expertise is clear: the state must pivot from being a direct provider of jobs to becoming the architect of an environment where “creative destruction” can flourish.

Moving up Maslow’s Pyramid

One of this paper’s most notable reflections relates to the psychological state of South African youth. Why does South Africa have one of the lowest youth entrepreneurship propensities in Africa (23.3%), while countries like Malawi and Uganda soar above 55%. According to the researchers, one major answer lies in motivation and the hierarchy of needs.

Drawing on Maslow’s framework, the research suggests that for entrepreneurship to work, youth must see it as a pathway to fulfil all levels of human needs. Currently, for many, it is a desperate attempt to satisfy “physiological” needs – food and shelter. However, the study argues that if youth is encouraged to see entrepreneurship through the lens of “self-actualization” and “achievement,” their engagement becomes sustainable.

This requires a cultural shift. Entrepreneurship must be marketed as a “lifelong career path” that offers social connections, self-esteem, and the power to be an agent of change. If a young person believes that starting a business is not just about survival but about “contributing to the greater good” and personal achievement, the propensity gap can be closed.

The Roots of the entrepreneurship problem

A panacea is useless if the patient’s environment is toxic. Thobile N Radebe et al’s study is brutally honest about the structural challenges that prevent South African entrepreneurial efforts, with reflection moving from individual willpower to systemic stability.

• The energy crisis: A country cannot industrialise or innovate in the dark. The “load shedding” (power outages) predicted for 250 days a year translates to an economic loss of $12.7 billion annually. For small businesses, the “backbone” of the economy, losing R899 million daily across sectors is a death sentence.
• The decay of local government: While entrepreneurship is a local phenomenon, the institutions meant to support it are crumbling. With 93% of South African municipalities considered dysfunctional or struggling, local economic development policies often exist only on paper.
• The fiscal drain: Billions of rands – R478.5 billion to be precise – have been diverted to bail out failing State-owned enterprises. This drain on public funds directly reduces the capital available to incentivise youth start-ups or provide the infrastructure necessary for labour-intensive and value-generating sectors like agriculture and manufacturing.

The implication is stark: until the government fixes the “lights” and cleanses the local governance of corruption and irregular expenditure (which has reached R26 billion in one year), even the best entrepreneurship policies will struggle to take root.

Policy vs. Implementation

South Africa does not suffer from a lack of policy – it suffers from a lack of impactful implementation. From the 1995 white paper on small business to the National Youth Development Agency (NYDA), the framework is present, but the results are less effective.

Radebe et al’s research reflects on a critical mismatch: the education system. There is a sharp rise in the demand for skilled labour, yet even university graduates find it challenging to secure employment. The study suggests that the government’s entrepreneurship drive should be spearheaded by Technical Vocational Education and Training (TVET) colleges. Unlike universities that focus on the theoretical aspect” TVET colleges offer a practical and theoretical blend that aligns with the needs of emerging entrepreneurs. Furthermore, the bureaucracy of administrative consistency continues to undermine business viability.

In this light, for entrepreneurship to be a panacea, the government must act as a facilitator by reducing these barriers and providing tailored support to the informal sector to encourage formalisation.

The Road Ahead: Entrepreneurship success as a deliberate act

The National Development Plan (NDP) aims to reduce unemployment to 6% by 2030. For this to be more than a fantasy, the study advocates for “youth-driven entrepreneurship”. The recent rise in Total early-stage Entrepreneurial Activity (TEA) from 10.8% to 17.5% shows a glimmer of hope, though much of it was driven by the necessity of surviving the COVID-19 pandemic.

The ultimate reflection offered by Radebe and her colleagues is that the future depends on “entrepreneurially aware problem solvers”. This is not a task for the youth alone. It requires the state to address the “widespread decay” of critical sectors.

If the government can restore investor confidence, eliminate political misunderstandings that affect business, and invest in “real sectors” like manufacturing, youth can move from being discouraged to being innovative. Entrepreneurship in South Africa is currently an uphill battle. But, as Theobile N Radebe et al’s concludes, it remains the only viable mechanism to keep youth productive, innovative, and capable of generating the income necessary to uplift the nation’s standard of living.

Useful links:

• Link up with Theobile N. Radebe on LinkedIn
• Read a related article: Guiding Through Obstacles: Empowering youth with disabilities for the job market
• Discover Stellenbosch Business School, South Africa
• Apply for the Stellenbosch MBA.

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