ILO

Promoting Youth Entrepreneurship

David J Lamotte

January 2002 2

Background

The UN/ILO/World Bank High-Level Panel on Youth employment has identified Youth Entrepreneurship as one of four priorities for a National Youth employment Action Plan.

Youth Entrepreneurship - Making it easier to start and run enterprises so as to provide more and

better jobs for young women and men The other complimentary areas being

Employment Creation, Employability and Equal Opportunities.

January 2002 3

Why promote entrepreneurship

“Entrepreneurship and business creation are also a growing alternative for young people whose age group often faces a labour market with double digit unemployment rates. Traditional career paths and opportunities are disappearing rapidly. A growing number of young people are taking up the challenge of starting their own business.” (Juan Somavia, Director General ILO)

January 2002 4

Entrepreneurship is a means not an end

"Youth people's challenges are complex." Multiple solutions/pathways. (YEN 4 Es).

Starting a business is not an end but a means to achieve an end.

If a young woman starts an enterprise (or becomes self-employed) and after one or two years she finds an interesting job offer and gets to be employed by

somebody else, it is a success?

January 2002 5

Advantage of promoting youth entrepreneurship

More employers Employees who better understand business More innovative and socially responsible

enterprises More jobs (most likely jobs for other young people) Better informed consumers …

January 2002 6

The situation facing many young people

Entrepreneurs wanted: Help grow an enterprise from scratch in an business that offers no barriers to entry, many competitors, very low margins, highly labour intensity, no propriety technology, few economies of scale, weak brand distinction and little regulatory protection. No credit available!Serious inquiries only.

Would you apply for this job?

A young women is looking through the local newspaper and finds the following advertisement?

Jobs of this type are the reality for many

young men and it is even more difficult for

young women!

Yes or NoYes or No

January 2002 7

The high-level panel says that: All countries need to review, rethink and reorient the legal and

institutional framework to make it easier to start and run a business.

Governments and international organizations should work to develop policies to integrate the informal sector into the mainstream economy, raise its productivity and improve conditions of work.

Governments, (national and local levels) need to encourage a broad and dynamic concept of entrepreneurship to stimulate both personal initiative and initiatives in a broad variety of organizations

Specifically the High-level panel provided a detailed recommendation (No. 7) on promoting innovation and entrepreneurship for young women and young men.

January 2002 8

Situation in the region Promoting youth entrepreneurship is a widely

recognised need. It was mentioned in nearly all the country papers.

Also there was a recognized need to promote an entrepreneurial culture; particularly in the Pacific.

Most countries in the region have projects or programme to help young people start a businesses.

January 2002 9

Broad types of youth entrepreneurship programmes

Business start-up programmes Programmes specifically for young women and

young men Programmes in which young people are a large

proportion of participants Programmes designed to promote or foster a

more entrepreneurial culture

January 2002 10

Examples of business start-up programmes

Financial and human resources (mainly from the private sector) to provide mentoring, credit and sometimes training. Bharatiya Yuva Shakti Trust (India) Young Professional Development Programme (Indonesia) Philippines Youth Entrepreneurship Foundation involving the

ECOP, Rotary, (soon to be replicated in Indonesia) Fiji Chamber of Commerce and Industry

Skills training (commonly on-the-job) and entrepreneurship training "The LEARN Foundation” (Bangladesh) recruits young people

from minority communities and provides on-the-job training in skills on ICT plus entrepreneurship training

January 2002 11

Programmes designed to promote or foster a more entrepreneurial culture

Sponsoring, running or judging youth enterprise competition Shell’s Operation Livewire

School based businesses and competitions Promoting role models

Australia’s Young Achievers

Is this because the do not exist or that we do not know about them?

We do not have many examples of these types of programmes reported in our country papers.

January 2002 12

What we can learn from these programmes

Behind every good programme, there is a social entrepreneur who has a vision and makes thing happen

Successful programmes have very good internal management

Programmes must help young people take advantage of market opportunities, based on their (potential) capabilities and assets as well as their aspirations.

January 2002 13

…And …

“Focus on core competencies and partnership". One programme (organization) can not provide everything so it must form partnership with other programmes.

Public-private partnership is a key to sustainability.

January 2002 14

Youth Focus

Visionary Leadership

Networking &Partnership

Strategic Management

Innovation

EconomicDimension

SocialDimension

Political / Policy Dimension

Social Entrepreneurship

Process

Program Effectiveness & Sustainability

Context/Environment

Increased Livelihood Outcomes

Framework for effective programmes

From ILO’s IFP/SEED

January 2002 15

Impact of these programmes These programmes clearly help the young participants

overcome the many obstacles they face in starting a businesses.

Unfortunately, these programmes do not reach sufficiently large numbers of young people.

We should not necessarily think in terms of another project or programme but start thinking more strategically.

Our strategy should foster partnership between and build on the existing efforts of governments, employers’ organizations, trade unions, youth organizations and other civil society groups to learn from each other and to pool efforts and resources.

January 2002 16

Developing a youth entrepreneurship strategy

Recommendation No 7 of the high-level panel provides some insights into the broad components of a youth entrepreneurship strategy.

The strategy should foster partnership between and build on the existing efforts of governments, employers’ organizations, trade unions, youth organizations and other civil society groups to learn from each other and to pool efforts and resources.

January 2002 17

Promote a more enabling environment

ILO’s Recommendation No. 189 On General Conditions to Stimulate Job Creation in Small and Medium Enterprises, provides useful guidance.

It says amongst many priorities we need to: Review and reorient the legal and institutional framework to

make it easier to start and run a business. Encourage financial institutions to provide credit and other

financial services. Foster an entrepreneurial culture Ensure that young women have the same opportunities as

young men

January 2002 18

Integrate entrepreneurship into the mainstream education system

Examine our education system to see to what extent it promotes entrepreneurship and self-employment as viable and rewarding career options.

Do the examples of work situations in the text books reflect entrepreneurship and self-employment pursuits.

Integrate entrepreneurship education into the mainstream academic and vocational curricula. E.g. (ILO’s Know About Business)

In a math class the students might be asked to work out a cash flow plan for a small business and identify the costs of hiring employees.

In a language course students might learn about business terminology and practice making a sale in another country.

In a history class the development of new businesses might be part of the study of an era

Provide business start-up training and support for graduates who want to start their own business. E.g. (ILO’s SYB and IYB programmes)

Vocational institution graduates University graduates

January 2002 19

Promote access to credit for young entrepreneurs

Commonly finance (including micro-finance) institutions view young people as being relatively risky. Also for this target group lending scheme does not seem to work well. Finance institutions in some countries avoid unmarried young

women because (1) when they get married, they may move to a different community and (2) when they get married, their husbands will take over authorities on financial matters and are unlikely to honour financial commitments that their wives made before they get married.

Many of the more successful youth business start-up programmes combine access to credit with business development services.

January 2002 20

Foster partnership with employers’ and workers’

Sponsoring, running or judging youth enterprise competition.

Providing mentoring and advisory services Providing work experience and on-the-job

training opportunities. Doing business with young entrepreneurs Encourage representative organizations to

advocate on the needs of young women and young men entrepreneurs.

January 2002 21

Foster the involvement of young women and young men

Encourage participation and ownership of decision-making in entrepreneurship programmes

Promote the formation of entrepreneurship clubs and associations as self-help organizations

Involve and consult these organizations.

January 2002 22

I would be happy to answer questions and receive comments