Enterprise Development – a promising pathway for youth in the economy

Any organisation concerned with addressing the devastating South African employment issue, should have Enterprise Development front of mind. Employment cannot be sustainably addressed if new businesses do not come into being to absorb young people into meaningful and productive activities. The Youth Employment Service (YES) mission to transform South Africa’s youth into active economic participants goes far beyond simply placing individuals in work positions. Additionally, the organisation seeks to address the root causes of unemployment by creating new economic pathways and work opportunities for youth by strategically driving enterprise development (ED) in peri-urban areas and densely populated township communities. In functional economies, the contribution of small business to employment and GDP is well over the 85% mark. South African small business makes nowhere near the same contribution. Enterprise development and youth employment are intertwined, two faces of the same coin.

YES is a pioneering, business-driven initiative which has partnered with government and labour to tackle South Africa’s youth unemployment crisis and drive youth employability. Over the past 7 months of live operations, YES and its platform business model of numerous partners have created over 18,000 committed work experiences across the country. This makes YES the highest impact, non-government funded jobs initiative in the country, given the short time period this has been achieved in.

Going forward, YES aims to drive hard on enterprise development channels for youth employment. YES CEO, Dr Tashmia Ismail-Saville, maintains that small business enterprise development is the most sustainable mechanism through which to drive employment, and is a key part of YES’ strategy.

She notes, for example, that new small businesses can absorb and employ entry-level and semi-skilled workers more readily and in greater numbers than larger or more established companies in the first economy. The data shows us that past five years of existence, these established first economy businesses generally require higher skilled workers and turn to efficiency driven automated models to be competitive which leaves semi-skilled and unskilled youth further behind.

Demonstrating the importance of small and medium enterprises (SMEs) for job creation, a 2015 International Labour Organisation (ILO) study revealed, for example, that SMEs accounted for more some 85% of net employment creation in the EU. The report also noted that the median employment share of SMEs internationally was as much as 67%, and that the sector was additionally responsible for some 60 – 70% of contributions to global GDP. Another ILO study showed that 91% of firms in Europe are 1 to 8 employees ( The enabling environment for sustainable enterprises in South Africa / International Labour Office, Enterprises Department. – Geneva: ILO, 2016 )


By comparison, South Africa’s SMEs currently account for some 47% of employment and contribute just over 20% to GDP, pointing to the opportunity for exponential growth within the sector.

These figures give evidence to the economic urgency and importance of transferring entrepreneurial skills and business experience to our country’s youth. Contributions and investments towards supporting young entrepreneurs and driving enterprise development not only have profound impact at the individual level, but also have a multiplier effect on job creation and economic growth. Together with partners such as MTN, Mobicel and Ubuntu, YES is pushing for youth to be incorporated into the ‘agent-trader’ model, where over the year of YES work experience the youth earns a basic income but is also learning how to hustle as an agent, an independent entity, earning over and above the basic income, either by getting smart-phone repair skill sets or trading as an agent; selling phones, data, airtime, electricity and other digital goods.

After their YES year, these youth can successfully transition into independent entrepreneurs. YES is almost ready to deploy on YES youth smartphones, in addition to work readiness training, business literacy modules, with the basics on money management, entrepreneurial goal setting and the psychology of resilience, all key to successful entrepreneurial futures.

Building community-based economic ecosystems

Reservoirs of high numbers of unemployed youth are still found in township communities. This ugly legacy of apartheid has not been transformed and townships remain a place where the lot of the previously disadvantaged has not changed. The roll out plan for YES community hubs together with a wide range of partners from multinational companies, provincial governments and local community programmes will create collaboration spaces and economic seeding points to change the game for local youth. Accessibility for enterprise development infrastructure and training is key.

Making small business support, training, exposure to business and career pathways, all with the latest technologies being deployed is what YES is working towards and to get right at scale.

There is no point to funding work and training programmes when most youth can’t consistently reach facilities offering these programmes. Young women, who may also be mothers, need opportunities to grow and trade as successful business people but remain close to their children, instead of long and expensive commutes.

The YES model is uncompromising in setting economic and development infrastructure in the heart of marginalised communities and ensuring market access is established for the new enterprises.

“These hubs lie at the centre of grassroots economic value chains, as all hub investments are carefully linked to high growth sectors with exponential job creation potential, supplying youth with skills and experience in fields ranging from health, education and technology to nutrition and farming,” says Ismail-Saville.

“The outcome is a community-based economic ecosystem that supports new businesses and provides support to a number of existing businesses within the local community.”

Hub facilities play a significant role in providing communities with a range of business support services for existing small businesses, including the provision of CIPC registration and support services. Additionally, the hubs offer access to a range of training and development programs such as business and financial literacy programmes, and 4IR training in partnership with Google and Microsoft.

YES hubs further support businesses and entrepreneurs in realising their potential by connecting them with the world outside through technology transfer, WiFi, offtake agreements and best practice training, bringing investment and technology into the heart of local communities.

Importantly, the hubs create jobs at a community level where they are accessible to local youth, reducing the cultural, geographic and educational distance to work opportunities.

“The focus sectors chosen are demand-led, with market access a necessary condition for investment in the infrastructure on the jobs,” explains Ismail-Saville.

YES Golden Rules to govern successful enterprise development for SA’s youth:

1. Make it accessible.

2. Ensure programmes for young women are established which take into account rearing young children and security.

3. Utilise best in breed technology and training with industry relevance. Old tech means these new enterprises can’t be competitive or earn margin.

4. Always start with market access, invest in training and enterprise capex only if someone will buy from them. Understanding economic value chains and demand driven industrial structures must form part of planning.

5. You need technical training, business + financial literacy and psychological training for successful enterprise owners. Holistic support is key.

The YES Hub model integrates these golden rules as key part of its enterprise development strategy, creating enabling environments in remote township areas that allows businesses and entrepreneurs the chance to access a broad range of opportunities and services.

Success stories

Some examples of the work being done at YES hubs in collaboration with various implementation partners include:

The Nedbank Green Engine:

An Enterprise Development and training grant approaching R6 million from Nedbank enabled the development of an urban farming aquaponics initiative at the Tembisa hub, the Nedbank Green Engine, which is aimed at developing young entrepreneurs and urban farmers. As just one example, Mosesi Mosesi a farm manager who participated in this programme, proudly states, “I went from being unemployed to being an employer.”

With YES providing the managerial framework to assist artisanal farmers, the farm is yielding 43,200 high-quality heads of lettuce a year and has already created over 70 jobs.

Through this initiative, community members are given the necessary skills and resources to create sustainable small-scale farming operations in back gardens. Their produce then provides a secure food source to members of the community, and surplus production is sold into the community, as well as to restaurants and retailers.

Blossom Care Solutions

YES has also partnered with Blossom Care Solutions to introduce a manufacturing, sales and marketing business that is focused on producing 100% compostable and affordable menstrual hygiene products using new technology. And not only is this revolutionary product helping to save the environment, it is also creating work for 12 previously unemployed female youth from Tembisa.

At the end of the first year of production, these 12 young women will take ownership of the business via a social franchise, becoming owners of the business with the support of a Blossom team who will continue to oversee training, marketing, sourcing of raw materials and expansion programs. This facility has the further ability to scale over a period of time, to sustain a total of 30 direct jobs. YES will scale this initiative across the country.

Mish Da Chef

Mishak Masipa, of Mish Da Chef Company, was given a massive break when he won a cook-off last year to be selected to be the YES hub’s own master chef. The exposure and experience has had immeasurable benefits for Mish Da Chef, which now employs three staff and offers world class food to Tembisa at lower prices.

While the business has expanded into event catering, offers private chefs and even food and beverage consultation, it has also attracted the attention of one of the bigger players. A partnership with The Local Grill is set to see the establishment of a 50-seater, sit-down restaurant, operated by Mish Da Chef at the YES Tembisa Hub. It will include an on-site training facility for the hospitality and tourism industry and will create 16 new youth jobs on a sustainable basis.

Netcare

Netcare has contributed R5.5 million to build the next hub in Alexandra, to be opened later this year. This hub will start with two new businesses – a co-op of women and youth for upcycling Netcare’s linen, and a ceramics school and factory for the production of corporate gifts and souvenirs.

In a virtuous circle, Netcare’s used, but still high-quality linen that would ordinarily go into landfill is donated to the co-op and is then repurposed into other items, some of which – such as baby blankets – the company will then repurchase.

Netcare chief executive Richard Friedland underscored the impact of such a hub on the local community in an interview on Business Day TV, saying, “We can be creating close on 300-400 jobs within the Alexandra area over a five-year period.”

Why businesses should get involved

Ismail-Saville notes that YES’s experience with the Tembisa hub indicates that the average YES hub will employ 300 youth full-time and create an additional 2,400 jobs indirectly in communities through stimulating new demand for security, cleaning, infrastructure build and maintenance.

Each hub is additionally expected to grow local economies by some R120 million annually, while salaries paid to staff and new indirect jobs will generate a further R55 million in local economic spending.

“It is our vision to roll out 100 hubs across the country and for this we need funders, access to land and commercial partners to develop value chains,” states Ismail-Saville. “The Hubs are built with a Lego design in mind, modules or Lego bricks include a sector, training, market access and jobs, these bricks are assembled in unique combinations to suit the market opportunities and community needs and potential. It is a scalable and customisable method to achieve our goals”.

“The hubs provide access to a large base of individual consumers and small enterprises which companies may struggle to reach alone. This is an attractive proposition for established companies, many of whom have indicated their willingness to provide ED support to invest in and fund the development of additional hubs. Other institutional organisations also see this partnership as a scalable collaboration to fulfil their own transformation mandates, YES is working with the DBSA, Transnet, several banks, Naspers, Foundations, NGOs along with companies who all see clearly the potential enterprise develop holds both strategically for their own objectives and for the country.”

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