Prioritising youth start-ups vital for 2015 National Budget

23 Nov, 2014 - 05:11 0 Views

The Sunday Mail

Innocent Katsande

The dry labour market potentially has tragic consequences on the future economy.

Young people have for long been excluded from actively participating in the economy by a combination of factors that include low industry performance and multiple barriers to the establishment of small businesses. This has resulted in a high unemployment rate.

Growth indicators in Africa show that unleashing energy, the entrepreneurial spirit and technological genius in the young is not just a moral imperative but an economic necessity.

However, young people’s access to the resources that would enable them to play a meaningful role in the local economy has been limited in the past few years.

The dry labour market potentially has tragic consequences on the future economy.

We are not just referring to a delay in the youths finding meaningful employment, some will never make it onto the career ladder.

Those who do manage to find employment will suffer weaker career progression.

These emerging economic gaps are persisting, thus fuelling a cycle of poverty.

As Members of Parliament and other strategic contributors work on the 2015 National Budget, which Finance and Economic Development Minister Patrick Chinamasa will present this week, it is critical for Government to respond to the demands that small businesses must be promoted in order to spur economic growth.

While small businesses may not generate as much money as large corporations, they are a major contributor to the economy.

Small businesses present employment opportunities and serve as the building blocks of the economy.

When supported in a friendly environment, such businesses grow.

Large entities such as Nyaradzo Funeral Services started small.

Microsoft is a prime example of how a small business idea can change the world.

Small businesses that grow into large enterprises often have greater impact on the community in which they were first established.

Enough recognition and investment needs to be channelled towards regulating small, unregistered and informal businesses that are emerging across the country as a result of young innovations.

Zimbabwe should open its eyes and understand that youth business incubators — when put in place and supported — are largely responsible for accelerating growth in emerging economies.

Assistance can take the form of a package of business and technical support services that include training on business strategy, marketing, financial management, legal and product development.

Effective incubators, according to economic experts, best come in formats such as access to industrial sites, provision of entrepreneurship training, provision of business advisory services and guaranteed access to capital

These are meant to support young people and small businesses by providing hands-on training during the highly vulnerable start-up phase.

These services are designed to help young entrepreneurs from concept-building to project establishment.

After establishment, the successful young businesspeople must be given access to a network of other businesses and adequate resources.

When successfully implemented, youth business incubators provide an environment conducive for the success of innovative entrepreneurial start-ups spearheaded by young people.

In a recent open letter to Minister Chinamasa, young people strongly advocated empowerment through their inclusion in economic projects and preferential access to natural resources and tenders.

They highlighted the need for youths to access capital via transparent economic empowerment funds.

In addition, they stressed that they need broad access to industry-related education and skills development programmes, and requested that youth start-ups be supported.

At the recently-held National Youth Conference, which focused on realigning youths towards skills development and poverty reduction, there were vociferous calls for Government to review policies towards improving ease of doing business; cost reduction and doing away with bureaucracy and bottlenecks in setting up enterprises.

The State Procurement Board was also implored to ensure 25 percent of Government tenders are granted to youths in line with the National Youth Policy.

In Nigeria, the authorities there placed their small and medium enterprises’ policy at the top of their agenda to drive economic growth.

A study by the Office of Statistics shows that over 90 percent of all businesses in Nigeria employ less than 100 people. Looking at our definition of SMEs, it then means that at least 90 percent of all businesses in Nigeria are, to use the umbrella term, “small businesses”.

The SME sector provides, on average, 50 percent of Nigeria’s employment, and 50 percent of its industrial output.

The proportion of Nigerian SMEs and their impact on the economy is pretty much similar to those in other countries, especially advanced economies.

There are approximately 23 million small businesses in the United States.

Altogether, these employ more than 50 percent of the private workforce, and generate more than half of the nation’s gross domestic product (GDP).

In the European Union, SMEs are seen as largely essential for European employment.

Each year, one million new SMEs set up in the EU.

SMEs account for over 95 percent of all companies and 65 percent of business turnover in the EU.

In the United Kingdom, these businesses not only form the bedrock of the British economy, but are widely accepted as the main hub of economic activity. So, what is the difference when we come to our economy?

The difference lies in the importance we attach to SMEs and the role that this sector plays in economic development.

SMEs have the potential to contribute significantly towards economic growth and therefore they need to be supported.

 

Innocent Katsande is the communications and advocacy officer of the Zimbabwe Youth Council

 

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