How to Educate Entrepreneurs … ?
- Build Robust Entrepreneurship Eco-systems
- How Education fails students and business on employability
- Inclusive Entrepreneurship skills training
BUILD ROBUST ENTREPRENEURSHIP ECO-SYSTEMS
Governments and policymakers must invest in the creation of a robust entrepreneurship eco-system for the youth.
We are living in a time that has the largest youth population the world has ever seen. This creates many challenges as young people are impacted by a wide range of socio-economic and environmental issues. However, this demographic youth bulge also provides opportunities as young people have the potential to create innovative solutions to many of these issues. One major challenge that cripples the ability of young people to reach their full potential is unemployment. The world needs to create over a billion new jobs by 2030 to accommodate existing and future unemployed youth.
One very powerful solution is to empower young people to become creators of jobs in the emerging industries which will play an integral role in transforming our world. To do this requires the full support of governments, private sector, civil society and young people themselves to develop a robust entrepreneurship ecosystem that provides an accommodating environment for youth entrepreneurship to flourish.
It is a fact that many young people have a vested interest in developing enterprising solutions that are beyond creating a livelihood for themselves. These are the creators of many jobs that young people need in the labour market. Many have developed innovative solutions to promote local economic development, combat climate change, create low-tech sustainable energy solutions, promote gender equality and inclusiveness, and several encourage youth participation and transparency in political discourses. However, many of these big enterprising ideas lack key resources that prevent youth enterprises from growing to scale and making lasting impacts. As an entrepreneur myself, I know first-hand the challenges of starting a business. Without adequate support, a business can easily fail in its first vulnerable years.
I therefore call on policymakers and youth leaders at all levels to join forces to eradicate impediments that prevent the development of a resilient entrepreneurship ecosystem. These range from the current complex and high-cost regulatory systems to a lack of youth-friendly financial products and services. We must act now to foster a culture of entrepreneurship that will promote youth employment and sustainable livelihoods. To do this, there needs to be:
- A more simplified regulatory environment that utilises ICT to create a low-cost business registration and reporting experience
- The integration of entrepreneurship education at all levels of formal and informal education systems and business development services that meet the needs of young people, match local context, utilise case studies and encourage the integration of ICT, prototyping and research
- Youth-friendly financial products & services: eg. informal lending mechanisms, start-up and accelerator grants, loan schemes without the traditional collateral requirements – all under-pinned by effective financial literacy training;
- Incubator and resource hubs that provide on-going technical support, mentoring and coaching, and access to resources and opportunities that support green tech start-ups, social enterprises and other forms of transformative enterprises
A society that encourages a youth-centric entrepreneurial culture will create the long-term, decent jobs needed for young people and assist the development of –
- Sustainability = ideas for business that strengthen natural ecosystems;
- Security = ideas that promote peace and create powerful tools for post-conflict peace-building;
- Fairness = ideas that prevent gender segregation, encourage inclusion and fight discrimination;
- Prosperity = ideas that create a world that decouples economic growth from environmental degradation and build local economies;
Our world depends on the enthusiasm, creativity and passion of young people to build, strengthen and diversify the labour market while promoting sustainable development; Governments and policymakers can facilitate this by investing in the creation of a robust entrepreneurship eco-system for the youth.
How Education fails students and business on employability
Benjamin Fraser, Caribbean and the Americas Regional Representative
The Commonwealth Students’ Association (CSA)
The concern of employers globally is that employees have the correct bit of paper but a total inability to effectively apply it and they blame this on failing education systems.
Firstly, persistent high levels of unemployment along with job vacancies that remain unfilled are often attributed to skills mismatches – the gap between an individual’s skill and demands of the job market.
The Hays Global Index assesses the dynamics of skilled labour markets across thirty-three countries from all regions of the globe. The report reveals that between 2015 and 2016 there was a global increase in the challenge of business to matching available skills with unfilled jobs. On a scale 1-10, 10 being the most unfavourable 15 countries scored at least 6.5.
Employers and industry officials need to be involved in defining curricula and learning outcomes and help deciding which skills the students are being trained in. Austria has won the attention of the international community for controlling its unemployment rate through its dual education system which is characterized by alternating school-based and company-based training stages; it is always kept up to date through consolidated efforts to forge partnerships between employers and educators.
Secondly, Millennials, which make up the growing portion of the labour force are drawn to STEM careers. Born in the information age, we boast a portfolio of hard technical skills that belie our young age. However, when it comes to soft skills, Millennials fall short. This is frustrating for employers.
In a McKinsey survey of employers of young people in nine countries, 40% of employers said lack of soft skills was the main reason for entry-level job vacancies. There were gaps in soft skills such as communication, teamwork and punctuality. In the 2016 Payscale report titles “Levelling Up: How to Win the Skill Economy,” critical-thinking, problem-solving, attention to detail, writing proficiency topped the list of skills managers find missing from job-seekers. While formal education leaves graduates technically and academically prepared, their soft skills are severely lacking.
One potential solution is measuring students’ participation in extra-curricular activities. Research has shown that these activities can function as important tools in developing skills. Universities and employers should pay attention to the extent that students and potential employees, participated in them. Non-academic activities demonstrate a young person’s level of commitment to personal growth and should be very attractive to future employers as an indicator of well-developed soft skills.
I participated in the 2016 Summer Youth Employment Programme organized by the National Youth Service of Jamaica. Because of the strong emphasis which my high school placed on participation in extra-curricular activities, I found it easy to function in a work environment and I found the accounting work wasn’t difficult.
Thirdly, all levels of education must come to recognise the most essential facet of entrepreneurship: it is a practice, like that of law and medicine, that can be codified, developed and taught. Modern education systems must discontinue its failure to demonstrate an understanding of the fundamental importance of entrepreneurship as an applicable practice. A Swedish study on the impact of entrepreneurship education in high school on long-term entrepreneurial performance revealed that Junior Achievement’s Company Participation Programme increases the probability that an individual will engage in entrepreneurship by starting a firm and that his or her income from these firms will be higher.
I recommend the integration of entrepreneurship in the heart of the education system from beginning to end. It is quite likely the most important step a country can take to help reverse the trends of rising youth unemployment and social dislocation.
Inclusive entrepreneurship skill-training and business management support solutions
Adriana Poglia and Rob Giddings, Peace Child International
Globally, inequality is rising: in 2017, in Africa and Asia wealth per adult fell by more than 1%, compared to a world wealth per adult growth of 4.9%. UNCTAD Data for 2016 shows that 73.12% of foreign direct investment (FDI) inflows go to high income countries. Low income countries receive just 0.81%. This clearly demonstrates the inequality of investments between countries. These statistics show that the traditional low-income countries are still economically marginalised, and that the global economic system does not support them to overcome poverty.
Education impacts the type of investment the country can attract. In a global economy increasingly about technology, companies need more high-skilled workers than low-skilled ones meaning low-income countries are further marginalised. Using UNICEF data, low-income countries register on average a primary school attendance rate of 69.7% with an average dropout rate of 16.7%. This compares poorly with high income countries where average attendance is 94.2% with a dropout rate of 1%. Data from secondary schools show low income countries registering an average attendance rate of only 31.7% of the total number of children of secondary school age.
As a result, low-income countries have an average youth literacy rate of just 63.89%, compared to high income countries which register an average literacy rate of 99.12%. With technology being a key driver of economic growth, it is also recognised that the poorest and most vulnerable young people are being increasingly left behind in the technological race.
What happens to these young people?
Most of them end up working in the informal economy, either in temporary jobs, or running their own business, earning just enough to survive. This is a high-risk lifestyle. Some only work a few weeks a year. Businesses are run on tiny margins. Income generated from these activities is variable and inconsistent. A business or personal crisis can quickly lead to business failure. To manage this, they hedge their income across a portfolio of activities in a practice known as ‘Mixed Livelihoods.’ If one fails, they can survive from the income of others. For example, if a person is engaged in agriculture and are also running a small market stall, a drop-in demand at the market stall, then they can survive by focusing on their agricultural activities.
The people who run these different activities rarely gain the skills needed to grow a business. This creates a trap in which the person is stuck, constantly trying to earn enough to survive and never being able to predict how much they will actually earn. This uncertainty means it is difficult to make long-term investments in their business, themselves or even their family, which are essential to escape poverty. In this sense, for the most marginalised, employment means creating a sustainable and predictable income.
What can be done about increasing the incomes of marginalised young people and empower them to earn a predictable and sustainable income?
Most activities in the informal economy involve trading. Entrepreneurial and business management skills are therefore vital. With entrepreneurial skills, a young person can maximise profits, earn a higher income from any small business they choose to engage in, and can identify a viable portfolio of activities to ensure the sustainability of their income. Once they have established a viable business, they should be able to earn a predictable income and eventually move into the formal economy.
In the work of Peace Child Intl., we have worked with young entrepreneurs who have done just this. Yei Neagor in Liberia was running a small business selling cold drinks on the side of the road when she signed up to the Be The Change Academy’s entrepreneurship training. She went through our training course and today she has her own shop and is building a second to rent out. She has 2 employees and pays for herself and her partner to complete university. She has turned her life around.
What to do about low illiteracy?
Traditionally education was done mostly using stories. An obvious example is religious texts, all of which provide guidance on life. This provides PCI’s starting point for designing education courses targeted for illiterate people. Research in education has demonstrated the value of games and pictures in making education more engaging for the pupil and is a key factor for improving educational outcomes.
PCI has designed, tested and proven an entrepreneurial training course that uses stories, games and image-based training tools. These encourage participants to build a strong understanding of underlying business concepts and then apply them in their lives. The “no writing” philosophy encourages the illiterate to participate and engage in the training. Feedback from the participants has been overwhelmingly positive: we have seen a huge reduction in dropout rates.
The example of Madame Xenab
Madame Xenab of Koi village, Kenema District, Sierra Leone joined the BTCA training having never been to school. She always had the idea of starting a business but never had the confidence to do so. She and her husband supported themselves and their children by selling whatever they could grow on their small farm. As a result of the training, she designed a business strategy that involved growing and selling specific items that families need for cooking. She noticed that families often run out of these products because they are hard to find outside the weekly market. She sourced her business finance from her local ‘Su-Su’ group – a rotating savings system common in most low-income countries: each member puts in a set amount each week and each week one member receives a pay-out of the total amount saved. Xenab used her pay-out to start her business and will use her next pay-out to grow her business.
During the evaluation of our work we came across many stories like Xenab’s. This demonstrates the power of image-based training tools to support marginalised young women gain the entrepreneurial skills they need, and the ability to apply them to their specific marketplace and context.
The lack of Business Management Skills
The key challenge that remains is the issue of business management. Illiterate entrepreneurs do not keep records so often neglect to consider general business costs. This lack of accountability also makes it difficult to prove to a potential lender that their business is profitable, another key factor which causes so many of the world’s most vulnerable young people to remain trapped in the informal economy.
Our experience working with illiterate entrepreneurs, demonstrates that often simple visual techniques can result in improved management: for example, using leaves and stones allows them to count how much of an item remains in stock.
PCI is designing a bespoke business support application that uses visual systems for data entry on mobile phones. Many of these devices have built-in cameras and a voice-recording facility, both of which can be designed to assist illiterate people. This technology will allow illiterate entrepreneurs to keep a historical record of all their transactions and add up all their business expenditures, allowing them to calculate their profit. This will significantly improve the information available to the entrepreneur to assess the demand for their products and improve their decision-making procedures.
Recording transactions also provides the evidence of the businesses profitability over a period of time. This is needed to convince potential lenders to support the young entrepreneur to access the capital they need to grow their business. The app will support marginalised young people to generate a predictable and sustainable income.
The work of PCI demonstrates that such programmes can effectively reach some of the poorest and most marginalised young people in the world and help them to create productive employment and decent livelihoods for themselves. Informal businesses often make a significant but hidden contribution to the economy and can be a key driver for inclusive growth and poverty reduction through youth job creation.
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