Why are students reluctant to become entrepreneurs?
Entrepreneurship ecosystems incorporate actors and experts in social networks, cultural values, college-level entrepreneurship education, research and development, commercial and professional enterprises, business financing and internal and external marketing dynamics. The system’s processes equip students with knowledge and skills to launch business ventures.
That was one of the key findings of a report, Youth Entrepreneurial Ecosystem for Sustainable Development in Sub-Saharan Africa, that was released in April by the Alliance for African Partnership (AAP).
The AAP was co-created by Michigan State University (MSU) and African thought leaders in 2016. It is a consortium of MSU and 10 African universities.
The AAP report is an opener that provides insight into intense obstacles faced by youth in Sub-Saharan Africa, some of whom might have walked through the corridors of higher education and have earned their degrees or diplomas but eventually find themselves stuck in a quagmire of joblessness and who slide into the informal sector to eke out a living.
Highlighting case studies conducted in nine countries, namely, Botswana, Kenya, Malawi, Mali, Nigeria, Senegal, South Africa, Tanzania and Uganda, the report noted that, across Sub-Saharan Africa, many young people, including university graduates from other tertiary institutions, have become mere spectators in the world of work and decision-making processes.
“These young people are excluded from mainstream work life, and by lacking quality education and skills, are left to piece together precarious livelihoods in dire circumstances,” said Professor Richard Mkandawire, the director of the AAP Africa office.
According to co-lead researcher, Anastacia Mamabolo, an associate professor at the Gordon Institute of Business Science, University of Pretoria, South Africa, many young people in Africa acquire skills, but too little is being done to develop specific competencies, build confidence and change mindsets to enhance employability.
She noted that, when it comes to teaching, many university and technical and vocational institution lecturers tend to teach the way they were taught, usually concentrating on theory without considering application aspects and hands-on practice.
But the report noted that, whereas entrepreneurship education per se provided knowledge on how to do business, universities need to collaborate with various stakeholders such as government bodies, entrepreneurs, service providers, financial institutions, start-up incubators and business accelerators in order to build successful entrepreneurial ecosystems for students.
Towards that objective, the report stressed the need for students to be taught how to nurture business ideas that could develop into commercial ventures, change mindsets and create jobs.
Africa’s youth bulge
According to the authors of the report, the issue of harnessing social entrepreneurship ecosystems as part of the learning process in higher education is urgent for Sub-Saharan Africa as more young people are entering the labour market than in any other region in the world.
“The gap between labour supply and demand is expected to widen in most African countries in years ahead,” said Dr Abou Traore, an associate professor of rural sociology and agricultural sciences at MSU and the co-researcher of the report.
For instance, in Tanzania, whereas, between 600,000 and 800,000 new young people enter the labour market each year, only about 40,000 job vacancies are available in the public sector, according to Dr Juliana Machuve Kazi of the University of Dar es Salaam.
In her Tanzanian case study, Kazi noted there had been inadequate hands-on teaching and a reluctance to embrace entrepreneurship.
“Most students are hesitant to embrace an entrepreneurial mindset. They still prefer being employed and underestimate the importance of soft skills-related courses compared to conventional core degree and diploma courses,” said Kazi.
In all nine countries that were studied, a large number of students preferred to be employed rather than create their own businesses and start-ups because of lack of financial support.
Factors hampering entrepreneurs
The issue is that, although governments and universities encouraged students to grow their own business ventures and start-ups, access to finance had been one of the main problems.
According to Dr Sera Gondwe, a lecturer in agricultural sciences at Lilongwe University of Agriculture and Natural Resources, Malawi, 80% of business start-up funds in Malawi come from the entrepreneur’s own savings, salaries, from selling assets, or from family and friends.
Wilson Karimi, a project coordinator at Egerton University, Kenya, also found that lack of capital was a common challenge among all young entrepreneurs who were willing to start business ventures immediately after graduating from universities and other tertiary colleges in Kenya.
According to Karimi, young entrepreneurs also faced bureaucratic delays in government departments when trying to register their companies in addition to a long process of acquiring intellectual property rights.
Furthermore, he cited competition from established businesses, inadequate skills and challenges in accessing credit from mainstream banks as well as the lack of security needed to secure loans, or limited understanding of the market.
But amid efforts to transform universities and other tertiary institutions into catalysts for youth entrepreneurial ecosystems, the AAP is urging various stakeholders, including governments, to build tailor-made entrepreneurial curricula, programmes and degrees.
In addition to learning entrepreneurship, students should be taught how to develop business ideas by hands-on entrepreneurship programme facilitators and through successful business incubators.
According to the report, universities could create a conducive environment that would introduce students to funding mechanisms, access to markets and business policies.
In this regard, traditional curricula should be replaced with coordinated programmes focused on bridging the gap between theory and practice.
What can be done?
The report suggested the establishment of entrepreneurial incubation centres at universities with the aim of developing sustainable and innovative business models for long-term success.
Towards this context, external entrepreneurial ecosystem actors, who were interviewed by the authors of the report, suggested the development of youth entrepreneurial programmes that are well designed and should be monitored, evaluated and properly implemented for better outcomes.
But, for that to become a reality, the report said all entrepreneurial ecosystems should be built from the entrepreneur’s perspective, focusing on enriching the entrepreneurial mindset and skills.
According to Mkandawire, universities could use alumni and local experts to serve as mentors, coaches and funders of student entrepreneurial activities. He said universities should strengthen their partnerships in order to build effective entrepreneurial ecosystems.
The report stated that universities could also establish clubs to promote youth entrepreneurial activities, an initiative taken by Makerere University in Uganda.
Even then, one of the key findings of the report is that, whereas there had been attempts to build entrepreneurial ecosystems in African universities, such activities had been fragmented and lacked integration.
“In most universities, there had been duplication of activities, while in others, varying models of entrepreneurial ecosystems considered themselves as competitors,” stated the report.