South Africa’s unemployment rate is soaring and people are struggling to find work. Is entrepreneurship the answer to solving the unemployment question?
According to data from StatsSA, SA’s unemployment rate increased from 32.1% for 2023Q4 to 32.9% for 2024Q1.
Nkosinathi Mahlangu, head of Youth Employment Portfolio, Momentum Metropolitan said that the SA economy is at a stage where economic activities and sustainable livelihoods will not only be realised through formal employment.
“We have seen South Africans turning to entrepreneurship out of necessity,” Mahlangu said.
Raizcorp chief executive Allon Raiz agrees with Mahlangu that there are many South Africans choosing the path of entrepreneurship because the cannot find formal employment.
“There has definitely an increase in entrepreneurs due to unemployment,” Raiz said.
According to Francine Mashabela, Career Centre Manager, IIE Varsity College, the unemployment crisis has pushed people to choose the route of entrepreneurship because they need to fend for themselves.
One such entrepreneur is Zethu Nyali, the founder of Zee Organics who started her business because she could not find employment during Covid. Nyali said that although she studied science, she was unable to find formal unemployment.
When her sister fell sick with cancer and was having issues with psoriasis she created products to help her sister. After having no luck at finding a job, she started a business in 2021 to sell the same products that she created to help her sister.
Nyali said that she would definitely recommend that people start their own business if they cannot find a job rather than sitting at home jobless.
One of the major benefits that Nyali, has found by starting her business is that she has been able to employ other people like the 10 people that work for her.
According to Mashabela, the number one benefit of entrepreneurship is job creation because new businesses create new opportunities that were not there before, plus they help with the growth of the economy.
Mashabela said: “Unemployment crisis will continue to be quite a big problem therefore it is important for entrepreneurs to empower other people through job creation.”
On the flip side, there is also a large number people that are entering the market because they see entrepreneurship as an opportunity, according to Raiz.
Mashabela said many South Africans are choosing entrepreneurship over formal employment because they find themselves inclined towards entrepreneurship.
“They appreciate the flexibility and independence of entrepreneurship opportunities,” Mashabela said.
According to Mashabela, the younger generation enjoy flexibility and they want to be a part of the solution of in terms of solving the unemployment crisis in SA rather depending on someone else to give them a job or solve the problem for them.
Unlike the younger generation, many people of the older generation are more inclined to depending on someone else to give them a job.
According to Mahlangu, entrepreneurship is also seen as an income supplement to the employed as we have seen South African’s having “side hustles” which are entrepreneurial.
Raiz added that entrepreneurship is great learning ground for young people through which they can gain experience and then move to the corporate world.
Advice for aspiring entrepreneurs
Regardless of the reasons that you want to become an entrepreneur it is vital that think through the decision carefully.
Here is advice from Mashabela and Raiz to help out aspiring entrepreneurs.
– Mashabela said: ”Be clear that starting a business and entrepreneurship is definitely the right path for you by knowing that whether you have the qualities of successful entrepreneur or not.“
– Knowing the problem that your business is going solve and how you are going to solve that problem is crucial, Mashabela said. It is important to set yourself a part from other businesses and creativity can play a huge role in that.
– Raiz said that entrepreneurs need plan properly by having a business plan that has 24 month outlook rather than 12 months and having twice the funding than they originally planned for therefore reinvesting in the business is important.
– Entrepreneurs need to listen to the market feedback and keep adapting to the feedback otherwise they won’t survive, according to Raiz.
– Mashabela said that entrepreneurs need to be realistic because trying to start a business can be a long, hard journey but with persistence it is possible to get the business going from the ground up.
Business mentor
Finally, it is crucial that entrepreneurs surround themselves with other entrepreneurs and mentors who can help them get through both the emotional and technical part of business growth, according to Raiz.
Mashabela said: “Entrepreneurs need to connect with the relevant people to support them on their journeys to successful.”
Raiz said that mentors are a critical part of the journey because they give a different perspective and to have a honest external perspective is very powerful as it opens up a different way of thinking.
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