In economies that are experiencing a youth bulge, entrepreneurs could be the key to what seems like an intractable global problem of growing youth unemployment
Entrepreneurs are a rare breed. They spark ideas, drive innovation and are the primary job creators in any economy. A Ernst & Young study found that 77% of the world’s most dynamic entrepreneurs are expecting to increase their workforce in 2015 as against only 29% of large firms. Data across a 30-year period in the US, from 1976 to 2005, show that virtually all net new jobs were created by new firms. In economies that are experiencing a youth bulge, entrepreneurs could be the key to what seems like an intractable global problem of growing youth unemployment.
Sub-Saharan Africa provides an insight into the looming challenge. According to a report by the African Development Bank, by 2030 there will be 24.6 million people entering the job market in sub-Saharan Africa annually. Elsewhere in the world, it is no different. In the Philippines, one of Asia’s fastest growing populations, 1.15 million Filipinos are expected to enter the workforce each year, according to the World Bank, of which only a fourth are expected to find stable jobs. India is experiencing something similar.
Intuitively, we know that we need to create hundreds of Silicon Valleys around the world that become engines for innovation and job creation. The rising importance of smart cities around the world is encouraging but its primary emphasis is in building smart hard infrastructure. Coupling this with the development of knowledge infrastructure and entrepreneurial ecosystem could ignite the spirit akin to Silicon Valley and provide the impetus to address the global job demand.
Admittedly, entrepreneurs cannot be harvested. To an extent, entrepreneurship needs to be in the very culture of an individual. But, it is evident that policy and systemic interventions can help nurture entrepreneurship.
Teaching entrepreneurship is a new area of education. It fundamentally involves building appropriate knowledge through academic studies, skill development through practice, apprenticeship and internship programs with start-ups along with mentoring programmes for budding student ventures.
This theory is being translated into actual programmes across the world. In India, the Wadhwani Foundation initiated such a programme ten years ago, working with colleges to educate and inspire their students towards entrepreneurship. The foundation is attempting to scale this initiative nationally in India and other emerging economies.
The scaling and replication is structured around three pillars: government partnership, technology platforms and building targeted networks. Government partnership provides vigorous policy support and directed funding for entrepreneurial infrastructure. The massive open online course platform delivers self and facilitated learning of customized entrepreneurship programmes. Finally, rigorously curated mentor and investor networks connect with entrepreneurs at scale through a technology platform.
Besides helping create the next generation of entrepreneurs, the three pillars are also being piloted with start-ups and small and medium enterprises (SMEs). Across the emerging economies, start-ups need mentoring to ensure success. Emerging economies are also disadvantaged with thousands of well-established and high potential SMEs stuck with less than 10 employees due to business constraints or mindset driven complacency.
Opportunities to scale these to 50-100 employees is real and being explored by customizing the three pillars. While realizing the full potential of start-ups and SMEs will dramatically accelerate job creation, instituting entrepreneurial education will continue to provide the pipeline for the next generation of startups and SMEs.
The good news is that this model is cost effective, customizable and scalable. It can be used anywhere.
Ajay Kela is President and CEO, Wadhwani Foundation.