Challenges and prospects of youth entrepreneurship in Khayelitsha, Western Cape

Thesis submitted in fulfilment of the requirements for the degree Master of Technology: Business Administration (Entrepreneurship) in the Faculty of Business at the Cape Peninsula University of Technology 2014The world’s population continues to grow, while job creation opportunities shrink, particularly among young people. Youth unemployment is among key global challenges that may continue to persist for many years. Recently, the unemployment rate among youth in South Africa was estimated at 70 percent. This could mean that thousands and thousands of young people are living under poverty conditions in this country, which may result in a generation of poverty if this position remains unobserved. Interestingly, entrepreneurship has been adopted world over as a strategic approach to facilitate economic participation among youth. Their engagement in entrepreneurship helps them to achieve economic independence, increase their self-esteem, improve their standards of living, to reduce their dependence on state welfare and improve their emotional intelligence. At the same time, job creation opportunities and a decline in criminal activities as a result of unemployment, will ensure development of economic growth. Despite the above mentioned entrepreneurship benefits, youth in Khayelitsha, where this study is based, may be reluctant in pursuing careers in entrepreneurship, owing to inadequate entrepreneurship development services among them, which appear to the case. The objectives of this study were to find out specific factors that discourage the youth from pursuing entrepreneurship careers, to investigate particular challenges that inhibit expansion of their entrepreneurial ventures, and to describe specific prospects of youth entrepreneurship development in Khayelitsha. The current study adopted a descriptive research design. A quantitative empirical research approach was employed with the help of self-administered questionnaires. A sample of 132 subjects was randomly drawn from a population of 200 youth entrepreneurs who operate and are formally registered as SMMEs within various industries that are registered on the database of a local organisation known as Khayelitsha Youth In Business (KYIB), which promotes and develops entrepreneurship among youth in Khayelitsha. The data that was collected from participants of the current study was captured and analysed with the help of a Statistical Package for the Social Sciences (SPSS) software, based on 77 questionnaires that were returned. The findings were illustrated in tables, bars and pie charts, and the objectives of the study were achieved. It was found that it was not the case that young people in Khayelitsha do not want to pursue careers in entrepreneurship, but rather it was that youth entrepreneurship development is lacking in this community. The current study also revealed that a major factor that inhibits youth entrepreneurship development was the lack of awareness and inaccessibility of entrepreneurship support structures and initiatives in this community. Interestingly though, this hindrance does not appear to have a negative bearing on the identified growing enthusiasm of youth to engage in entrepreneurial activities. Overall, on the basis of the challenges and prospects revealed, recommendations to improve the current situation were made. This study is an applied research effort and its relevance is linked to the fact that it provides a rare insight into the state of youth entrepreneurship in a large but under-researched township community in the Western Cape. The findings and recommendations therefore bear far-reaching ramifications for all stakeholders who are concerned about developing youth entrepreneurship in this society