Investigation of the Youth Informal Entrepreneurship Landscape in South Africa

Abstract

Introduction: The South African economy is characterised by high and continuously rising youth unemployment levels and rates. While countervailing interventions have been attempted in the formal sector, support for youth employment and informal sector entrepreneurship has received limited attention from policymakers.

Purpose: This is a rare study that examined South African youth entrepreneurship by analysing all five available waves of the seriously under-utilised Survey of Employers and Self-Employed (SESE) data, focusing on youth entrepreneurial activities.

Methodology: Youth (15–34 years) and adult (at least 35 years old) informal entrepreneurs were distinguished, before deriving descriptive statistics on business activities, with a specific focus on site of operation, management, employment and net profit use in youth-owned enterprises.

Findings: Youth informal entrepreneurs were typically African own-account workers without matric (senior certificate), and operated in the wholesale and retail industry. They had decent access to electricity and piped water on the business site, but did not have e-mail or internet facilities. More than 80% did not keep any business records, while only 60% operated their businesses for the full 12 months. Nearly 90% had launched their informal businesses less than five years ago, primarily because they were unemployed. The majority needed assistance mostly in the areas of marketing, provision of an alternate site and better access to raw materials. Lastly, the majority of them spent the net profit to purchase household items instead of re-investing in the businesses.

Originality/value: The empirical findings help the government to embark on new policy changes to better promote youth informal entrepreneurship growth.