Supporting entrepreneurs in South Africa's informal economy can be a crucial step towards reducing unemployment rates - and, research from Harambee Youth Employment Accelerator explains, there's potential to do something else: create more inclusive employment.
The solution could be as easy as providing cheaper, easier access to data, the analysis shows.
In its latest Breaking Barriers report for June, the non-profit organisation notes that according to its studies, of the country's 1.8 million informal small and medium enterprises (SMEs), less than one-third are run by youth. Slightly more than a third are led by women.
Image credit African Development Bank
Yet, there's room, it argues, to work towards a more inclusive economy and address the 58% youth unemployment rate by creating opportunities in areas where a significant portion of such enterprises are youth-led.
At present, the South Africa’s economy is expected to contract by as much as 10% due to the impact of the Coronavirus pandemic. Specifically, the Treasury expects as many as 1.8 million jobs to be lost in the worst-case scenario.
The country’s President Cyril Ramaphosa has claimed that the current pandemic can be seen and faced as an opportunity to create a more inclusive economy as we work towards a recovery which could, arguably, take up to two to five years.
"The most common informal sector occupations for young men are taxi drivers and motor vehicle mechanics, and for young women—beauticians and street food vendors. Supporting these young people and women will help to build a more inclusive recovery—and without their livelihood strategies, the poverty gap could grow exponentially and inequality increase," the Harambee report points out.
Image credit The Point
Also, according to the report, some youth have been finding business opportunities in their communities amid lockdown - such as selling internet connectivity to a member of their communities or producing cloth masks.
However, they are also facing several challenges; for example, a major barrier is accessing data.
"Access to data has emerged as one of the most significant barriers to equality during the lockdown... When asked, young people told us that, because of the limited cash, they opt to purchase smaller data bundles more often, even if the price per unit is higher than a bulk data bundle purchase," the report demonstrates.
It has been counted that, averagely, young people spend R360 per month on data, others as much as R1 800, the survey by Harambee found. We indeed know that youth require data for job searching, online applications, social media, research and academic work.
"Sixty-three per cent of young people we surveyed do not have an income—and many youths are using the childcare grant to support themselves," the report reads.
Across the continent, unemployment rates are staggering, but social enterprises are teaming up to catalyze change. Image credit Ashoka
"Youth tell us that they are eager to learn, but that data barriers are significant …By lowering (or even removing) data costs, young people are more able to access information, seek learning and job opportunities and engage with others."
Making mobile-sites "data-free" is beneficial as it has the effect of youth being productive during the daytime and not limiting their online behaviour after midnight when data is cheapest, the report concluded.