How to build an enabling  environment for youth  entrepreneurship and sustainable 

How to build an enabling environment for youth entrepreneurship and sustainable enterprises Paper for the knowledge sharing event on Integrated Youth Employment Strategies, Moscow 17‐19 February, 2010 Martin Clemensson Jens Dyring Christensen Small Enterprise Programme, International Labour Office, Geneva February 2010 The world is in transition searching for more innovative ways to combine economic
growth, the reduction of poverty and equitable development in a more environmentally
sustainable manner. There is a mounting concern in all corners of the world about both
the short and long term impact of globalization on the environment and a dawning
realisation that ensuring the quality of present and future life and employment depend on
how well we tackle this challenge.
This calls for new forms of cooperation between governments, business, workers and
societies in general to promote the concept of “sustainable enterprise”. This concept, as
endorsed by the International Labour Conference (ILC) in 2007, recognises the
importance of integrating three pillars of sustainable development: economic, social and
environmental. The ILC’s conclusions highlight the importance of an “enabling
environment” for sustainable enterprises.1 This term as presented in this essay contains
four elements such as i) the norms and values in a country with regards to
entrepreneurship, ii) the policy, legal and regulatory framework in which youth led
enterprises operate, iii) the administrative arrangements used to implement and enforce
this framework, and iv) the organisations that promote, regulate and represent enterprises
and their workers, including financial institutions.
To put it short, we are facing three grave challenges at the moment that make the
promotion of enabling national environments for sustainable youth enterprise very
urgent. First, the global economic crisis is already taking its toll on developed, emerging
and developing economies. This brings with it unprecedented labour market and social
challenges across advanced, emerging and developing countries, including for young
women and men that are already in the labour market or for those that are about to make
the transition from school to a working career.
Second, the planet itself is facing a “sustainability” crisis. Current production,
consumption and work patterns consume energy and other resources and leaves behind
waste and greenhouse gases at a rate dangerous for our planet and our health. Climate
Change itself, adaptation to it and efforts to stop it harbour major risks, but they also
provide new and innovative opportunities for youth entrepreneurship and youth
employment creation across the world.
Third, the world is facing a grave employment crisis for young people. There are more
than 1 billion young people aged 15-242 in the world today, of which 85 per cent live in
developing economies and almost 100 million young people will be entering the global
workforce every year for the next ten years. The global youth workforce today numbers
International Labour Conference (2007) Conclusions Concerning the Promotion of Sustainable Enterprises, June,
Paragraph 11.
The definition of youth may vary from country to country. The standard UN definition comprises the age group
between fifteen and twenty-four inclusively.
more than 600 million and the number of unemployed youth has increased to about 80
million. Given the current economic downturn this number is likely to rise even further.3.
Why youth entrepreneurship?
Evidence shows that when jobs are scarce, especially young persons are generally more
likely to be unemployed. In the current economic crisis young people are the first to be
laid off (last-in first-out). This had lead to millions of laid off young workers returning to
rural areas where the prospects for securing alternative work are dire. Compared to
adults, the youth of today are almost three times as likely to be unemployed and globally
one in five working youth continues to live in extreme poverty on 1US$/day level.4 Many
young people are therefore simply pushed into self-employment becoming “entrepreneurs
by necessity” rather than “entrepreneurs by choice”. Many struggle in the informal
economy with few acquired entrepreneurial skills, little, if any, knowledge about what it
takes to run a business and with little or no access to affordable finance or business
development services. The promotion of more effective youth entrepreneurship policies
and strategies is therefore getting increased attention among governments and
international organisations and there is a growing recognition that responsible youth
entrepreneurship must be at the heart of tackling global environmental, economic and
employment challenges.
The ILO has a clear and unique mandate to improve the business environment for
sustainable enterprise5. Enterprises are the principal source of economic growth and
employment creation and are at the heart of economic activity and development in nearly
all countries. Business owners, managers and workers combine their skills and resources
to produce enterprises that are able to compete effectively in local, national and
international markets. It is within this context that the ILO’s primary goal of promoting
“opportunities for women and men to obtain decent and productive work, in conditions of
freedom, equity, security and human dignity” is recognised.6 Youth entrepreneurship falls
within this global mandate and is a strategic component of the ILO’s Youth Employment
Programme (YEP) as well as of the global Youth Employment Network (YEN) in which
the World Bank, UNDP and the ILO are partnering with governments across the world.
Do we know what works?
Entrepreneurship itself is a young area of research and youth entrepreneurship is even
younger. Much of the research literature is of high-income or middle-income countries
and there is a lack of empirical evidence from developing economies, largely also due to
unavailable data. However, general academic research as well as concrete and practical
Global Employment Trends , International Labour Organization, Geneva, March 2009
Global Employment Trends for Youth, International Labour Organization, Geneva October 2008.
ILO Declaration on Social Justice for a Fair Globalisation, ILC 2008; ILO Declaration on Fundamental Principles
and Rights at Work, ILC 1998; Conclusions Concerning the Promotion of Sustainable Enterprises, ILC 2007;
Recommendation No.189 of 1998 on the General Conditions to Stimulate Job Creation in Small and Medium-Sized
Enterprises; Recommendation No.193 of 2002 on the Promotion of Cooperatives;
Decent Work; the report of the Director-General of the ILO to the International Labour Conference, June 1999.
experiences gained by the ILO over the past 10 years has identified various constraints
and barriers to youth entrepreneurship. Typical challenges are lack of an enterprise
culture in many countries; unfavourable legal, policy and regulatory frameworks for
youth entrepreneurship; the lack of entrepreneurship education across formal and
informal educational systems; the lack of access to affordable financing in the form of
start-up, investment or working capital, and; little knowledge about and access to
relevant business development services and support schemes for youth already in
business or for those or interested in pursuing an entrepreneurial career.7
What are the policy implications?
For youth entrepreneurship policies to be effective it should be approached within the
context of wider employment policies and programmes and an integrated approach with
interventions across multiple sectors and at multiple levels must be taken Interventions
should therefore target the specific challenges that youth face with regards to:
i. The promotion of entrepreneurship culture – social and cultural attitudes along with
family values and norms have a strong influence on whether a young person decides
to pursue an entrepreneurial career. Whereas society’s norms influence an
individual’s approach to life they similarly influence entrepreneurial activity.
Entrepreneurship culture campaigns, the promotion of young successful
entrepreneurs as role models, business idea competitions, awards, media coverage,
youth business events and entrepreneurship education are important strategies for
creating a culture of entrepreneurship.
ii. Introduce entrepreneurship education at different education levels – presenting
students to the world of business and transferring knowledge and entrepreneurial
skills through formal and informal education is crucial to create responsible young
entrepreneurs, including social entrepreneurs. Entrepreneurship education is not
only a means to create young entrepreneurs but also to equip young people with
entrepreneurial attitude and skills which will benefit them in other areas of life, their
communities and society as a whole.
iii. Improvement of the legal and regulatory environment - with emphasis on the
specific barriers and burdens faced by young entrepreneurs - and especially young
women entrepreneurs is especially important.8 Often the administrative and
regulatory burdens – such as business registration, the time it takes to register, the
cost, the number of steps/procedures, minimum capital requirements, property rights
Schoof 2006 ; Nafukho 1998 ; Nasser 2003 ; Weeratunge 2007 ; Blokker and Dallago 2008 ; Greene 2005,
Blanchflower and Oswald 1999, Llisterri et al. 2006; Owualah 1999; James-Wilson and Hall 2006; Haftendorn, and
Salzano 2003/4 ; Audretsch 2002.
For instance, lack of right to own land (collateral) and property in some countries, to open a bank account, register
a business etc. Complex, costly and lengthy business registration procedures affect potential women entrepreneurs
more. Evidence shows that countries with a more enabling business environment have a larger share of women
entrepreneurs. This has spill over effects such as better education and health for children leading also to healthier
and better educated future generations.
etc. - have a disproportionally negative impact on youth-owned businesses, which
are more likely to remain informal as a result. Business environment reforms are
necessary to unleash the entrepreneurial efforts of current and emerging young
businesswomen and men.
iv. Access to affordable finance – is often perceived as one of the biggest impediments
for younger people who, compared to older age groups, have no or less savings and
resources, lack of securities in form of e.g. land and property that can be used as
collateral in debt-financing, lack of business experience etc. Easing the collateral
and legal requirements on young entrepreneurs is important and improving access to
various types of finance micro, equity, venture and credit guarantee schemes – in
some countries backed by governments – are important factors in improving the
access to finance for young entrepreneurs.
v. Relevant business development services and support schemes - for youth already in
business or for those interested in pursuing an entrepreneurial career is important.
Through the pre- start-up, start-up and growth phases of a business venture, there is
a need for specific training in entrepreneurial and business management skills.
Potential young entrepreneurs often lack business connections, have little or no
knowledge about where to access business support services and often not adequate
workspace and business infrastructure. Addressing these constraints through e.g.
“one-stop” shops, youth enterprise centres, business incubators and entrepreneurship
and start-up training is increasingly being experimented with in several countries.
An example of an integrated programme and intervention mix is illustrated below:
Examples of Youth Entrepreneurship Policy & Programme Mix
Enterprise culture, values and norms (meta level) Macro level
Meso level
Micro level
National Youth Policies and
Action Plans
Entrepreneurship education
for in-school youth
Youth Business climate
surveys and business
regulatory reforms
Business start-up &
improvement programmes
Stimulating demand for
entrepreneurship among
young peoples
Promotion of successful
young entrepreneurs as role
Women’s entrepreneurship
Market diagnostics and
sector analysis
Entrepreneurship culture
Establishment of finance
Business idea competitions
for young entrepreneurs
Establishment of youth
funds to finance innovative
Provide information on
access to business support
Support to young
entrepreneur associations
and cooperatives
Facilitating business
linkages and access to
To have a lasting impact, the promotion of youth entrepreneurship should be approached
comprehensively, emphasizing sectors with job creation potential and integrating the
three components of sustainable enterprises – social, economic and environmental.
Human progress and sustainable economic development depend on new ideas and the
ability of young and future entrepreneurs to implement these ideas. The only means to
bring about sustainable development is through investments in the creativity, innovation
and problem solving skills of youth.
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