MAINSTREAMING YOUTH ENTREPRENEURSHIP IN GHANA

(GETTING THE FUNDAMENTALS RIGHT)

PROFILE OF THE COUNTRY

COUNTRY: Ghana - West Africa ESTIMATED POPULATION (2008 est.): 22 MILLION TOTAL LAND AREA: 238,539 sq. kilometer (92,100 sq miles) DENSITY (2008 est.): 78 Persons per Kilometer POPULATION GROWTH RATE: 2.6% (2000 Census) CLIMATE Tropical and Humid TEMPERATURE Whole Country: Average low: 20,5C (69F), average high 26C (79F). Accra: Average Daily Temperature is 30C (86F).

Name: MENSAH CLEMENT Age: (23 years) 23RD JULY, 1986 Gender: Male Mailing address: C/o MR. GBODO, P.O. BOX AC168, ACCRA. Email address: menkcol@yahoo.com or mcashine@gmail.com Essay topic: MAINSTREAMING YOUTH ENTREPRENEURSHIP IN GHANA GETTING THE FUNDAMENTALS RIGHT
CONTACT: +233207554643

September, 2009

The world over, entrepreneurship has been identified as the sure way to reducing poverty and mass under-development of many developing countries for which Ghana is no exception. It is in this vain that multilateral agencies such as the World Bank and Centre for International Private Enterprise have sought and continue to provide assistance, both technical and financial for private sector development in these countries. However, this pathway to poverty reduction and economic growth entrepreneurship, which according to Adam Curle (1974; cited in Nsiah Peprah 2006) involves giving people the motivation to fulfill their economical, social, and spiritual potentials is yet to be exploited and oriented to boost youth employment. Ghana, like other African countries, is full of promise and potential, having all the human and natural resources needed to realize her development aspirations to take her place in the world; yet it has been the otherwise, with abject poverty, youth unemployment and diseases becoming the order of the day. The youth are not adequately equipped to deal with todays challenges. One of the major challenges facing young people in Ghana is unemployment. The situation applies to uneducated and educated groups alike. Currently unemployment rate of young people between 15 and 24 years of age is 15.9% with an estimated number of 1.2% new entrants to the labor market annually (Ghana Country Report on unemployment, 2002). Unemployment in Ghana has therefore been described as a youthful phenomenon (Ghana Country Report on unemployment, 2002). Most school drop-outs and uneducated youth enter the informal sector to undertake apprenticeships and on-the-job training in order to acquire employable skills. Apparently those who are fortunate to attain higher learning come out of school only to realize that Government is unable to provide them with jobs. Urged on by the survival instinct, many of the young people have resorted to starting their own businesses and organizations, but are unable to materialize primarily due to a number of entry barriers, of which the State, its Agencies and other Non-State Organizations (NSOs) are major contributors to this failure.

To start with, Government commitment in terms of policy towards youth employment is inadequate. While many countries have acknowledged that small enterprises have an important role in their economies, not much effort has been done to facilitate their growth. Government, as the mother duty bearer is obliged to play the lead role by initiating policies and programmes that would create the enabling environment for the growth of new businesses especially for the youth. It is indeed true that certain programmes such as the Micro, Small and Medium Enterprises (MSME), Presidential Special Initiative to mention a few have been initiated by Government to support entrepreneurship, nevertheless these efforts have been directed at existing businesses and usually opened to all, without specific recourse to the youth. Secondly, cumbersome business regulations affect the establishment of businesses, in that it is easier for a large enterprise to get land for industrial development and a license to operate their business than the small operator. The absence of such milieu does not only serve as an entry barrier to the youth but more critically, a disincentive for effective collaboration and support from Non-State Organizations and other Private Sector actors such as banks, hence the worsening of the countrys youth unemployment woes. Another important factor militating against youth entrepreneurship is the managerial incompetence and capacity of the youth to start, operate and sustain their businesses. The Ghanaian youth lacks the necessary competence to start and manage their own businesses especially those engaged in the informal sector, who according statistics, less than 2% of them have obtained formal education. Even those who have acquired some level of formal education do not have hands-on experience or skill to manage their businesses. This is as a result of the fact that the educational curriculum is traditional, stressing less on innovation and entrepreneurship and pursuing courses that only produce products for public sector jobs that non-existent. Difficulty in accessing start-up capital and incentives is also a major setback. The lack of access to finance is the most fundamental factor that directly constrain the Ghanaian youth in establishing their business. This is as a result of the fact that they simply do not have the collateral to access loans from financial institutions and more so are unable to design better business proposals. This therefore pushes most of the youth into the service sector especially the women because of the low entry barriers of these economic activities. Support given in the form

of loans by the Government under schemes such as MSME and MASLOC have so many conditions and terms which eventually denies the youth access and sometimes these loans are politicized. It is however worth-mentioning that some NSOs have instituted programmes to directly support young entrepreneurs but these efforts are inadequate to make any meaningful impact on youth unemployment in the country. Last but not the least, the youth is challenged with the unbearable competition on both local and international markets. The Ghanaian market is replete with high caliber competitors including foreigners who are illegally operating in the retail sector. Most of the youth think of being in the industrial sector, manufacturing for instance soap and pomade but the taste of their target market are hooked to similar products from the outside world. Such competitions therefore do not favour young entrepreneurs whose businesses are embryonic in nature. Undoubtedly, the insurgence of the world financial crisis has brought with it serious repercussions for business growth. Already, it has caused the Ghana Government to cut down on public expenditure and subsequently freezing public sector employment for two years 2009 and 2010. Major Private Sector actors such as Vodafone Ghana have also begun laying-off hundreds of its workers all in the name of the economic meltdown. Of all the constraints identified above, the most affected lies in the domain of access to funding and marketing opportunities. Thus the phenomenon has reinforced the difficulties in accessing capital to start their businesses. Currently the rate of inflation as at August 2009 stands at 19.5%, making borrowing from financial institutions very difficult. In fact loans can barely be obtained from financial institutions for the expansion of existing small enterprises; let alone for the establishment of new ones. In the same vain, both foreign and local markets are frustrated as a result of the low purchasing power of consumers. Those greatly hit by this are actors within the manufacturing and commercial sectors. For instance, majority of the informal sector actors such as market women are complaining bitterly because people are not purchasing their goods, leading to a downright fall in sales. In spite of this, the global crisis is expected to further increase informal activities, which constitute already vulnerable groups, such as youth and women.

There is therefore no doubt that the financial and economic crisis has become a jobs crisis in Ghana, and SME growth offers the best prospects for job creation. Strengthening youth entrepreneurship in Ghana therefore would require that Government gets the fundamentals right by creating an environment that would enable the youth to start, operate and sustain their own businesses and organizations. To do this, a Comprehensive National Plan to Focus on Youth Entrepreneurship should be designed. This strategic framework should consider the following key areas: Training and Skill Development As indicated earlier, a pre-requisite for entering into the labour market and their ability to engage in diverse economic activities is training and skill development. Government should as part of its long-term measures highlight the importance of a well trained and enterprising labour force as a public policy priority for national development. In this regard, the following activities should be undertaken; Strengthening support for vocational and technical education Institute an apprenticeship programme for youth without employable skills Incorporation of entrepreneurship as a subject into the educational curriculum (at all levels) Also, as part of short-term measures, youth within the informal sector should be identified according to their sectors of operation and their training needs assessed. For example, youth in agric should be identified and given the necessary training they require to be successful entrepreneurs. Provide youth with ICT training to appreciate and practice what is called infopreneurship; thus using information from the internet to inform local businesses.

Stimulate the Spirit of Entrepreneurship amongst Young People One important factor necessary for strengthening youth entrepreneurship in the country is to get them have the interest and passion for setting up their own enterprises. It is important to note that already some NSOs are organizing seminars, conferences and competitions to raise awareness. State apparatus especially the National Board for Small-Scale Industries in collaboration with the Ministry of Youth and Sports should;

Institute a platform for Innovation Search; thus programmes that would inspire, challenge and guide the youth should be instituted to enable them develop practical visions for the benefit of their communities and the nation as well. Such programmes should include Annual Essay Competitions, Conferences, the use of e-tools to share stories of successful entrepreneurs; holding of young entrepreneurs fairs to mention a few.

Provision of Financial Support for New and Existing Businesses One major lubricant without which no business would exist is finance or money. In this regard, Government should take a cue from initiatives some NGOs are currently implementing such as Lift Your Game UP (by Awesome Ventures Limited) to set up a special fund say National Youth Entrepreneurship Fund to support entrepreneurial activities of the youth. This fund should be disbursed across all sectors of the economy especially agric and industry and should strategically focus on; Providing soft loans in the form of capital to prospective as well as already existing young entrepreneurs to boost their operations. Developing and strengthening their capacity to operate, manage and sustain these ventures. Building an integrated market access and trade facilitation infrastructure.

Reform Business Regulations Critical to creating such an environment for youth entrepreneurship is the reformation of business regulations. Government in consultation with other stakeholders should remove legislative barriers to youth entrepreneurship by; Establishing field units of the Registrar Generals Department to ease the registration of new businesses. Loosing tight regulations to favour SMEs owned and managed by the youth. For example, releasing land for youth in agriculture.

Conclusion To conclude, youth entrepreneurship presents itself as an indispensable and simple alternative for reducing youth unemployment and abject poverty in Ghana and the world at large. Thus it cannot be ruled out of economic growth and sustainable development, hence the need to rethink the youth as a huge resource stream which can contribute immensely to economic prosperity. It is therefore envisaged that the four strategic fronts outlined above, when given the necessary attention by Government, would go a long way to mainstream youth entrepreneurship in Ghana and perhaps the West-African Sub-Region.

References Doing Business 2010 Report. Retrieved 14th September, 2009 from http:// www.doingbusiness.org Gbodo Samuel, 2009. Youth Empowerment in the Liberalized Environment, Ghana KNUST. Government of Ghana, 2002. Ghana Country Report on Unemployment, GoG. Nsiah Perprah, 2006. Sociology for Development. Ghana, Kwame Nkrumah University of Science and Technology.