ORIGINAL RESEARCH

 

Impact of entrepreneurial incubators on youth employment in South African local government

 

 

Luluto Mgweba^I; Sithenkosi Lungisa^II

^IDepartment of Public Administration, Faculty of Management and Commerce, University of Fort Hare, Alice, South Africa
^IIDepartment of Public Administration, Faculty of Management and Commerce, University of Fort Hare, Bhisho, South Africa

Correspondence

 

 

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ABSTRACT

BACKGROUND: Unemployment has been the central socioeconomic issue in South Africa since the democracy in 1994. As a result, the nation's unemployed youth continue to be at risk in the job market. In the quest for alternatives, youth entrepreneurship has been acknowledged as a crucial strategy for empowering youth through innovation and technology.
AIM: This study sought to analyse the impact of innovative entrepreneurial incubators (IEIs) in fostering youth employment within Raymond Mhlaba Local Municipality.
SETTING: This study was conducted within the Raymond Mhlaba Local Municipality to analyse the effectiveness of IEIs in supporting young entrepreneurs, thus increasing employment opportunities for the youth in South Africa.
METHODS: A sample of 20 semi-structured open-ended interviews was conducted, and thematic coding was used for data analysis.
RESULTS: The study found that there are several challenges pertaining to the effective implementation of IEIs to foster youth employment in South African municipalities. This is attributed to a lack of funding and educational programmes.
CONCLUSION: The main recommendation is that all municipalities must establish IEIs and devise strategies to ensure that these are implemented effectively.
CONTRIBUTION: This study contributes to improved municipal governance through providing innovative mechanisms that foster effective and efficient implementation of IEIs in South African local government. This contribution aims to ensure that municipalities discharge their constitutional mandate to improve citizens' standard of living through IEIs, especially in areas with high youth unemployment.

Keywords: innovation; entrepreneurship; youth; unemployment; education; incubator; local government; Raymond Mhlaba Local Municipality.

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Introduction

The African continent is plagued and marred by immense socioeconomic issues, and these are not limited to political, social and economic issues. In the quest to respond to the complex factors, Africa's development initiatives and efforts have been hindered by high unemployment rates (Hlungwani & Sayeed 2018:108) and a growing population, combined with poor economic growth. This worsening crisis has required African countries to develop alternatives to enhance economic growth. In the quest for alternatives, entrepreneurship has been acknowledged as a crucial strategy for empowering those without opportunity (Hlungwani & Sayeed 2018:108). This is supported by evidence including the Igbo apprenticeship system in Nigeria (Obaeko-Iwara, Ekene-Amaechi & Netshandama 2019:227), which invests in human resources and vocational education to promote economic growth and security. The Ogiek's indigenous apprenticeship system in Kenya (Muli, Nyambura & Onyango 2023) also emphasises protecting the environment and efficient utilisation of resources through traditional learning and training activities. This indicates that many Africans primarily rely on entrepreneurship as a means of income (Kansheba 2020).

As evidenced by Agenda 2060, the African Union (AU) recognises the importance of youth entrepreneurship and offers a variety of programmes and structures for youth entrepreneurship. To meaningfully contribute to these frameworks, African Union member states are expected to give effect to these within their respective contexts through nation-specific policies, programmes and initiatives. Therefore, this article examined the role of local government in South Africa in accelerating economic growth and facilitating the achievement of the AU frameworks and the attainment of the National Development Plan (NDP) objectives of fostering an environment that encourages youth economic participation and empowerment.

The Constitution of the Republic of South Africa (The Constitution 1996) mandates municipalities to promote an environment that is beneficial to investment by providing infrastructure and fundamental services to create employment opportunities (Kirsten & Fourie 2021). Heathfield (2020) defines employment as a contract to provide compensation for work. Loo (2023) posits that unemployment includes employed people who need the correct position and those who are employable and actively looking for a job but need help finding one. Wakefield, Yu and Swanepoel (2022:87) note that since the beginning of democracy, unemployment has been the central issue for the South African economy, which is not very different from before. Within the broader context of unemployment, this article focuses on youth unemployment as one of the country's foremost social, financial and political problems.

It is reported by Statistics South Africa (StatsSA 2022) that out of the country's overall population of 60.6 million, 10 million people between the ages of 15 years and 35 years, which is approximately 16.5%, are the youth. Youth employment refers to the participation of this age group in productive activities (Anowor et al. 2023:2). It is projected that in 25 years, Africa's population will be 2.5 billion, with more than half of the population under the age of 25 years. However, in separate studies, Brackbill (2023) and Ezeh and Feyissa (2019) argue that this presents challenges for the continent in relation to creation of employment and economic growth, and equally presents a greater opportunity for the continent.

Considering the aforementioned, Mundhree and Beharry-Ramraj (2022:19898) view youth entrepreneurship as a possible solution to the youthful African population and as a strategy to accelerate economic growth to sustain and manage the needs of the ever-growing population. As part of its efforts to promote entrepreneurship, accelerate economic growth and create employment, the South African government established policies such as the National Youth Development Agency (NYDA) Act (Act 54 of 2008), the National Youth Policy 2020-2023, the Youth Enterprise Development Strategy 2013-2023 and the Youth Challenge Fund to ensure that youth start up or maintain entrepreneurial initiatives and get financial and capacity building support.

Low skill levels, high dropout rates and unemployment, exacerbated by the coronavirus disease 2019 (COVID-19) pandemic, are among the perpetual issues that South African youth initiatives must overcome. Many young people are still having difficulties finding work and developing entrepreneurial skills, despite slight progress in the economy and education. This highlights the necessity for creative alternatives, such as entrepreneurship incubators (EIs), which can offer young entrepreneurs a supportive environment. Incubators bridge the skill gap and promote an entrepreneurial spirit by providing essential support in the form of resources, networking opportunities and mentorship.

In view of the stagnant performance of entrepreneurial efforts by South African youth, Schutte and Barbeau (2022) and Helper and Robert (2023) present business incubators as a strategy that can be used by policymakers to encourage and support entrepreneurship endeavours that are youth spearheaded. An incubator is an entity that supports business development for entrepreneurs from invention to the establishing and early growth phases (Aldammagh, Abdalmenem & Shobaki 2020). Municipalities can foster a positive environment for aspiring entrepreneurs by offering innovative entrepreneurial incubators (IEIs), which will boost employment, the local economy and the quality of life. This is compatible with local economic development's (LED) overarching objectives, which include generating wealth, creating jobs and enhancing community living conditions.

In this regard, this study used the phenomenological qualitative design to achieve the following research objectives:

• To analyse the potential of IEIs to foster youth employment in South Africa.

• To recommend strategies for implementing IEIs in South African municipalities to combat youth unemployment.

The article is divided into seven sections, which include the problem, literature review, methodology, ethical considerations, results, discussion of results and findings, strategies and recommendations.

The problem

Insufficient and inadequate youth involvement in policy, decision making and economic activities is a problem in South Africa (Youth Enterprise Development Strategy 2013-2023). It is reported by the International Labour Organization (ILO 2020:22) that youth unemployment in South Africa was 57.7% in 2019. During the first quarter of 2018, 32.4% (or around 3.3 million) of the 10.3 million people in South Africa between the ages of 15 years and 24 years were not in employment, education or training, showing that over one in three South African youth in this age group was not actively participating in the labour market (Statistics South Africa 2018). Therefore, Mayekiso and Obioha (2022:336) argue that joblessness and lack of education and training breed societal problems such as poverty, inequality and crime, which have characterised South African communities over the last 30 years. These challenges have had negative socioeconomic consequences where people turn to illegal activity because of a lack of means to participate in the economy (Mayekiso & Obioha 2022:336).

Youth unemployment persists in South Africa. As indicated by the 2022 Quarterly Labour Force Statistics, the overall number of young people without jobs (aged 14-35 years) increased by 2.0% (92 000) from the initial quarter to 4.8 million in the second quarter of 2022 (Statistics South Africa 2021). In the Eastern Cape province, which is the focus of this article, youth unemployment for ages between 15 years and 34 years is 60.2% (Eastern Cape Socio-Economic Consultative Council 2022), which accounts for the highest number of unemployed youths per province in the country. Compared to men, who had a 45.1% unemployment rate in 2022 quarter 1, women had a lower rate of 42.7% (Eastern Cape Socio-Economic Consultative Council 2022). In Raymond Mhlaba Local Municipality, the 2021 unemployment rate was 48.0%, and the youth unemployment rate was 60.0% (Auditor General South Africa 2021).

In view of these vast problems encountered by the youth in South Africa, the government introduced the NDP 2030, the NYDA, Umsobomvu Fund and the Small Enterprise Finance Agency (SEFA), among others. These aimed at offering financial support, mentorships and skills advancements for young entrepreneurs. However, the inadequate performance of these policies is because of government's failure to centre the initiatives at local government and encourage citizen participation.

To address persisting youth unemployment, the South African government has established institutions such as the National Council of the Provinces (NCOP), the Financial and Fiscal Commission (FFC), Budget Council (BC) and the South African Local Government Association (SALGA), and within this atmosphere operates the local government sphere. However, the sphere of local government has been unable to discharge this constitutional mandate owing to the vast and recurring problems of corruption, maladministration, incompetence, poor oversight mechanisms, poor institutional culture, poor implementation of policies, non-compliance to pieces of legislation, financial mismanagement and poor implementation of municipal plans such as Integrated Development Plans (IDPs) and LED strategies, among others.

Scholars such as Mukwarami, Mukwarami and Tengeh (2020) argue that failure of the local government to drive economic development focused on young people can be attributed to poor financial support and lack of policy that centres youth entrepreneurship at municipal level. Local governments are frequently disregarded by the national and provincial governments and are left behind with incompetence and unavailability of resources. The government initiatives must be centred at the local government, as its developmental role benefits the local inhabitants, societies, the provincial and national domains of government, and hence the entire country.

According to the Youth Enterprise Development Strategy (2013-2023), the youth, aged 14-35 years, make up 41.2% of the South African population. However, only 6% of them are actively engaged in entrepreneurship (Youth Enterprise Development Strategy 2013-2023). According to Ćoćkalo et al. (2020), a lack of funds and uncertain political and economic environment, excessive taxes, the value of the nation's economy, and the overall quantity of small and medium enterprises all contribute to youth unemployment as barriers to entrepreneurship. This extends to the ability of local municipalities to create employment opportunities through effective and efficient implementation of their LED strategies and to encourage involvement of young people in entrepreneurship.

Marire (2022:190) argues that owing to the disregard for Local Economic Development (LED) strategies, factors such as a strict regulatory framework for the labour market, a public education system that does not adequately reflect labour productivity, skill and employment market capitalisation, and digitalisation of industrial manufacturing operations are because of the disregard of Local Economic Development (LED) strategies (Marire 2022:190). The youth lack education and skills, financial resources and mentorship necessary to pursue creative business ideas. Entrepreneurship incubators can provide opportunities for training and growth to entrepreneurs through encouraging their motivations and skills to grow businesses (Haugh 2021:158).

To prepare the youth for a productive economy and a job market that can take them on as employees, they must have the opportunity to participate in education and skill development programmes. Thus, there is need for entrepreneurship to create opportunities for the youth, as Ćoćkalo et al. (2020:151) view entrepreneurship as an engine that can accelerate economic development and build a foundation for long-term economic success.

Literature review

This section covers the theoretical and conceptual frameworks that support the development and operation of entrepreneurial incubators, which provide young people in Raymond Mhlaba Local Municipality the resources, connections and expertise to launch long-term ventures and generate jobs. The identified research gap is the lack of empirical evidence on the effectiveness of IEIs in addressing youth unemployment in South African municipalities. The theoretical frameworks guiding this study are the network governance theory, which is used to analyse the effectiveness of IEIs to foster youth employment, and the innovation theory of entrepreneurship, which helps in identifying the challenges encountered by the local municipality in implementing IEIs to foster youth employment. Figure 1 below is a youth entrepreneurship model which demonstrates that IEI's have an influence on youth employment and local economic development and entrepreneurship. Local economic development and entrepreneurship influences youth employment as they create an environment that is conducive for job creation.

 

 

Theoretical framework

The article used network governance theory in the analysis of the effectiveness of IEIs in fostering youth employment through interactions between government stakeholders to gather resources and come up with innovative strategies. Wang and Ran (2023:1189) assert that network governance can be associated with governance in a setting of providing public services, as governance occurs within networks of complicated relations between public and non-public entities. The importance of network governance theory in relation to the objectives of this article lies on the standpoint of the theory applicable for dealing with complex IEIs to promote youth employment. The challenge of lack of the knowledge of change and the challenges and problems that municipalities encounter in implementing IEIs hinder the effectiveness of entrepreneurship in fostering youth employment in Raymond Mhlaba Local Municipality.

The innovation theory of entrepreneurship was also used to identify the challenges encountered by the local municipality in implementing IEIs to foster youth employment. This theory, in view of Menezes (2017), entails that innovation can be used to launch a new product or an improved version of an existing product, apply new techniques for production or sales, launch a new market, obtain new raw material sources and leverage a new industry structure, such as the dismantling of monopolies. The theory helps in the analysis of the challenges encountered by Raymond Mhlaba Local Municipality in implementing IEIs to foster youth employment.

Conceptual framework

This section discusses the main concepts that make up the article on the analysis of the effectiveness of IEIs in fostering youth employment. These concepts include innovation in the public service, youth unemployment in South Africa, youth entrepreneurship in South Africa, IEIs and LED.

Youth unemployment in South Africa

Youth unemployment is an issue that affects developing countries, South Africa included. Woolcott et al. (2023:1) assert that the youth unemployment rate is the percentage of the young labour force made up of unemployed people aged 14-35 years. Over the years, youth unemployment has persisted, as Mseleku (2022) asserts that despite the government's development of programmes to combat unemployment, youth unemployment in South Africa continues to increase. Mseleku and Ntshiza (2022:2) assert that in a backdrop of developing nations like South Africa, youth unemployment has steadily climbed along with levels of poverty and inequality. In the first quarter of 2021, the official unemployment rate for young people (15-34 years) was 46.3% (StatsSA 2021).

Moalusi (2018) argues that South African youth have a few opportunities to participate in the economy, and various researchers like Mago (2018:2), De Lannoy et al. (2018:5), Mazorodze and Nsiah (2020:3) and Oyedemi and Choung (2020) believe that because the youth is more frequently impacted than older people, youth unemployment has surpassed the issue of general unemployment. This leads to social exclusion of and crime by young people, which destroys their well-being because their development is heavily reliant on employment. Hence, Chipeta, Kruse and Surujlal (2020:19) advocate for entrepreneurship as a solution to social problems like unemployment.

Innovation in the South African public service

Innovation has been decentralised in the public service organisations for innovative implementation of mandates. In the context of the public service, Raudla, Mohr and Douglas (2023:2) indicate that innovation includes the delivery of services, procedures and rules. Martinus (2022:110) adds that innovation in the public service is the identification of issues and challenges, the generation of fresh and imaginative concepts and use of novel solutions. Carneiro, Isidro-Filho and Criado (2023:6) support the importance of innovation in the public service by stating that societal problems like crime, inequality and unemployment force public organisations to reconsider their approaches to tackling complex problems, hence the need for innovation as a strategy for tackling these problems and bringing solutions.

Youth entrepreneurship in South Africa

Dzomonda and Fatoki (2019:2) define entrepreneurship as the process of conceiving, planning, launching and, using innovation, developing a business opportunity into a potentially high-growth organisation in a complicated and unpredictable environment. Entrepreneurship has been recognised as the basis of economic activity. For example, Olufemi (2020:152) submits that entrepreneurship is required for the development of jobs, boost to the economy and the reduction of poverty. Youth in South Africa is made up of ages between 14 years and 35 years and they need support to consider the career paths of entrepreneurship and create labour-intensive businesses. The need for entrepreneurship can be seen in the context of South Africa, where there are low levels of entrepreneurship, standing at an estimated rate of 11.7% (Maramura, Maziriri & Nzewi 2019:115). Mashau (2018:63) asserts that South Africa has a low rate of business success, which results in low job opportunities, leading to high unemployment rates.

Innovative entrepreneurial incubators

Allie-Edries and Mupela (2019:72) assert that incubation strongly depends on the economy's support for aspiring entrepreneurs as they enhance entrepreneurial skills, growing the economy and avoiding unemployment. Mashau (2018:54) adds that incubators serve as a strategy for starting business and industry partnerships and fostering innovation and entrepreneurship. Business incubators, as the procedures and venues for technology transfer to encourage the growth of innovation and entrepreneurship, aid more technology entrepreneurs nowadays (Wang et al. 2020:2).

During a start-up period of the business, these incubators promote small, medium and micro enterprises (SMMEs) by providing them with the knowledge, tools and favourable surroundings to operate their enterprises (Lose 2021:2).

The study of Leal, Carmen and Rui (2023) shows that innovative incubators provide a favourable environment for the growth of new businesses and emerging companies. They support the creation of a diverse and sustainable economic system by promoting the expansion of enterprises in important sectors like technology and services. Though not ignoring the existing successes of entrepreneurial incubators in South Africa, the development of entrepreneurship in South Africa also depends heavily on infrastructure upgrades in areas like energy, water, transportation, and telecommunications to sustain development.

Local economic development

Local economic development is a developmental tool that has been recognised in recent years by policymakers in South Africa (Nel 2019), which seeks to strengthen a community's economy to enhance everyone's quality of life and the community's economic future (Jili & Nzimakwe 2022:1), by alleviating social ills such as unemployment. The Constitution of the Republic of South Africa 1996 established the objectives of a developmental local government to promote social and economic development for its communities of jurisdiction (RSA 1996), hence also embedding the function of LED. Jili and Nzimakwe (2022:2) believe that for that to happen, local development must meet the fundamental needs of the community, offer services to the locals and help sustain local businesses. Enaifoghe and Vezi-Magigaba (2023:98) believe that to promote and advance social and economic development in South African municipalities, which goes hand in hand with LED, entrepreneurship plays a critical role.

 

Research methods and design

Based on the views and experiences of youth and authorities from Raymond Mhlaba Local Municipality, an interpretive paradigm was used to comprehend the problems associated with implementing IEIs. An interpretive paradigm is well connected with this article's qualitative method. Aligned with the view of Nickerson (2023), this method enabled the article to scrutinise experiences through respondents' opinions about the challenges in implementing entrepreneurial innovative incubators. Necessitated by interpretive research philosophy was the application of a phenomenological design on the issue being investigated to thoroughly respond to the objectives of this article.

The targeted population for this article was youth engaged in entrepreneurship initiatives and funded through the LED funding policy of Raymond Mhlaba Local Municipality, totalling about 120 SMMEs. The LED unit of Raymond Mhlaba Local Municipality has a total number of 61 employees (Executive Committee System and Councillors) and is responsible for stimulating the local economy and addressing socio-economic problems (RMLM IDP, 2023/2024). Therefore, for the selection of participants, a purposive non-probability selection technique was applied. As a result, semi-structured open-ended interviews were employed as the data gathering tool in this article from a sample of 20 participants. The theoretical benchmark for determining and evaluating qualitative data sets is data saturation. This study's sample size was determined using the principle of saturation. Further details on the sample are given in Table 1.

Ethical considerations

Ethical clearance to conduct this study was obtained from the University of Fort Hare Research Ethics Committee (UREC) (reference number: 202001859 - LM - SL).

 

Results

The raw data that were gathered during fieldwork were interpreted and analysed. Alongside the primary goals of this investigation, theme discussions were utilised to convey the analysis of the raw data. The data that were collected aligned with key research questions provided in the introduction section of this article.

Youth unemployment

Youth unemployment is an issue that has several foundational causes that affect South Africa. Mazorodze and Nsiah's (2020:2) study shows that unemployment is the implication of a lack of jobs in the labour market, and being unemployed encourages people to commit crimes. However, through employment, people can engage with others and have financial security. However, there are challenges that limit access to employment, which are explored in the following sections.

Low levels of skills

Skills contribute to youth employment, and in today's environment, their value for young people is crucial, especially because of the nation's weak economy. Youth need a variety of skills that will enable them to both start their own labour-intensive businesses and meet the demands of the job market. The municipal LED unit employees were asked if they had a skills audit report. The researcher sought to discover whether the importance of skilled youth is taken into consideration to know what skills the youth have and who still needs the skills. One of the participants indicated that the municipality has a skills audit report that they use to classify the skills acquired by the youth. The participant indicated the following:

'Of course, there is a skills audit report under Human Resource Development whereby there is an official of HRMD which assists young people that are unemployed graduates who have applied for Service Education and Training Authority programmes such as audits learnership. Our municipality also have internship programmes, such as in Finance, where there is a pull of database of unemployed graduates from all the wards of Raymond Mhlaba Local Municipality.' (Key informant 1)

Municipalities benefit greatly from skills audits because they help pinpoint the skills the youth have and the gaps in young people's competencies that need to be filled.

Low educational outcomes

The analysis also revealed that access to educational programmes for young people is facilitated through the University of Fort Hare, which is in Raymond Mhlaba Local Municipality. Three youth participants indicated that they only knew educational programmes offered by the university even though the university was not accessible to everyone. Other youth participants (13) indicated that they did not know about these educational programmes at all.

One of the youth participants who indicated that there were educational programmes that were not directly offered by the municipality, but are within the University of Fort Hare, indicated that:

'There are not many educational programmes in Raymond Mhlaba Local Municipality that I know of but, I only heard that they do exist within the University of Fort Hare, even though fewer people are part of such programmes due to lack of information since they are not students at the university. Alice is a small town and so there is not many options around for young people because, if one is not a university student, then they often suffer the absence of educational programmes. Even the ones that I heard they exist within the university, they are not accessible to everyone, they just choose randomly.' (Participant 8)

Another participant who is an entrepreneur also shared the same view:

'I never heard of any educational programmes here, I just run my own business using my own indigenous knowledge because I need money. Nothing from the municipality is helping me to sustain my business operation. I would greatly participate in such programmes if they were available, but unfortunately, I never heard of such programmes.' (Participant 9)

A participant from the municipal LED unit mentioned that there were programmes within the municipality and indicated that:

'There is a training programme/learnership that just ended in October which assisted youth in business management skills and offered office management so that if they are given an opportunity to start their own businesses, they can know how to manage those businesses.' (Key informant 1)

Another participant from the municipality supported the claim that there are programmes that are offered by the municipality, by revealing that:

'The educational programmes that are offered by the municipality are not only focused on the unemployed young people, but also, they are meant for the employed youth with the aim to ensure sustainable standard of the municipality in alignment with the rapidly changing environment.' (Key informant 4)

The participant mentioned programmes such as Municipal Finance Management, Occupational Certificate, Construction plant operation, Cleaning Systems (which trains young people on how to manage and classify the medical and general waste), as one of the educational programmes that are offered by the municipality.

The earlier statements reveal that knowledge based on educational programmes varies because of poor information communication. Youth are not aware of the programmes from the municipality, and those aware of programmes believe that they are offered by the university. The municipal stakeholders provided certificate evidence of educational programmes that are offered by the municipality. However, evidence from this article show that educational programmes are limited to a few local households in Raymond Mhlaba Local Municipality. Those participants staying far from the municipal offices where they can access these programmes because there are no centres in each area did not benefit.

The distance is not the only issue. Innovative sources of information do not favour youth in this municipality owing to poor network coverage and lack of income to travel and access the internet. Evidently, the findings of this article reveal that access to educational programmes remains constrained, affecting access to youth and leading to youth unemployment.

Lack of resources for job search

The study also analysed the access of youth to resources for job search in Raymond Mhlaba Local Municipality and the efforts made by the municipality for easy access to resources for job search by young people. The study found that resources for job searchers, such as publications assistance programmes and interventions from the municipality, might enhance employment likelihood. Affum-Osei et al. (2021) argue that access to job openings and applying for them takes a lot of time and effort nowadays, which is why job hunting has become a necessary aspect of life. When resources for job search are not accessible to young people, the result is youth unemployment.

The participants from the municipal LED mentioned that there are sources that the municipality uses for easy access to resources for job searches by young people. One indicated that:

'As far as I understand, all the job opportunities are issued in municipal websites, social media platforms, and billboards. Posters are also distributed in different areas of the municipality, including those that are also made available in municipal offices. For instance, if you go to Alice, you may find a poster that informs people about certain opportunities.' (Key informant 3)

However, a young person from Fort Beaufort who had been looking for a job stated that:

'I have been trying to look for a job using my own resources without the help from our municipality. I am not aware of any resources that they provide because we do not even have internet access in our area to access the information, neither do our ward councillors come and check on us and assist us with job applications and show us opportunities. They only come only when they want votes, and just give us food parcels, and disappear. I do not have any income and it is not easy to look for a job and do applications because I must print [curricula vitae] CVs, take a taxi, and go to town, all that needs money, and I do not have it.' (Participant 6)

The earlier statement shows that the youth lack access to resources for job search owing to lack of knowledge and the inability to see the social media information because of poor network and lack of internet data.

Lack of entrepreneurial motive

The study sought to analyse the availability of programmes to enhance youth entrepreneurship motives. A study by Akinboye, Morrish and Collins (2022:33) shows that entrepreneurs create new businesses because they want to be recognised, be independent and make money. Entrepreneurs who are experiencing strong emotions of optimism may be willing to take risks, whereas those who are experiencing negative emotions and low arousal may be risk-averse.

Although youth entrepreneurship is frequently regarded as a key factor in reducing poverty, fostering economic growth and job creation, the low prevalence of youth entrepreneurship is concerning (Radebe 2019:61). This can be attributed to lack of young people's entrepreneurial motive from Raymond Mhlaba Local Municipality. Entrepreneurial thinking and motive are lacking and, as a result, youth have nothing to do, which leads to wrongdoings. However, the municipal officials who participated in this study claimed that they make efforts through programmes to enhance the entrepreneurial motive of young people. One indicated that:

'We do have workshops done by the Department of Economic Development and Environmental Affairs, whereby they came with the Office of the Premier, and introduced the Isiqalo Youth Fund. We also have trainings of "generate your business idea, improve your business, start your business," where about 39 young people were trained last year in Alice. I monitored and evaluated them and found that they are doing very well. Some are in farming, catering, construction services. I am still assisting them in terms of funding opportunities so that their businesses can grow.' (Key informant 1)

Another municipal official also gave the same sentiment by indicating that:

'We once received funding from Services SETA which enabled us to train young people to new venture creation and business management. We promoted cooperations between those who will focus on creating new venture and those of business management for businesses to operate effectively and efficiently.' (Key informant 2)

However, a young person who also owns a business gave a different view, by indicating that:

'I have an informal business that I have been running for 4 years now, I never received any funding nor any form of support from the municipality. I face a lot of challenges as a sole-entrepreneur such as the loss I suffered since 2019 due to [coronavirus disease 2019] COVID-19 as I had no gain. But since I need money, I had to continue with what I have so to get something small which does make a little difference rather than staying home with nothing. I never heard of any existing programme which can help us as young entrepreneurs to operate efficiently and effectively, and we do really need such programmes.' (Participant 5)

The earlier statements show that programmes that enhance entrepreneurial motive may exist, but they are not reaching young people to enhance their entrepreneurial motive. Access to financing is also an obstacle because it enables businesses to launch, run, thrive and expand. However, the analysis of the data established that youth need both funding and entrepreneurial programmes to enable them to start and sustain their businesses.

Innovative entrepreneurial incubators

This section deals with IEIs as a solution to youth unemployment in South Africa. The article sought to analyse the availability and access to IEIs at Raymond Mhlaba Local Municipality, and the key informant participants mentioned that there was an informal incubation centre housed in the municipality's Development Agency, which has a business unit that assisted entrepreneurs generally, and not specifically the youth. However, the participants highlighted that there were not many activities happening in that incubation centre, as one indicated that:

'The incubation centre that I used to know is no longer operating, and I think this is due to lack of staff and funding, because there were no resources to employ more staff so to assist more businesses. Basically, the municipality currently has no innovative entrepreneurial incubator.' (Key informant 4)

The key informants highlighted the challenges faced by Raymond Mhlaba Local Municipality in implementing these IEIs by indicating that change management is an issue. This is in cases where there would be a certain manager or director who is passionate about developmental programmes, and when the management changes, a new one does not follow through from where the previous one left off. As many as 15 youth participants indicated that they never had any access to IEIs. The lack of access to these incubators directly affects youth, as one indicated that:

'The poor support from the municipality and the lack of these innovative incubators to help us youth is an issue because we must maintain ourselves though we have nothing. When we need what these incubators would offer if they were available, we now must travel to other places because we do not have access to the services that can offer us the kind of business knowledge and skills that we need. Alice is a historical town but is lacking such innovative incubators. Hence you would find that most young people around here are on drugs, and they commit crime every day, because they have nothing to do. The municipality should help young people so they can stop roaming around and messing their lives.' (Participant 4)

Most young people lack access to IEIs because they never saw them in their areas. The challenge in implementing these IEIs includes change management and funding. Chigunta (2016) believes that IEIs are a solution to youth unemployment in South Africa. As a result, it is the duty of the LED unit of the municipality and other stakeholders to drive the implementation of these IEIs across municipalities.

 

Discussion

The main aim of this study was to analyse the impact of IEIs on youth employment and focused on answering the following questions:

• What is the potential impact of IEIs to foster youth employment in South Africa?

• What are the strategies for implementing IEIs in South African municipalities to combat youth unemployment?

Focusing on the first research question, this study concludes that the local municipality is not implementing IEIs to foster youth employment. As a result, youth does not have funding and entrepreneurial programmes to enable them to start and continue with their own businesses. Educational programmes are limited to a few local households. Moalusi (2018) also argues that South African youth have a few opportunities to participate in the economy. Consequently, unemployment leads to crime (Mazorodze & Nsiah 2020:2). Olufemi (2020:152) submits that entrepreneurship is required for the development of jobs, boost to the economy and the reduction of poverty.

In addition, Chipeta et al. (2020:19) indicate that entrepreneurship is a solution to social problems like unemployment, as this study has found that youth lack the necessary skills and entrepreneurial motive to progress and continue with their businesses. Poor internet connection is a barrier for young people to effectively search for jobs; hence, innovation must be adopted in municipalities for easy access to information.

As a result, in alignment to the second question of this study, Carneiro et al. (2023:6) advocate for the importance of innovation at local government, which enables the organisations to effectively solve societal problems and grows the economy. Therefore, for municipalities to produce continuous and sustainable value, there is a need to develop and adopt an innovation culture that supports the development of the capabilities required to compete successfully in the present and the future. In South Africa, youth unemployment is a major problem that can be effectively addressed through IEIs, as this has been viable in other parts of the world. Therefore, this study recommends that local businesses and municipalities must collaborate to establish incubators to equip young entrepreneurs with tools and support they need to launch their own businesses. This can involve having access to training courses, money and mentorship. Local governments and educational organisations must team up to establish incubators that provide students the chance to improve their entrepreneurial abilities through access to networking opportunities, mentorship and workshops.

To induce investors from the private sector to fund entrepreneurial incubators, municipalities can also provide incentives like tax credits and grants. To lower the financial obstacles to launching a business, municipalities must give young entrepreneurs access to capital through funding, loans and other financial instruments. Local governments must use their power to facilitate connections between aspiring business owners and mentors, investors and other successful entrepreneurs. By doing this, young people can be given the tools they need to succeed, and a supporting network of entrepreneurs can be established.

Strategies and recommendations

The findings of the research highlight crucial areas where the South African municipality's youth employment policies need to be improved. To instil an entrepreneurial culture in the youth, the municipality must set up educational programmes and centres that emphasise skill development and entrepreneurship. The municipality should make good use of skills audit results to pinpoint young skill shortages and develop focused upskilling programmes. The municipality should make investments in enhancing its internet infrastructure, as inadequate internet connection poses a major obstacle to efficient job searches and information retrieval.

By using cutting-edge procedures and new technology, the municipality must foster an innovative culture and educate municipal officials about innovation and its value in public service. Establish strict management procedures that aid in the growth and retention of qualified workers and supervise managers on most effective approaches for fostering employee engagement and development. Along with creating and implementing entrepreneurship education within the school curriculum, the municipality also has to provide extracurricular entrepreneurial programmes. Establish partnerships with local businesses and company owners to offer guidance and practical knowledge.

Municipalities must establish innovative entrepreneurial incubators

It is necessary to establish IEIs to support sustainable economic growth and social development in local communities. These structures have the potential to boost entrepreneurship, technology and innovation, as well as offer new job possibilities that lead to wealth creation. During the early stages of business incubation, IEIs help start-ups and entrepreneurs realise their ideas by offering places to work, education, mentoring and access to venture funds at a low cost. Madzivhandila and Musara's (2020) study shows that globally, LED policies are placing more emphasis on entrepreneurship as a means of utilising indigenous and local economic potential.

Municipalities, through local economic development units, must budget for innovative entrepreneurial incubators

The Constitution provides that for a municipality to prioritise the community's basic requirements, it must organise and oversee its budgetary, planning and administrative operations. Municipalities need to budget for innovative incubators for entrepreneurs because they offer a nurturing atmosphere in which they guarantee the survival of start-ups, encourage the expansion of new businesses and create jobs. Municipalities can therefore raise income levels, and diversify their tax and revenue sources by funding these incubators.

Ensure that innovative incubators are capacitated

Innovative incubators are crucial to the expansion and advancement of municipalities as they offer a forum for the generation of fresh ideas and the application of creative solutions to the problems that the communities face. Therefore, through the assessment of innovation capacity, municipalities can improve education and training about technology and innovation management to enhance their skills, the capacity of municipalities for innovation and the innovation culture.

Improve infrastructure in municipalities

The study found that there is poor infrastructure in the municipality, which hinders the implementation of IEIs and youth employment. To create and maintain the infrastructure needed to support entrepreneurial incubators, municipalities must work with private organisations. This can be done by offering start-up capital, improving infrastructure and giving tax breaks to businesses that make infrastructure-related investments in the municipality. Infrastructure can also be improved by utilising the resources and experience of the business service through public-private partnerships. This article calls for intervention from the large corporations in the form of funding for infrastructure development with the provision of business infrastructural assistance, such as workspace, internet access and technological platforms that foster innovation.

Ensure entrepreneurship education and training are orientated towards the incubators

The study found that there is lack of training programmes, entrepreneurship education, training centres and funding to inculcate a culture of youth entrepreneurship in South Africa. The article suggests that the municipality must collaborate with government and other relevant stakeholders to help young people acquire the skills necessary to launch and manage profitable businesses by offering them entrepreneurship education and training. This can include receiving guidance in marketing, financial management, business planning and other crucial areas.

Limitations of the study

This study is limited to the focus on IEIs at local government in the public sector. This study's results on IEIs are generalised and limited to the public sector context and not the private sector.

Future research

This study focused on IEIs to foster youth employment. Future studies can focus on analysing the role of the networks between the municipality and relevant stakeholders in mobilising financial resources to implement IEIs to foster youth employment.

Contribution of the study

This study contributes to the studies that encourage and advise local government policy to focus on the establishment of entrepreneurial incubators. The main aim of this study is to ensure that local government policy on economic development identifies entrepreneurial incubators as an instrument to enhance and sustain SMMEs. This ensures that municipalities discharge their constitutional mandate to alleviate poverty and unemployment to improve the standard of living of citizens.

 

Conclusion

This study analysed the impact of IEIs on youth employment in South Africa. From the findings of this research, it was found that funding, change management and innovation are barriers for the municipality to implement innovative and entrepreneurial incubators, which also hinders the establishment of educational programmes to foster youth employment. The lack of funding is because of the inability for government to intervene at local government and distribute funds that can help in the developmental initiatives such as implementing IEIs to foster youth employment. Change management results from a lack of chain of connection, which enables the present management to take over from where the previous management left off.

 

Acknowledgements

Competing interests

The authors declare that they have no financial or personal relationships that may have inappropriately influenced them in writing this article.

Authors' contributions

L.M. is the main author of this article as it is derived from her honours research submitted to the University of Fort Hare. L.M. was responsible for data collection, interpretation of results and writing a substantial part of the article. S.L. is the appointed supervisor of L.M. at the University of Fort Hare. S.L. was responsible for guiding L.M. throughout the honours degree and other requirements as mandated by the university.

Funding information

This research received no specific grant from any funding agency in the public, commercial or not-for-profit sectors.

Data availability

Data sharing is not applicable to this article as no new data were created or analysed in this study.

Disclaimer

The views and opinions expressed in this article are those of the authors and are the product of professional research. It does not necessarily reflect the official policy or position of any affiliated institution, funder, agency or that of the publisher. The authors are responsible for this article's results, findings and content.

 

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Correspondence:
Luluto Mgweba
202001859@ufh.ac.za

Received: 01 May 2024
Accepted: 22 Aug. 2024
Published: 25 Sept. 2024