Challenges Faced by Young Black Entrepreneurs

Youth entrepreneurship is the answer to the socio-economic challenges faced by many countries, particularly those in emerging markets like South Africa. One of the biggest challenges we face as a country is unemployment, specifically youth unemployment. According to Stats SA, youths make up 55 percent of the country’s 35.8 million working-age population. Of the 19.7 million youths, however, only 6.2 million were employed, while 3.6 million were unemployed although still actively looking for a job. Youth unemployment overall rose to 36.1% in 2011, up from 32.7% in 2008 – effectively more than double that of the unemployment rate among adults.

Black African youth, like adults, are hardest hit by unemployment: 40.3% are without a job while the white youth unemployment stood at 11.2%. There are not enough jobs for black youth in South Africa. It’s therefore very clear that there is a need to meticulously pay close attention how we enable and support black youth to thrive as entrepreneurs from rural villages, townships to high density urban areas. However, majority of these young people are first generation black entrepreneurs in their communities. That alone presents a plethora of challenges for them to successfully navigate the terrain of building a business from scratch. Some of these challenges include:

1.    Family unit or structure narrative and expectations

There’s an expectation from the parents that any child should go to school, get a degree and look for a job. It’s considered blasphemous for most families to have their child opting to pursue entrepreneurship as a route to break the circle of poverty. It’s almost unrealistic to imagine that black parents would prioritise the discussion of wealth creation and entrepreneurship at their dinner table.

2.    Black tax and extended family responsibilities

An average black person cares not only about their immediate family members, there’s an inherent expectation to look after your relatives as well. It’s hard enough trying to maintain a mental obsession about starting a business, should you get lucky and make it, or immediately you graduate from college/ university; the family is counting on you to renovate the family house, or put a sibling through school, or pay your own varsity debt. There is no safety net when you need it the most.

3.    Medium of Communication – Language

The medium of communication has greatly limited the probability of success for a number of black youth entrepreneurs. I have seen it when some of them from rural areas are in Johannesburg or Cape Town to pitch their businesses. The language of English intimidates them and sadly investors interpret that as lack of confidence. I have had to allow some of these entrepreneurs to conduct their elevator pitches in isiZulu, Sepedi, etc.

4.    Access of High Risk Appetite Funding and Capital

Still frustratingly remains one of the biggest challenges faced by black youth entrepreneurs. Although the awareness of available funds from government and its agencies is improving. The issue is really on the low risk appetite and red tape involved in accessing these funds.

5.    Access to Social Capital and Networks

It’s obviously much easier to be a soccer player if Jomo Sono was your father. By the time you can kick a ball, you know all the best coaches, the best pitches and have an exact game plan of who to call when you are ready. Black youth entrepreneurs do not have this within their families or communities. Role models with integrity and relevant case studies are very few. All you have is your track record. Which isn’t much at start-up phase. No family name to leverage or drop when you need to, no well-connected family friend to call up when you need a favour.

6.    Access to Knowledge, Skill and Experience

Most black youth are the first to venture into entrepreneurship in their generation, you most likely do not have an uncle or mother to give a quick call to when you feel stuck. You certainly did not grow up in a business, learning, familiarising yourself with the real life functioning of running the day to day of a business.

7.    Access to Employees, Co-Founder and Teams

With the limited experience and high cost associated with employing skilled individuals, the prospects of building a start-up or small business becomes very limited. This is because at this initial stage, you’re still raising for financial resources to stabilise yourself.

8.    Access to Guaranteed Markets

There’s a growing enterprise development apathy because nobody is willing to confidently commit off-take agreements in a sustainable manner for the black youth beneficiaries. We have progressed to a point of ease when it comes to giving required support to entrepreneurs in the form of training, grant funding, mentorship, etc.

It’s not all lost though. The future outlook of black youth entrepreneurs gives hope.

Writer: Octavious Phukubye          Photo by rawpixel on Unsplash

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