Combating Unemployment in Nigeria: Youth Entrepreneurship as the Antidote

Abiola Olawale M.

Introduction

The international recognition of the need to address the issue of young people classified as not in education, employment, or training (NEET) underscores a critical global concern. Unemployment rates among young individuals have surged significantly in recent years, surpassing rates for the general population by a considerable margin.

Unemployment stands out as one of Nigeria's fundamental developmental challenges today. Research indicates that while unemployment was high in the 1980s, current reports from various local and international bodies, alongside clear evidence of widespread joblessness in recent decades, highlight an unprecedented severity of the issue in Nigeria's history.

However, it would be premature to conclude that governments have not taken steps to alleviate this problem. Initiatives such as the National Directorate of Employment (NDE) and its skills acquisition programs, along with initiatives like NAPEP, PAP, SURE-P, and YOUWIN, represent diverse intervention mechanisms aimed at fostering economic growth rich in job creation opportunities. Moreover, the Federal Government has consistently reported strong real GDP growth rates, measuring around 6% to 6.5% since 2005, until recent times. This paradoxical scenario reflects a disconnect where robust economic growth has not translated into comprehensive economic development. Despite this apparent growth, poverty rates remain high, industries are struggling, technological advancement is limited, income inequality persists, child mortality rates are elevated, and Nigeria's overall development index remains low.

Globally, there's an increasing emphasis on promoting youth entrepreneurship, driven by responses to economic recessions and concerns about jobless economic recoveries in Europe and North America. Similarly, in emerging economies like the BRIC nations, Asia, and Africa, encouraging entrepreneurial attitudes among the youth is a significant policy priority. International bodies such as the OECD, ILO, and the World Bank, along with foundations like the Kauffman Foundation, the Bertelsmann Foundation, Fate Foundation, and the Soros Foundation, have ramped up their efforts in supporting youth entrepreneurship initiatives.

Transitioning into owning a micro or small enterprise presents a viable alternative for young individuals with entrepreneurial mindsets, provided they possess the necessary skills and knowledge. Creating awareness about this career option and establishing an enabling environment for enterprise creation is crucial for successful startups. However, there remains limited research on youth entrepreneurs, including barriers and incentives, hindering the development of informed policies.

While the pivotal role of entrepreneurship in driving economic development and job creation is increasingly acknowledged, efforts to examine it specifically from a youth perspective have been relatively modest. Definitions of "youth entrepreneurship" are outlined, and key issues in the literature on youth entrepreneurship are thoroughly examined, paving the way for informed discussions and policy interventions.

Youth: A Complex and Dynamic Concept

The concept of youth is multifaceted and varies across communities, shaped by customs, traditions, social norms, and geographical locations. In the context of this article, youth typically encompass individuals aged between 15 and 24 years. Youth, as a concept, involves a delicate balance between the significance of age, which bestows upon young people a distinct social status separate from adulthood, and other social divisions that differentiate youth from one another. While age is an essential consideration that can unite youth into distinct social groups and place them within specific institutional settings, relying solely on age as a defining factor presents limitations. This is because youth's roles, experiences, opportunities, challenges, exposure, and aspirations vary significantly despite their similar ages.

Historically, youth literature predominantly focused on developmental psychology, portraying youth as problematic. However, a shift in perspective has led to a reevaluation of youth through a sociological lens. Viewing youth as a relational concept, akin to gender, brings power dynamics to the forefront, highlighting how age is socially constructed, institutionalized, and controlled within specific historical and cultural contexts. This perspective underscores youth as a transitional rather than a static stage, emphasizing their heterogeneity and diversity of experiences.

The developmental stage of youth, coupled with their rites of passage, significantly influences how they are perceived and treated within society. Of particular concern in this article are the uncertainties surrounding youth's entry into and exit from labour markets. The transitional process from youth to adulthood plays a pivotal role in shaping their trajectories. Without possessing adequate skills and competence, young individuals may face challenges in adapting to the demands of the workforce. These skills and competence gap not only hinder labour market participation but also limit opportunities for self-employment, resulting in untapped potential within the economy.

Here, it's important to distinguish between "skill" and "competence." A skill is the capability to perform a task effectively, while competence refers to the level of standardized requirement for an individual to perform a specific job in a professional setting. Competencies, a blend of knowledge and skills, are crucial for individuals to excel in their respective fields. Enhancing these competencies among young people is vital for their successful integration into the labor market and for unlocking their full potential in various career paths.

Youth Unemployment: A Lost Opportunity for Growth

High youth unemployment rates pose a significant challenge, representing not only personal misfortune but also a missed opportunity for national and global economic development. As Schumpeter's theory of creative destruction suggests, innovative entrepreneurship fuels economic growth through a cyclical process of replacing old structures with disruptive innovations.? However, high youth unemployment hinders this cycle, as unemployed young people lack the skills and experience to contribute effectively.

The consequences of youth unemployment are far-reaching and long-lasting. Early career unemployment weakens future employment prospects, leading to lower income and reduced job stability throughout a person's working life.? Furthermore, young people facing unemployment tend to develop lower confidence and resilience, hindering their ability to navigate future job market opportunities and setbacks.? This issue persists regardless of the prevailing economic climate.

In the current global economic landscape characterized by demographic and economic transformations, often referred to as the "Human Age," many young individuals are being left behind. In this era, where technological advancements have led to the abundance of previously scarce resources, individual skills, knowledge, and talent have emerged as the primary drivers of economic and business development. The success or failure of businesses will increasingly hinge on the strategic acquisition and management of economically relevant skills by both enterprises and individuals.

A talent-centric approach not only offers fresh insights into the pervasive challenges of youth unemployment but also provides a framework for businesses to invest in innovative solutions to address this issue effectively and sustainably. While the current economic climate necessitates immediate actions to boost job creation and enhance young people's access to employment opportunities, the solutions devised should be inherently sustainable. Self-employment can contribute to the continuous build-up of tools and strategies that address both cyclical downturns and long-term structural hurdles, facilitating smoother school-to-work transitions and increased youth participation in meaningful employment.

Articulating a compelling value proposition for employers is crucial in advocating for business-led initiatives to enhance youth employment outcomes. This foundation can serve as the bedrock for sustained policies and investments aimed at fostering a more inclusive and prosperous environment for young people entering the workforce. careers with weaker credentials and face challenges with confidence and resilience in navigating labor markets throughout their working lives.

Self-Employment: A Multifaceted Concept

The concept of self-employment encompasses various definitions that often intersect, including multidisciplinary perspectives that help differentiate it from other forms of employment. Sociological, legal, and statistical disciplines offer distinct viewpoints on self-employment. Sociologically, early scholars like Marx and Weber emphasized ownership of means of production and autonomy. Legally, definitions are shaped by employment protection laws, commercial regulations, tax responsibilities, and social benefit considerations. From a statistical standpoint, self-employment is defined by remuneration methods, distinguishing between those earning wages/salaries and those paying themselves from profits.

These distinctions form the basis for categorizing employment status, with the ILO and UN classifying employment into employee, unpaid family helpers, employer, and own account workers. An employer operates an independent economic enterprise, hiring one or more employees, while an own account worker engages in economic activities independently without hiring employees.

Self-employment serves as an avenue for individuals to enhance their quality of life and explore entrepreneurial opportunities, particularly beneficial for young people. However, youth self-employment is often viewed as economically precarious due to insufficient supportive policies and programmes in the formal sector. It is commonly preferred by youth based on their acquired competencies from training, enabling them to pursue small economic or entrepreneurial endeavors driven by motivations such as self-expression and independence.

Understanding the motives behind self-employment involves examining push and pull factors. Pull factors represent individuals voluntarily entering self-employment as entrepreneurial pursuits, while push factors depict those compelled by circumstances to engage in self-employment due to limited alternatives for economic engagement. Financial and non-financial reasons influence individuals to opt for self-employment, whether driven by a desire for independence, the pursuit of personal ideas, or the aspiration to be their own bosses.

Entrepreneurship can be viewed through two distinct lenses: economics-focused entrepreneurship, which centers on creating private enterprises for wealth generation, and social entrepreneurship, which aims to generate profits while directly contributing to social causes. While both forms involve profit creation, social entrepreneurship stands out for its emphasis on driving social impact through its profits. Economics-focused entrepreneurship typically serves as the foundation for most youth entrepreneurship programs.

The concept of entrepreneurship draws heavily from economics, with the term "entrepreneur" originating from the French word meaning 'to undertake.' Central to entrepreneurship is the notion of innovation, where individuals or enterprises innovate by introducing new production methods, goods, markets, industry reorganizations, or sourcing factors of production. Creativity plays a vital role in fostering innovation, enabling individuals to generate new ideas and develop systems to bring these ideas to fruition.

Risk and uncertainty are integral components of entrepreneurship, requiring individuals to make informed decisions under uncertain conditions. Entrepreneurs must be willing to take calculated risks, demonstrating a willingness to embrace uncertainty and invest in opportunities that drive economic growth and development. This risk-taking attitude embodies a significant responsibility, as entrepreneurs identify and seize potentially lucrative opportunities.

Youth entrepreneurship often revolves around recognizing opportunities to create value through innovative processes or products, shifting the focus to individual initiative over external factors. However, critiques have emerged regarding traditional economic-centric views of entrepreneurship in the context of youth. Recognizing the heterogeneous nature of youth entrepreneurship sheds light on the diverse motivations behind young individuals venturing into entrepreneurship, whether driven by seizing opportunities or compelled by external factors like limited employment prospects or educational challenges.

Youth engage in entrepreneurship for various reasons, ranging from seeking independence and flexibility to addressing economic necessity or survival. Self-employment not only offers individuals autonomy but also provides essential goods and services to local communities, stimulating economic growth and competition. Moreover, youth entrepreneurship fosters innovation, resilience, and community engagement, enabling young people to explore new solutions, learn through experience, and adapt to evolving economic landscapes.

Youth enterprises contribute to promoting social and cultural identities, fostering a sense of community and belonging for marginalized youth. By democratizing entrepreneurship, disadvantaged individuals can succeed irrespective of their social or family backgrounds. Additionally, self-employment equips young individuals with valuable skills, and nurturing qualities such as resourcefulness, initiative, and a willingness to explore new approaches, ultimately contributing to economic development and sustainable communities.

Promoting Youth Entrepreneurship: A Pathway to Economic Growth

Therefore, policies aimed at promoting youth entrepreneurship should not be viewed as a divergence from the broader policy framework necessary in any case. Training programs designed to prepare young individuals for self-employment and support them in establishing businesses can significantly contribute to combating youth unemployment. It is essential to acknowledge that not all young people may pursue entrepreneurship in a traditional business sense; however, equipping them with enterprise skills can enhance their adaptability across various career paths. The success of the evolving economy hinges on fostering an entrepreneurial culture, with youth demonstrating the capacity to comprehend and lead this shift. Consequently, the encouragement of youth enterprise, particularly in entrepreneurship, holds paramount importance.

The significance of promoting entrepreneurship extends to altering societal attitudes towards entrepreneurial endeavours, collectively shaping an 'enterprise culture.' This cultural shift is apparent among young people, and the rising role of self-employment globally underscores its importance as a significant source of employment, livelihoods, and economic vitality. In both industrialized and developing nations, the trend towards flexibilization and informalization of production and employment relationships, driven by global competition and technological advancements, emphasizes the growing role of entrepreneurship and self-employment in job creation and economic resilience.

Despite the opportunities presented by entrepreneurship, aspiring entrepreneurs encounter various challenges, including the need to raise awareness about diverse career options and business startup opportunities. Young individuals often lack a comprehensive understanding of entrepreneurship and the responsibilities associated with managing a business, necessitating realistic considerations of self-employment as a viable career path. Providing practical support services like training, guidance, and access to financial resources becomes crucial for those venturing into entrepreneurship. Additionally, environmental influences, the development of entrepreneurial aspirations, and the cultivation of attributes and attitudes linked to entrepreneurial success all play pivotal roles in shaping the entrepreneurial journey. Addressing challenges such as limited access to credit further underscores the complexities faced by young individuals striving for self-employment in a competitive labor market.

In Conclusion, while youth entrepreneurship isn't a silver bullet for solving youth unemployment, it remains a crucial element in the overall response.? The viability and success of self-employment opportunities in Nigeria hinge on fostering a favorable labour market and implementing government policies that empower aspiring self-employed individuals.? This includes a strong commitment to labour market reforms that facilitate the integration of young people.? By smoothing the path to self-employment, these reforms can significantly enhance the economic journeys of young Nigerians.

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