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The Role of Entrepreneurship in Reducing Youth Unemployment in Ghana: Opportunities and Challenges.

 


AUTHOR,  FREDERICK KOJO GBAGBA (PhD) and KINGSLEY ADUM

EMAIL,  gbagbaf@yahoo.com

It is that time of the year in Ghana’s democracy again – the election period – and all political parties and independent candidates are making a plethora of promises. Per observation, one of the major issues political parties and independent candidates have focused their attention and policy frameworks on is the issue of youth unemployment. This issue remains one of the most pressing challenges in Ghana, mirroring a broader crisis across several African countries. 

Ghana’s youthful population continues to increase, with the 2021 census by the Ghana Statistical Service revealing that 38% of the country’s 31 million people are young people between the ages of 15-35 years. However, the growing youthful population of the country does not match the number of formal job opportunities created by the government. For instance, in 2022 the World Bank reported that Ghana’s youth unemployment stood at 12.6% with the youth in the rural areas suffering from this issue the most.

 This problem is further exacerbated by the influx of several young people into the few urban areas in the country in search of jobs which most of them do not get. Amid this challenge is the growing emphasis on using entrepreneurship to solve this problem. Entrepreneurship is touted to lead to innovation, social progress, and economic development.

This article aims to explore the role of entrepreneurship in curbing youth unemployment in Ghana, discussing the opportunities entrepreneurship presents as well as the challenges it faces. The article also assesses how entrepreneurship is being fostered in Ghana, the barriers young people face in setting up startup businesses as well as the policy frameworks or interventions that improve the entrepreneurial ecosystem of Ghana.

The Youth Unemployment Crisis in Ghana

The unemployment rate of a country is the percentage of its labour force that are without jobs but are available to work are actively seeking employment. The youth unemployment situation is not new to Ghana.

 For instance, in 2022 the youth unemployment rate in Ghana by the third quarter of 2023 was 29.7% according to the Ghana Statistical Service (GSS). According to a 2023 report by the International Labour Organisation (ILO), the youth unemployment and underemployment crises in Ghana are particularly acute among young graduates, with thousands of graduates from the country’s universities and technical institutions unable to secure formal jobs for themselves. 

This situation has forced almost all the political parties and independent presidential candidates contesting the December 2024 national elections to consider the creation of jobs as one of their major campaign promises and policies. The question however is: ‘Can the government alone curb this crisis by creating white-collar jobs?’ What then is the alternative approach to tackling this menace? The answer is entrepreneurship.

Entrepreneurship as a Solution: Opportunities in Ghana

Yes, not all people can indeed become entrepreneurs, however, most young people can be mentored, encouraged, and trained to become entrepreneurs, helping to reduce the youth unemployment rate in the country. In the face of the youth unemployment crisis, many have touted entrepreneurship as a viable path to curbing youth unemployment in the country. Through entrepreneurship, young people can become job creators and not job seekers. Several factors show that the country has the potential to curb youth employment through entrepreneurship.

First of all, there has been a growing entrepreneurial culture among Ghanaian youth in recent times. For instance, in March 2024, the African Leadership Magazine reported that Ghana has a staggering 37.9% of its adult population engaged in entrepreneurial activities, ranking Ghana among the global leaders in this aspect. Also, in July 2022, the Enterprise Bureau reported that almost half (49.2%) of all people employed in Ghana – aged between 15 years and above – own businesses. 

These and several other reports suggest that Ghana has a good entrepreneurial culture that can help the youth develop their entrepreneurial skills. From small businesses in the retail, agriculture and industry sectors to tech startups, Ghanaian youth are making good use of opportunities available to them to build their own ventures. This entrepreneurial spirit and culture in the country have been encouraged and supported by several incubators like the Meltwater Entrepreneurial School of Technology (MEST), African Entrepreneurship Academy, Entrepreneurship Training Institute, etc. These entrepreneurship institutions form a crucial part of the efforts being made to encourage the culture and spirit of entrepreneurship in the country.

Secondly, the government’s initiatives are one of the factors that promote entrepreneurship in the country. In recent times, the government of Ghana has recognized the importance of entrepreneurship as a key driver of job creation, economic development and economic freedom for citizens. Thus, there have been a number of government initiatives aimed at making entrepreneurship in the country attractive.

 To mention a few, there are initiatives such as the National Entrepreneurship and Innovation Program (NEIP), the Ghana CARES Programme, the Presidential Pitch for Young Entrepreneurs, etc. The government also established the Ministry of Business Development to further develop and encourage entrepreneurship in the country.

 Through these initiatives and the ministry, the government continues to provide funds and various forms of support for young entrepreneurs, encouraging many young Ghanaians to take the bold step to start businesses of their own. For instance, through NEIP, the government has committed more than $10 million in funding for startups, providing grants and training to several young Ghanaians.

The booming digital economy is also an opportunity for Ghanaian youth to venture into entrepreneurship. In the past few years, one of the famous words in Ghana is “Digitalization”, especially in the political space. This is due to the rise of the digital economy in the country in recent times which presents several opportunities for young entrepreneurs in Ghana. 

Ghana’s internet penetration has been growing over the past few years. For instance, the World Bank Open Data reported in 2021 that 68.2% of Ghana’s population had access to the internet. Additionally, in February 2024, DataReportal reported that “there were 24.06 million internet users in Ghana in January 2024.

 Ghana’s internet penetration rate stood at 69.8 percent of the total population at the start of 2024. Kepios analysis indicates that internet users in Ghana increased by 454 thousand (+1.9 percent) between January 2023 and January 2024”. This internet penetration has opened up sectors like e-commerce, digital marketing, and fintech to several young Ghanaians. For example, internet penetration has led to the setup of startup businesses such as mPharma, ExpressPay, Farmerline, Zeepay, BoxconnTechnologies, PEG Africa, etc.

 These and several other startups in the digital space were encouraged by the increased access to the internet in the country, demonstrating the potential of digital entrepreneurship to transform industries as well as create jobs for young people in the country.

Last but not least, agribusiness is also another area that has in recent times shown the potential of entrepreneurship in creating jobs for young people. Several Ghanaian youth have recognized the potential in agribusiness, shifting from the traditional way of farming to the business aspect of farming. One prominent Ghanaian agribusiness in recent times is Mr. John Dumelo, who is inspiring the youth to venture into agribusiness. Also, government initiatives such as Planting for Food and Jobs (PFJ), etc. encourage the youth to recognize the business aspect of agriculture. This agribusiness value chain provides opportunities in processing, marketing, and export, areas where young entrepreneurs can thrive.

Challenges Facing Youth Entrepreneurs in Ghana

Whereas there are promising opportunities for entrepreneurship in Ghana, many challenges persist, making it difficult for many young people to establish and sustain successful businesses.

Firstly, access to finance is difficult. It is one of the most crucial barriers to entrepreneurship, especially for young and upcoming entrepreneurs. It is difficult for young people to access affordable funding. The few financial institutions willing to provide funding in terms of grants, loans, and sponsorships demand collaterals and make certain requirements that are difficult for young people to meet. The seriousness of this issue was captured in a 2020 report by the Global Entrepreneurship Monitor (GEM) where it was stated that “80% of young entrepreneurs in Ghana cited inadequate funding as the primary obstacle to starting a business”.

Secondly, inadequate business skills and mentorship are a big hindrance as well. Several young entrepreneurs do not have the requisite skills and knowledge to build as well as scale their businesses. While entrepreneurial culture and passion are high, financial literacy, business management, and marketing expertise are mostly missing. Although government programs like NEIP and educational institutions such as Meltwater Entrepreneurial School of Technology (MEST), etc. offer support and training in terms of skills acquisition, there is a need for more extensive mentorship programs to guide young people through the early stages of their business development.

Again, young entrepreneurs in Ghana face regulatory and bureaucratic hurdles. The business environment in Ghana is improving, by all indications, however, it still poses crucial challenges for young entrepreneurs. The World Bank’s Doing Business in 2020 ranked the country (Ghana) 118th out of 190 countries relating to ease of doing business. These bureaucratic and regulatory hurdles consist of longer registration processes, regulatory complexities, high taxes, etc. These hurdles discourage several young people from becoming entrepreneurs.

Last but not least, competition and a saturated market are a challenge for young entrepreneurs in Ghana. Several youth-owned businesses face serious competition, especially in saturated sectors like small-scale and retail trading, the service sector, etc. Several startup businesses struggle to set themselves apart and become scalable or sustainable in such highly competitive markets.

In all these, are the lessons from around the world that Ghana can take cues from?

Lessons From Around the World

Many countries around the world have faced challenges in reducing youth unemployment and some of them have successfully turned to entrepreneurship as the solution. For example, Rwanda has positioned itself as a regional hub for entrepreneurship and innovation, especially in the technology sector. This has helped the country to reduce its youth unemployment rate significantly, from 23.27% in 2021 to 16.6% in the first quarter of 2024, according to the National Institute of Statistics, Rwanda. The Rwandan government’s massive investment in ICT infrastructure as well as education has created an enabling environment for young entrepreneurs to thrive. Another example is the Startup India initiative by India’s government. This initiative has been significant in encouraging young people to start businesses as it provides them with tax benefits, relaxed regulatory burdens, and improvement in access to financing. Lastly, the YouWin program by Nigeria’s government provides seed funding to young entrepreneurs and has been instrumental in the creation of thousands of jobs as well as stimulating the growth of small businesses. These global instances prove that Ghana can also do more to harness the power of entrepreneurship to reduce the rate of youth unemployment. How can this be done?

The Way Forward: Recommendations for Ghana to maximise the potential of entrepreneurship in decreasing the rate of unemployment in Ghana, some key measures and strategies must be taken:

First of all, the government must expand access to funding for young entrepreneurs. Since the government cannot shoulder this burden alone, the government must also put in place the necessary policies and strategies to entice the private sector to offer affordable financing to young entrepreneurs in the country. This may include offering youth-focused microcredit, venture capital funds, and public-private partnerships that provide seed capital to startup businesses.

Second, the government must also strengthen business education and mentorship in the country. Entrepreneurship lessons and programs must be incorporated into the curriculum at all levels of education in the country. This is crucial because it will help change the normative mindset of most Ghanaians that after school, they must be employed by the government or someone else to a modern mentality that everyone can also start a business. Aside from formal education, mentorship programs must also be instituted in local communities to connect young entrepreneurs with experienced business leaders. This will help to provide young entrepreneurs with the needed guidance for success.

Additionally, to encourage more young people to start businesses, the government must also improve the ease of doing business. The government must reform the bureaucratic and regulatory measures regarding the establishment and registration of businesses. Regulatory requirements must be eased for startups to encourage young people to become job creators instead of job seekers. For instance, simplifying tax procedures and processes as well as offering incentives for youth-owned businesses can help to reduce the burden on young people in starting businesses.

Lastly, and equally important as the factors above, is that the government must do more to leverage the power of technology. Digitalization should not just be a mantra but must be put to work. The government must continue to massively invest in ICT infrastructure to support the growth of digital entrepreneurship. This will also encourage innovation in other sectors such as agritech, fintech, e-commerce, etc., eventually creating new opportunities for the youth to participate in the contemporary global economy.

Conclusion

Conclusively, this article espouses that entrepreneurship provides a promising gateway to decreasing youth unemployment in Ghana by empowering the youth to become job creators instead of job seekers. This article has shown that there are significant opportunities in sectors like technology, agriculture, small businesses, etc. 

However, addressing the challenges that persist such as difficulty in accessing funding, inadequate business skills and expertise, regulatory and bureaucratic hurdles, etc. are crucial. 

Additionally, with the right policies, strategies, and support systems in place, Ghana can leverage the power of entrepreneurship to play a transformative role in dealing with the youth unemployment crisis as well as driving the economic growth of Ghana.

 Ghana continues to develop its entrepreneurial ecosystem and it can massively draw from global lessons to create unique measures and policies to promote and develop youth entrepreneurship.




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