Bangkok--11 Feb--CIPE Zimbabwe, which means ‘Houses of Stone,’ is my home in the southern part of Africa. To many, this title may not seem an apt description for a country in such serious economic and social decline — the inflation rate was 3,371.9 percent in April 2007, HIV/AIDS affects 18-20 percent of the population and results in approximately 3,000 deaths per week, and about 70 percent of the population lives below the poverty line. However, the resilience and fortitude with which my fellow citizens meet these difficulties on a daily basis makes them, in my opinion, true Houses of Stone. The Self-Employment Solution As a result of the country’s hardships, many Zimbabweans have opted to migrate to other countries. Those who remain face a formal sector capable of absorbing only small numbers into employment, and as such, Zimbabwe has an unemployment rate of 80 percent. The need to survive has forced numerous citizens of all ages to seek self-employment. Commodity brokerage is a popular business. Brokers often take advantage of discrepancies in the economy that result from government interventions in the market — such as price controls — intended to counter the effects of rising inflation. The result is the emergence of a parallel/black market, and in the case of foreign currency, this has developed into a dominant and thriving sector. Commodity brokers commit financial resources to source and purchase goods in short supply. Taking advantage of high market demand, the goods are then resold for a premium. Not all commodity brokering operations are outside the parameters of the law. Cross-border trading is another form of business that many Zimbabweans choose. Typically, a trader will sell goods that are otherwise unavailable in Zimbabwe, or goods that can be purchased more cheaply from other countries. Until recently, cross-border trading had synergies with flea market operations, being a key supply of the goods sold there. The informal nature of flea markets meant that goods could be sold at much lower prices than in conventional shops. In addition to providing imported (and therefore more attractive) commodities, this made flea markets popular amongst Zimbabwean shoppers. While a 2005 government push to clear slum areas across the country (known as Operation Murambatsvina or Operation Restore Order) demolished many flea market operations, the remaining markets continue to provide viable livelihoods to some people. Youth: Pillars of Entrepreneurship Youth unemployment is one of the most formidable problems Zimbabwe faces. Those youth who are employed account for a large number of the country’s self-employed or informal sector. Through resilience and the determination to survive, they have developed a keen knowledge of the business environment, discovered opportunities, and exploited these successfully. Major Barriers to Entrepreneurship The traits that are often characteristic of young people, both positive and negative, are also reflected in Zimbabwe’s informal sector. In the informal sector, the business focus is short-term. A particular line of business is maintained only for the duration that a given commodity will realize lucrative returns. Informal entrepreneurs’ main business objective is to make profits as soon as possible. This temporary horizon is often exacerbated by a casual business approach as well as a lack of codified procedures and inadequate management of financial, human, and other resources. Lack of Relevant Skills These shortcomings that characterize entrepreneurship in Zimbabwe can be directly attributed to a lack of appropriate skills in business management. Insufficient business training is probably the greatest barrier, then, that is preventing youth from developing solid businesses out of their self-run operations. Zimbabwe has an excellent literacy rate of 90.7 percent; the vast majority of the population has had access to basic primary and some secondary school education. School curricula, however, do not give adequate attention to business skills training, particularly in the area of business management. Business-related courses are only given to those students who expressly elect to study business. While the government is committed to constantly updating the national curriculum to cater to new demands and emerging issues, business management content has not yet been incorporated. Youth emerge with skills in mathematics, science, or English, but not business. Without basic skills, young people rely on personal experiences and the advice of friends and relatives when starting a business. In Zimbabwe, informal enterprises have a negative reputation for being unprofessional and are often referred to with contempt as “indigenous” businesses. Still, it is these operations that provide young people with the most accessible experience in business. The result is a learn-as-you-go, unskilled approach to management. While this method is employed quite successfully by some, it can be a hindrance for youth who would seek to develop their interests into viable enterprises. Limited Access to Capital Worldwide, lack of access to capital is a common barrier for anyone wanting to start a business. In Zimbabwe, the lack of adequate capital is more acute because the economy is in severe decline. Established and fledgling enterprises alike, in both the formal and from conventional sources because prevailing lending rates are prohibitive — as much as 600 to 700 percent. For any young person planning to open a business, attaining start-up capital from a bank, for example, is unthinkable. Micro-lending organizations have traditionally provided the most financial assistance to small businesses in Zimbabwe, including to young entrepreneurs. However, with the country’s turbulent economic situation, these organizations have been forced to make their lending conditions stricter. Qualifying criteria for borrowers are thoroughly restrictive, loan periods are very short, and the amount eventually lent out is usually insufficient to launch anything meaningful. Thus, entrepreneurs generally do not view micro-lenders as a feasible source of capital, preferring to seek other financing options. Some entrepreneurs in Zimbabwe choose to sell their assets (such as real estate or a car) in order to raise capital for a new business venture. These assets can be sold at very high prices because the effects of depreciation are reversed by the more intense effects of hyperinflation. Needless to say, this source of capital is not an option available to those youth who do not own property — with little work experience, most youth have not earned enough to purchase assets. Some entrepreneurs are able to borrow from family members, but this is also a challenge because almost all households in Zimbabwe are suffering from the effects of diminishing disposable income. In this environment, it is remarkable that many young entrepreneurs have been able to use minimal resources to begin their business activities. This can be attributed to these entrepreneurs’ acute need to make a living in order to survive. Lack of Support Political trends in Zimbabwe have forced many non-governmental organizations (NGOs) to stop operations. Legislation regulating the activities of NGOs has become so restrictive that many groups have ceased to function. Consequently, the number of organizations assisting entrepreneurial development also declined, and with them, the services they offered — skills development, management training, and advisory services. Those NGOs that still operate have adopted a more cautious approach in their work, reducing general awareness of their existence amongst potential beneficiaries. The government’s ability to support enterprising young people has also been severely diminished by the worsening economic situation. As GDP has shrunk significantly (with an estimated real growth rate of -5.7 percent in 2007), spending has been reduced in all areas. Government projects to assist entrepreneurship development that were planned or already underway have either been crippled or stopped altogether. Skills Development Youth could most actively participate in overcoming these barriers by developing their business skills. Some notable skills gaps have been identified as barriers that prevent youth from evolving from street-wise operators into sustainable business managers. Giving youth the opportunity to access the expertise they lack would make significant progress towards developing a culture of youth entrepreneurship. Training in Business Management While some youth have excelled in using their “gut instincts” in business, the importance of knowing and applying sound business management principles and methods cannot be overemphasized. Zimbabwe’s young entrepreneurs could benefit hugely from acquiring these skills. The greatest need is for financial management training. Many young entrepreneurs do not distinguish between their personal funds and business funds. Even as the enterprise grows, the entrepreneur will continue to manage business and personal bank accounts with laxity. To be effective, training must cover a wide spectrum of financial techniques from accounting to cash management. In the initial stages of operating a business, the entrepreneur may work on their own, performing all the functions required. With growth, the entrepreneur hires staff. Yet in Zimbabwe, small businesses are considered employers of the last resort because they offer poor working conditions — including few or no benefits and unprofessional conduct on the part of the owner/manager. Formal training in human resources would give entrepreneurs much-needed skills in this area. Business management training would help young entrepreneurs make their operations more systematic. Good business management would make these enterprises more efficient, and would help young entrepreneurs dispel the widespread negative perceptions associated with small enterprises. Training in Other Business Spheres The most popular business model for young entrepreneurs in Zimbabwe is to purchase and resell goods. Yet Zimbabwe would greatly benefit from a robust production/manufacturing industry. Young entrepreneurs would be able to offer something currently limited in Zimbabwe (locally-produced goods), and with cost-effective production processes and distribution methods, they would be able to compete with more expensive imports. Similarly, young entrepreneurs could easily adapt their talents and skills to the service industry. Emphasizing service would also equip entrepreneurs in non-service sectors with a tool to gain a competitive advantage. Zimbabwe’s youth represent a significant sector of the country’s population, so much so that by giving them the skills and opportunities to provide better products and services to the public, the country could potentially see an increase in GDP, investment, and employment levels. Training in Business Continuation and Succession The running of an enterprise is usually closely aligned to the personality and style of the founding entrepreneur. In Zimbabwe, once a family business is passed to heirs, the enterprise will often collapse within a short time. The issue of succession is not necessarily an immediate concern of many young entrepreneurs. However, being conscious of and planning for the future of the business, young people can contribute to the economy of the next generation. Viewing the business beyond the era of its founder instills sound business and entrepreneurial practises among staff and potential heirs, and creates and maintains the wealth of the business for the short and long term. Programs to Build Business Skills Developing these skills among Zimbabwe’s young entrepreneurs will require the support and assistance of the government, in particular, and then other stakeholders after there is an environment in which further aid is feasible. Reworking the Educational Curriculum Developing business-oriented curriculum in primary and early high schools would take advantage of a structure that has achieved high levels of success in bringing basic education to the country. Introducing business topics at an early stage in education would show that these topics are just as important as mathematics, science, and English. The introduction of business management as a subject should include references to real-life case studies — after all, much of what occurs in society can in some way be related back to business. Courses must include a practical element so concepts can be applied, not just learned in theory. Reworking Vocational Training The Zimbabwean Government has achieved credible results in establishing vocational training programs and learning centres throughout the country. These are specifically designed to give youth useable skills from which they can launch their own businesses. In order to increase the effectiveness of this training, business management principles and methods must be included in the syllabus to complement the purely technical competencies that are imparted during vocational training. Students would then have an appreciation of how to develop their chosen vocation into a viable business. For example, simple bricklaying could become a small contracting operation. Furthermore, most entrepreneurs rely on selling or brokering the product of some other party. There are very few self-employed youth who are producers in their own right. Vocational training should also be expanded to provide skills in the service industry, including hairdressing, interior decorating, or plumbing. The service industry has become a key growth sector in many economies worldwide. Business Mentoring There are many Zimbabweans who have established and operate successful companies — these, too were once small enterprises. By developing a parallel program where an established company and its founding director mentor a fledgling enterprise and its young owner (in the same type of business), young people and established businesses could work together to forge the next generation of Zimbabwe’s private sector. Such a business mentorship program could be coordinated by an NGO that already works with entrepreneurs. Companies are likely to be more receptive to proposals from an established and reputable NGO as opposed to solicitations from unknown young entrepreneurs. Through their work with and knowledge of specific entrepreneurial ventures, the NGO could match the young businessperson with a suitable larger company and approach the founder/director/owner/manager. With the guidance of the NGO, the two parties could then work out the structure the mentoring program. The mentoring program could be organized as part of the larger company’s corporate social responsibility efforts. The government might provide tax incentives to those companies that take part in the program. This will be a valuable benefit to encourage the participation of established companies. The business mentoring program could be further linked to some type of financing for the nascent enterprises, either by way of a donation or as a loan facility. This sub-program would give young entrepreneurs access to much-needed financial resources. The larger enterprise could benefit from potential tax incentives. Entrepreneurial Competition All key support structures for entrepreneurship in Zimbabwe — the government, NGOs and private companies — could come together to run a national contest for young entrepreneurs. The objective would be to empower youth with meaningful skills to identify and act on business opportunities to benefit the economy and the individual. Each stakeholder could contribute something to the competition, such as financing prizes or providing skills training. By making the contest truly national, as much as possible reaching the grassroots level in all provinces, entrepreneurship would be cultivated in the country as a whole. Conclusion Opportunities for entrepreneurs are not necessarily obvious in Zimbabwe. However, the need to survive has compelled the country’s citizens — especially youth, who are most affected by unemployment — to identify and exploit these opportunities with some success. Advancing the activities of self-employed young people will require certain barriers to be reduced, the largest of which is deficient business management skills. Government, NGOs, and businesses can work together to implement programs that will close the skills gap and open the way for young entrepreneurs to achieve business success. Notes Statistics taken from the Central Intelligence Agency’s The World Factbook. References Central Intelligence Agency, The World Factbook, available at www.cia.gov/publications. Zimbabwe Ministry of Youth Development and Employment Creation, Section 4.3 “Youth Empowerment and Participation,” National Youth Policy of Zimbabwe, September 30, 2000, available at www.mydgec.gov.zw.