Understanding Youth Entrepreneurship and Innovation in South Africa: A Review of Drivers, Barriers and Opportunities

Abstract

Youth unemployment is rising in South Africa, while youth entrepreneurship is critically low. Yet, youth entrepreneurship can improve the economic participation of young people, revitalize economies and eradicate socio-economic challenges. According to Schumpeterian entrepreneurship, entrepreneurship equates to innovation, and entrepreneurs are innovators. However, there is evidence of insufficient innovation in South African businesses, both established and start-ups, and informal micro-enterprises. According to the GEM South Africa 2023/2024 report, in 2023, only 9.9% and 1.7% of South African early-stage entrepreneurs were reportedly involved in product innovation at a national and international level respectively. The objective of this study is to identify the drivers, barriers and opportunities of innovation in youth entrepreneurship. A narrative literature review study was conducted to critically review literature on youth entrepreneurship and innovation. Key findings of the study indicate that entrepreneurship education and training, institutional and policy factors, economic and financial factors and technological factors can drive innovation in youth entrepreneurship in South Africa. The study established that systematic constraints, educational barriers to innovation and gaps in access to funding can hinder innovation among youth entrepreneurs. The study emphasizes entrepreneurship education that enhances creativity, problem-solving, critical thinking and innovation through both theoretical and experiential learning approaches. In addition, the government should extend funding to promote the development of innovative incubators, technologies and infrastructure. An innovation-centric and collaborative entrepreneurial ecosystem can support the shift to innovative or creative youth entrepreneurship.