June 30, 2011

At Least 1 in 5 African Youth Plan to Start a Business

Young women and men equally likely to express entrepreneurial intentions

by Magali Rheault and Bob Tortora

WASHINGTON, D.C. -- Gallup surveys in 27 African countries and areas underscore the interest young people in the region have in entrepreneurship. A median of one in five Africans between the ages of 15 and 24 who are not already business owners say they plan to start their own business in the next 12 months, although they are less likely than those aged 25 to 35 to have these plans. In general, young women are as likely as young men to report plans to launch a business.

African leaders convening this week at an African Union summit in Equatorial Guinea will address youth empowerment and the roles young Africans can play in positioning their countries for sustainable development. Gallup's measures of young people's attitudes about entrepreneurship inform such conversations, particularly the relationship between youth and economic development.

Gallup finds African youth believe they can rely on social networks to launch their businesses. A median of about 6 in 10 African women (57%) and men (61%) between the ages of 15 and 24 say they trust someone other than a family member enough to make them a partner in starting a business. Similar proportions of women and men in the older age group (aged 25 to 35) say the same.

Young Africans -- whether they are currently thinking about starting a business -- paint a mixed picture in terms of starting and running a business, be it a formal or informal venture. They are relatively positive about the safety of assets and the potential financial success of their business, but fewer find the paperwork process and access to loan money easy enough for would-be entrepreneurs. It is important to note that young people in the older age group as well as both genders share similar views.

Attitudes About Entrepreneurship Vary Across Countries

Young people in different countries, particularly those in sub-Saharan and northern Africa have different views about some aspects of entrepreneurship. Young people residing in northern African countries are less likely than their counterparts south of the Sahara to say they plan to start a business. Young people's perceptions about business outcomes in northern Africa are generally less positive than those in sub-Saharan Africa. At the same time, young people in each region found more agreement with respect to ease of business entry and trust in business partners.

Gallup finds other country differences across income groups. Intent to start a business among those aged 15 to 24 is highest in low-income rather than middle-income countries, and ranges from 3% in Morocco to 40% in Uganda. In many of the countries and areas surveyed in Africa, majorities of young people believe they can trust non-relatives to be their business partners, although in the Central African Republic, Chad, Djibouti, Egypt, Libya, and Tanzania, less than 50% of young people believe they can.

Young Africans' views about access to capital underscore the importance of developing country-specific initiatives. As few as 9% of young people in Libya and as many as 45% in South Africa say it is easy enough for anyone to obtain a startup loan, even though similar proportions of young people in each country plan to start a business in the next year and both countries are upper-middle income economies.

Majorities of young people in the Somaliland region (64%) and Chad (51%) say paperwork is easy enough. Young Libyans (11%) were the least likely to say paperwork is easy enough. These findings suggest the paperwork process may push many young people into informal types of entrepreneurship, which could lead to socio-economic marginalization.

Young Africans' perceptions about business profitability and asset safety are more positive across all countries. Views about would-be entrepreneurs' potential profitability range from 85% in Ghana believing the government will allow business owners to make a lot of money to 40% in Libya believing the same. Trust about the safety of business assets is also relatively widespread, ranging from 91% in Ghana to 37% in Chad.

Bottom Line

Young Africans, including young women, show a latent interest in business creation. Although entrepreneurship is not a panacea to the daunting challenge of youth unemployment across Africa, it is a critical pillar that stands to provide a livelihood for many and, in turn, create jobs for more young people. The findings also underscore the gap between relatively positive perceptions of business outcome versus the more negative views of business entry. However, the cross-country variations are important reminders to develop country-specific entrepreneurship programs to turn aspirations into successful ventures. Future research will explore potential gender differences in push-and-pull factors in business creation.

For complete data sets or custom research from the more than 150 countries Gallup continually surveys, please contact SocialandEconomicAnalysis@gallup.com or call 202.715.3030.

Survey Methods

Results are based on face-to-face interviews with 1,000 adults, aged 15 and older, conducted in 2010 in Algeria, Botswana, Burkina Faso, Cameroon, Central African Republic, Chad, Comoros, Djibouti, Egypt, Ghana, Kenya, Liberia, Libya, Mali, Mauritania, Morocco, Niger, Nigeria, Senegal, Sierra Leone, Somaliland region, South Africa, Sudan, Tanzania, Tunisia, Uganda, and Zimbabwe. For results based on the total sample of national adults, one can say with 95% confidence that the maximum margin of sampling error ranged from a low of ±2.9 percentage points to a high of ±5.9 percentage points for the question "Are you planning to start your own business in the next 12 months, or not?" The margin of error reflects the influence of data weighting. In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.

For more complete methodology and specific survey dates, please review Gallup's Country Data Set details.