Lido beach in Mogadishu, Somalia, is a 100-mile stretch of white sand lapped by the azure blue waters of the Indian Ocean. On Fridays, hundreds of young people swarm the beach: energetic soccer tournaments sprout up, heated wrestling matches ensue and there are noisy swimming competitions abound. It is a beautiful sight in a city torn by 22 years of civil war. If you come back on Monday, you will still find them there. They are there Tuesday, Wednesday, and Thursday as well: the same youth at the same soccer tournaments, wrestling matches, and swimming contests.
Yet these carefree scenes of youth at play take on melancholy tones as you realize that, for many, the beach serves as an escape from the stark reality that they have nothing else to do. A 2012 UNDP Human Development report indicated that 67 percent of youth in the country are unemployed, and in South Central Somalia, 89 percent live in abject poverty. This widespread unemployment among disaffected youth has fueled extremism, piracy, political instability, and poverty, which in turn have contributed to the failure of several demobilization attempts in the country. Violent activity, crime, and drug use are rampant, especially among informal settlements in the outskirts of the city. Youth have fallen prey to extremist groups who take advantage of disaffection and disillusionment to recruit them into the militia, creating a destabilizing affect. Although Mogadishu is an extreme example, similar scenes are being witnessed in Johannesburg, Rio de Janeiro, Jakarta, and other cities around the world.
Developing countries are experiencing an unprecedented demographic shift leading to a youth bulge - a high proportion of young people aged 15 to 24. There are a greater number of young people today than at any point in history, but this demographic explosion, which has been largely absorbed by cities, has not been met by a similar growth in economic opportunities for the youth. The result of this disparity is a historic number of unemployed youth. Furthermore, high concentrations of unemployed, disenfranchised youth in rapidly growing urban centers has led to explosive conditions that have resulted in social upheaval, political crisis, instability, and violence.
The lack of employment opportunities for youth, particularly in urban cities around the world, is among the greatest security and development challenges today and has resulted in the underemployment, inequality, and marginalization of youth. It is therefore essential to develop strategies to harness the incredible power of youth inventiveness and dynamism to generate economic growth and employment. Rather than being a burden, the bulge can become a demographic gift. Entrepreneurship and the private sector can leverage the potential of this population and provide a bottom-up approach to youth job creation.
Younger and Bigger Cities
A 2012 UN global population report predicts that the global population will grow to 9.6 billion people by 2050. With this number in mind, the global challenge of population growth will greatly impact cities in the developing world. A UNICEF report on the state of the world’s children predicts that, by 2050, 70 percent of the world’s population will live in cities. Furthermore, a World Bank report on urban poverty predicts that over 90 percent of this growth will be from cities in the developing world.
The International Development Research Center’s study, “Researching the Urban Dilemma,” found that “whereas in 1950 there were 80 cities with populations exceeding one million, today there are 480.” A global youth bulge has largely fueled this explosion in the urban population in developing countries. UN-Habitat’s State of Urban Youth Report states that almost half of the global population is under 25, with 1.3 billion people between the ages of 12 and 24. Nowhere is this demographic shift more apparent than in cities: by 2030, 60 percent of urban residents will be under the age of 18 according to a UN-Habitat paper on the demographic youth bulge.
This demographic shift, coupled with rapid urbanization, is changing the face of the developing world. According to a UN Report on the global situation of youth, 85 percent of the world’s one billion youth, defined by the UN as all persons between the ages of 15 and 24 years, live in developing countries. Africa has been deemed the world’s youngest continent, with a population of 200 million youth according to the African Economic Outlook report. This number is expected to double in the next three years. According to a report from the Africa Center for Strategic Studies, African cities are growing by 18 million people each year. Much of this growth in cities is from increases in the youth population, according to a UN-Habitat report on the state of African cities.
Youth are at the forefront of the continent’s demographic shift toward cities: the number of young people in the continent is growing faster than anywhere else in the world. According to a regional overview by the Africa United Nations Economic Commission for Africa, over 70 percent of Africa’s population is under the age of 30, and it is expected to continue to grow younger for the next 20 years. As young people leave rural areas for cities in search of better economic opportunities, they add to an already growing urban youth population. In fact, most migrants into urban centers around the world are young people.
As a result, the urban population in Sub-Saharan Africa has expanded by 600 percent in the last 35 years, and predictions from UNICEF’s report on Africa’s Young Urbanites suggest that, within the next 15 years, more than half of the continent’s population will live in cities.
The speed and scale of this youth-fueled urban growth is exceeding the capacities of cities around the world. Cities are unable to keep up with the basic needs of a rapidly growing youth population, which has resulted in a myriad of challenges that are pushing urban institutions to crisis.
Youth Marginalization & Unemployment
There is an increasing number of youth living in cities in the developing world that are facing daunting economic and social challenges, including social exclusion, lack of economic opportunities, and limited access to resources. They are increasingly marginalized, excluded from the economic growth of cities, and forced to live on the margins of society.
This economic and social exclusion is rooted in cities’ failure to create quality jobs. As millions of youth migrate from small towns and villages into urban centers, they face limited opportunities with insufficient infrastructure, housing, and other basic services as well as unequal access to opportunities for education and employment. As such, they are not sharing in and benefiting from the prosperity of their cities. Rather than being at the center of economic activity and growth in cities, the youth find themselves unemployed or living in poverty in the unstable informal sector.
The rapid economic growth of cities has not resulted in similar rises in youth employment. Youth make up over 47 percent of the 200 million people unemployed worldwide. That level amounts to around 90 million unemployed youth. Young people are three times more likely to be unemployed than adults, and those able to find employment are often underemployed or work in the informal sector at insecure, low-skill jobs. As a result, around 152 million youth live on less than US$1.25 a day. UN-Habitat has also found that, globally, 300 million youths are classified as working poor.
As a result of limited job opportunities in the public or formal private sector, millions of young people are forced into the unregulated, exploitative informal sector where wages are not sufficient to cover basic living needs. In addition to the lack of available opportunities, much of the youth population lacks the qualifications or training required by most formal sector jobs. As a result of the underemployment, uncertainty, and low wages characterized by the informal sector, the International Labor Office (ILO) found that 23 percent of working youth live on USD 1 a day or less, making them extremely poor.
As a result of limited job opportunities in the public or formal private sector, millions of young people are forced into the unregulated, exploitative informal sector.
Developing countries face the biggest burden in the youth unemployment crisis. Often characterized by weak economies, inequality, and poverty, these countries are unable to create enough jobs for the exploding youth population. Although accurate data on youth unemployment rates in Africa are difficult to come by, the ILO estimates that over half of Africa’s youth are unemployed, underemployed, or inactive. In Sierra Leone, for example, UNICEF has found that only nine percent of the working population is employed in the formal sector, with the youth population contributing significantly less. These informal sector jobs are often with small, family-owned, low-productivity businesses that are unable to provide subsistence level wages, such as stalls found in outdoor markets. In Luanda, Angola, for example, the average age of those working in these markets is 21. With increasing urbanization and the youth movement into cities, these types of informal economies are far too small and unstable to meet their needs. Most youth will find themselves underemployed.
The rapidly growing unemployed youth population has also resulted in an explosion of urban slums around the world. Newly arrived youth end up living in slums and informal settlements on the peripheries of cities. According to UNICEF, of the world’s one billion slum dwellers, over 70 percent are under the age of 30. According to the United Population Fund’s State of The World Population report, 72 and almost 60 percent of urban residents in sub-Saharan Africa and South-Central Asia respectively live in slums.
The youth living in these slums have limited access to education, social services, and health care and are subjected to undignified work and living conditions. In light of the exploding population growth in urban centers, the concentration of youth living in poverty in the peripheries of cities is expected to increase dramatically in scale.
Instability and Violence
Globally, rapid urbanization and the social and economic exclusion of youth have had serious social ramifications. Disaffected young people who lack the economic opportunities to raise themselves out of poverty are more vulnerable than adults to participation in armed violence, crime, gangs, drug trafficking, and other illicit activities. This issue is exacerbated by uncontrolled and rapid urbanization, which concentrates the most at-risk demographic group into urban enclaves of poverty, unemployment, and disenfranchisement. As might be expected, the increase of youth in these environments has led to an increase in conflict, instability, and violence in the developing world. It is becoming increasingly clear that rapid urban growth without an increase in job opportunities for youth increases the risk of political and social turbulence.
For instance, the risk of political violence has doubled in countries with high rates of urbanization and low levels of GDP per capita according to the Woodrow Wilson International Center for Scholars. Instability and conflict in less developed countries have been linked with expanding youth populations, particularly among youth who have had limited economic opportunities.
According to a report titled “The Security Demographic” by Population Action International, which examined post-cold war civil conflicts around the world, a country with more than 40 percent of its population aged between 15 and 29 was 2.3 times more likely to face civil strife than one with lower youth proportions. The severity and length of conflict is also demonstrated to be greater.
The lives of many of this generation’s urban youth will be characterized by uncertainty and violence, especially in developing regions such as Sub-Saharan Africa, Latin America, and South East Asia. Particularly, young people between the ages of 15 and 30 are disproportionately affected by and perpetuate violence and crime in cities.The unprecedented rise of gangs, for example, has been linked to the youth bulge. Gangs of young men between the ages of 15 and 25 have become a distinguishing feature in these developing cities and have been linked to urban violence in cities throughout Latin America, the Caribbean, and Sub-Saharan Africa. Specifically, crime violence has become endemic in the cities of Johannesburg and Rio de Janeiro.
The resulting instability and conflict from youth unemployment poses significant barriers to meaningful and sustainable development and negatively impacts economic activity. For example, according to the Mexican government, criminal activity and violence cost the country in 2007 over USD 10 billion in lost investments, sales, and jobs. Similarly, a study by the Institute for Economics and Peace found that South Africa spent USD 51.2 billion on violence containment in 2012 alone.
If the basic issues of high youth unemployment and disenfranchisement are not addressed, cities around the world will continue to face a toxic cycle of instability, poverty, and unemployment that will undermine socio-economic development.
An Unprecedented Opportunity
The demographic youth bulge has the potential to deliver a demographic payload of economic growth and social prosperity. The inherent ingenuity and enthusiasm of youth makes them a dynamic human resource that can be leveraged to drive global economic growth and transform economies. Youth are at the forefront of change for a society, and their innovative ideas and energy can be a force for social and economic change. In cities, the youth are best positioned to take advantage of the economic benefits of urbanization.
The current challenge is to try and direct the economic power of cities to serve the needs of youth and ensure that the dividends from economic growth are equitably distributed.
The scale and density of people, resources, and networks in cities represents a unique opportunity. As such, the urban economy will be the center of global economic growth. According to the State of The World’s Cities report, 80 percent of future economic growth will likely take place in cities. Even today, cities account for 70 percent of global GDP (55 percent of GDP for low income nations).
The concentration of people in cities creates a pool of ideas, talent, and activities that drive innovation and social change. The sheer scale of cities increases the number of opportunities and creates an urban advantage that makes wealth generation and the pursuit of economic opportunities easier. By tapping into the economies of scale of cities, the inherent potential of youth can be leveraged to generate wealth and jobs. Youth today are migrating to cities because they provide the opportunities and resources for upward mobility that are not available in rural areas. The current challenge is to try and direct the economic power of cities to serve the needs of youth and ensure that the dividends from economic growth are equitably distributed.
The Potential of Entrepreneurship
Sustained and broad-based economic growth is a crucial driver for job creation. Additionally, the market economy, particularly the private sector, has been demonstrated to be the best means to drive growth. Within these economies, individual companies are the basis for development. According to the World Bank, in developed nations, the economic value generated by small and medium businesses generates more than 50 percent of gross GDP. A report from the Center for Global Development indicates that, in the developing world, the private sector and entrepreneurial activity can account for as much as 90 percent of jobs in some areas. For entrepreneurs, cities have all the essential elements for launching a successful enterprise: a dense network of consumers and labor, a surplus of goods and services, infrastructure, and institutions.
There are significant benefits to promoting entrepreneurship among youth beyond the creation of economic opportunities for the unemployed. From a social perspective, entrepreneurship addresses some of the socio–psychological problems and criminal activity that result from unemployment. Entrepreneurship also re-integrates marginalized and disaffected youth into the economic mainstream of their cities; youth who were previously forced into the margins of society gain a sense of meaning, self-worth, and belonging.
From an economic perspective, youth entrepreneurs are dynamic: they learn and adapt quickly. As a result, they deliver a large number of independent experiments on how to do business. In areas with higher startup rates and entrepreneurial culture, economic resources are used more efficiently and economic growth is higher.
It is therefore essential to foster the creation of small and growing businesses, which create economic value and spur growth. Supporting youth, the fastest growing and most dynamic population, to become entrepreneurs is the best means of achieving this goal.
Supporting Youth Entrepreneurs
Young people have raw entrepreneurial talent, but launching and building a successful business that can add economic value requires technical skills, knowledge, networks, and resources that many youth do not have access to. It is therefore essential to create an entrepreneurial ecosystem which promotes a thriving entrepreneurial culture that can drivesinnovation and employment. There are three essential elements to creating this ecosystem: strengthening educational systems with a focus on entrepreneurship training, developing a supportive and enabling environment which makes it easier to launch a business, and financing businesses owned and operated by youth.
Access to credit and capital alone is far from sufficient to leverage the opportunities of youth-owned businesses. Youth entrepreneurs must develop the skills to run modern, sustainable businesses that can compete and grow in a competitive environment. Formal training in such areas as business plan development, management, financial management, and opportunity identification and capitalization provide the foundation for launching and growing successful enterprises. Education programs also need to focus on transferable and marketable entrepreneurial skills that can be directed toward the creation of new and small businesses that leverage the benefits of the urban economy.
It also essential to create an enabling environment with rules, policies, and regulations that make it easier for youth to launch businesses. These policies should include implementing legislation to encourage young entrepreneurs to become involved in social and economic development and increasing the ease of doing business through easier business registration and set-up processes. A youth-centric regulatory environment that is conducive to innovation and experimentation with low discovery costs is essential.
In addition, youth entrepreneurs lack the collateral to obtain loans and are usually unable to obtain anything more than microfinance loans, which may not be sufficient enough to meet the needs of a new and growing business. The lack of long-term business histories, which are often required by risk-averse creditors seeking to make loans or investments, act as a further significant barrier keeping youth from launching businesses. Access to financing for youth entrepreneurs needs to be expanded, and government-supported capital is needed to supplement private sources of funding. Investing capital in new and innovative youth-owned businesses could also have a multiplier effect on development.
The quality of life for the growing number of young people in urban centers around the world will depend on how the youth population is able to transition into economic independence and freedom. If this transition is stunted, and youth are unable to find dignified work, their lives will be characterized by uncertainty, poverty, and violence, which will have a negative impact on sustainable economic development.
The most effective way for these youth to become catalysts for change and economic growth is through entrepreneurship.
Entrepreneurship gives youth a sense of ownership and participation in economic activity and leverages their immense potential and the economic potential of the cities they live in. Hopefully, this article has adequately demonstrated that providing young entrepreneurs with the training and support to launch their own businesses can be an effective means for sustainable job creation and the promotion of global stability.