Mixed-methods study into the development and progression of young entrepreneurs in Soweto, South Africa

Abstract

The objective of this study was to investigate the challenges faced by young entrepreneurs in Soweto when attempting to access funding for their businesses. The research aimed to explore and understand the specific issues and difficulties encountered by these entrepreneurs in their pursuit of financial support for their ventures. By examining these problems, the study aimed to contribute to a better understanding of the funding landscape for young entrepreneurs in Soweto and potentially identify strategies to address these challenges. Based on the literature on challenges faced by young entrepreneurs in Soweto, a questionnaire was distributed to the young entrepreneurs. Data was collected from a sample size of 49 participants using a questionnaire and focus group interviews. Face-to-face focus group interviews comprised of 6-8 subjects per group to concretize the study's outcome. Collected questionnaire data was analyzed using SurveyMonkey software. After this, themes were developed from the survey and from in-depth focus group interviews. A deductive coding approach was used, which allowed the researcher to focus on a predetermined code using the research objectives. The analysis of the responses demonstrates that many young entrepreneurs started their businesses out of a push-factor of unemployment. However, a substantial number of young people decided on entrepreneurship as a career of choice. The greatest obstacle for many young entrepreneurs is getting capital, as most do not meet the criteria for obtaining business loans from banks or government financial institutions due to their socio-economic status. The study found that government rules and regulations are viewed negatively and may not always support young entrepreneurs in the way that was intended. Also, the study identified bottlenecks in the DFIs (Developmental Funding Institutions) funding application processes, including a mismatch between the credit requirements versus required skillsets and collaterals. On this basis, it is recommended that the NYDA’s (National Youth Development Agency) credit assessment should be pliable and consider the applicant's socio-political background. In addition, there is a need to revisit the required skills and qualification requirements for funding. Government may create a business development hub to nurture young entrepreneurs. Also, tertiary institutions may assist by collaborating with successful young entrepreneurs in order to supplement academic knowledge with current entrepreneurial experiences. Finally, DFIs need to appreciate the NQF (National Qualification Framework) objectives where the principle of equivalence and the integration of skills applies.