BIDPA says that youth aren’t the only potential entrepreneurs

05 Aug 2018

Former president Ian Khama had to learn kwaito dance in order to dazzle a youthful voter constituency and for the same reason, his successor, Mokgweetsi Masisi, has guest-starred at a car-spinning competition using his nom de plume of smoke from a spinning car – “Sisiboy.”

Away from such gimmickry, the youth have consumed the time and attention of political leaders as well as a substantial amount of state resources because they are “tomorrow’s leaders.” A study from the Botswana Institute of Development Policy Analysis (BIDPA) alerts government to the fact that where self-employment is concerned, there are two very important groups that it is not focussing on: the elderly (some pensioners) and the widowed.

“The older an individual becomes, the more likely he/she enters into self-employment,” asserts Tshepiso Gaetsewe, an Associate Researcher at BIDPA, in a study titled “Determinants of Self-employment in Botswana”, adding that the latter condition may be motivated by accumulated human, physical and financial capital over time, which facilitates entry into business. “This is despite the fact that grants, training and other benefits are mainly targeted at the youth in Botswana. Government should also target older potential entrepreneurs with accumulated experience to encourage them to go into self-employment, and to further promote employment creation, economic diversification and poverty reduction.”

One of the determinants that Gaetsewe considered was age which in other studies, produced mixed results on whether older or younger entrepreneurs are more likely to enter into self-employment. She summarises these results thus: “Some have found that younger individuals are more likely to enter into self-employment than older individuals. This is because older people are more risk averse compared to the youth who also still have the energy to meet the work demands of a business. However, other studies have found that older individuals are more likely to enter into self-employment than younger individuals. This is because older individuals may have acquired more human and physical capital than the youth, and they may have established better networks.”

Further to old age being an incentive for venturing into business, the study found that the age of the head of household has a positive impact on self-employment.

“The estimated marginal effect suggests that a one-year increase in age of the household head would increase the likelihood of being self-employed by 0.81 percentage points. Therefore, older individuals are more likely to be self-employed than the youth,” says the study, adding that having retired from paid employment, self-employment is the only option available to the elderly.

The results also indicate that a household head who is widowed is 5.2 percentage points more likely to be self-employed than a person who has never been married. From the latter, Gaetsewe surmises that widowed individuals are forced into self-employment as a means of survival to compensate for the decrease in the overall household income due to the loss of a spouse. Consequently, she recommends that entrepreneurship programmes should place emphasis on upliftment of widows to ensure they are not excluded.

“The results further reveal that married, separated or divorced household heads are not different from being never married when it comes to making self-employment decisions. Similarly, cohabiting household heads are not different from those that were never married when it comes to making self-employment decisions,” she adds.

The study also looked at how other factors (gender, citizenship, education, health and location) are determinative in the context of self-employment. The results show that that men in Botswana are 40 percent more likely to engage in paid employment than women. Citizenship influenced self-employment negatively: citizens are 13.3 percentage points less likely to enter into self-employment than non-citizens, which Gaetsewe attributes to the fact that employment opportunities in the country are usually given to citizens while non-citizens usually enter the country to engage in self-employment. She notes that the latter is all the more reason why government needs to continue to encourage citizens to engage in self-employment in order to address high unemployment in the country.

As regards education, the study found that a one-year increase in years of schooling of the household head would decrease the likelihood of being self-employed by 0.79 percentage points. The implication it draws from this is that “education opens up opportunities for paid employment and that those individuals who have low educational attainments may be forced into self-employment due to limited job opportunities.” The health status of the household head was found to have no influence on self-employment. Finally, residing in cities/towns and urban areas than in rural areas reduces the probability of self-employment. Individuals residing in cities/towns and urban villages are respectively 18.4 and 9.5 percentage points less likely to engage in self-employment than those residing in rural areas. The study recommends that the government should target rural dwellers to enhance their business skills and also provide the necessary facilities and infrastructure in rural areas in order to further promote self-employment, job creation, poverty reduction and economic growth.

In a different platform, via a different mode and in a different context, the point that Gaetsewe makes in her study about catering for non-youth citizen groups was raised in the previous session of parliament. Through a question loaded with commentary, the Selibe Phikwe West MP, Dithapelo Keorapetse, asked the Minister of Defence Justice and Security, Shaw Kgathi, whether he is aware that members of the Botswana Defence Force retire into poverty because of the inadequate pension they get. In one respect, “inadequate” is a result of public service salaries being frozen for a protracted period of time due to what the government said were the effects of the 2009 recession. Pensions are calculated on the basis on how much a soldier earned at the time of his retirement and, as one former soldier-pensioner puts it, “the lower the salary, the lower the pension.” As Keorapetse recognises, this can be a poverty trap for former soldiers with no other source of income. A related to make to buttress what Gaetsewe says is that while the government stresses the importance of long-life learning, it doesn’t reward the outcome of such learning with economic opportunity.