2.1 Definition and types of youth entrepreneurship in Germany and Africa

2.2 Motivations of young people to engage in business

2.3 Required Capabilities of Young Entrepreneurs

2.4 Impact of youth entrepreneurship on the society and on young entrepreneurs

EDGAR BONGKISHIY, Cameroonian entrepreneur and software-developer

MAMY JOEL RAMAHEFARISON, founder of a cyber café in Madagascar

NELE HEINEVETTER founder of Niche Art and Architecture Tours Berlin

3.1 Political factors

Macro-economic Policies

Governmental Support for (Youth) Entrepreneurship

Political Stability

3.2 Economic factors

Access to Capital

Unemployment

Economic Growth

Inflation

Market forces

3.3 Social factors

Social and Cultural Norms

Risks and Uncertainty

Problem of entrepreneurship in South Africa

3.4 Technological factors

Positive relationship between developed infrastructure and entrepreneurship

Infrastructure in Germany

Infrastructure in South Africa

3.5 Environmental factors

Environment in South Africa

Environment in Germany

3.6 Legal factors

Business Structure

Licences or Permits Acquisition

Insolvency

4.1 Instruments and economic policy for promoting youth entrepreneurship in Germany

Funding

Counceling and Training

4.2 Instruments and economic policy for promoting youth entrepreneurship in South Africa

Funding

Counceling, Training and Skills Development

Broad Based Black Economic Empowerment

Conclusion

4.3 Trends and identification of markets with potential for young entrepreneurs

South Africa

Germany

Civic Education for Responsible Young Entrepreneurs

4.4 Potential of youth entrepreneurship policy within the German-African Partnership

1. Young entrepreneurs in Germany and Southern Africa

2. Opportunities and barriers for business creation by young people

3. Youth entrepreneurship policy and civic education

he “Go Africa… Go Germany…” program is conceptualised and organized by the Federal Agency for Civic Education (bpb) and is under the patronage of the President of the Federal Republic of

Germany, Christian Wulff. It took place for the fourth time from August 15th to September 2nd, 2011 in Germany and from March 12th to March 28th, 2011 in South Africa and Swaziland. It is designed to bridge the knowledge gap between the realities and perceptions that Germans and Africans have of each other. The program is mainly aimed at students and young graduates up to the age of 28 engaged in the subject areas of political science, international relations, economics, media science and law. By bringing together this young generation of academics and young professionals in an intercultural meeting, it aims at encouraging an inter-disciplinary and intercultural exchange and learning experience. One of the major aims of the program is to acquire a creative human basis for future German-African cooperation and to facilitate exchange between the scholarship-holders and established experts in the fields of economics, politics and law. To date, participants from all over Germany and more than 20 African countries have travelled together through Germany and at least one African country on the second part of the program. In 2007, the trip led us to Namibia; in 2008/09 to Tanzania and Uganda; in 2009/10 to Ghana and Nigeria; in 2010/11 to South Africa and Swaziland, and in 2012, a new group of participants will travel to Kenya and the newly founded Republic of South Sudan. By means of peer-teaching and on-going training, scholarship-holders will be able to act as multipliers of the lessons they have learned in Ger-many and Africa within their respective local contexts. The creation of a Common Paper serves as the first collaborative effort between all 26 “Go Africa… Go Germany…” scholarship-holders. The focus lies on topics related to youth in Germany and Africa, and the German-African Partnership. The fourth generation of the “Go Africa… Go Ger-many…” program was challenged to write about youth entrepreneurship and civic education. The results were summarized in our “Major Find-ings” and will be distributed to academics and decision-makers for fur-ther discussion. For more information and for accessing previous Common Papers, please visit the website of this program: www.bpb.de/goafrica

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n the course of the next decade approximately five hundred million young people will enter the labor market (Haftendorn& Salzano 2003: iii). However, many of them have great difficulties

in finding an appropriate job and are not able to make use of their skills and qualifications. In general the unemployment rate amongst young people is twice to three times as high as it is for adults (OECD 2008: 30). Due to the global recession, the prospect of employment by established companies is further hampered. The young people's limited access to the labor market often results in a vicious cycle of pover-ty and social exclusion. By not being able to participate in their respective economies, these youth are at risk of not reaching their full potential, and in doing so, straining the economy and relevant social structures. This is due to the fact that the government's investment in edu-cation and training will bear no fruits if young people do not move into productive jobs that enable them to pay taxes and support public services. Further-more, poor employment at the beginning of a young person‟s career may have negative effects on job prospects in later life (Haftendorn & Salzano 2003: iii). Not only does it impede opportunities to gain work experience and practice expertise but it also prevents young people from establishing a functional network of business contacts. An essential prerequisite for this endeavor is an in-novative education system which emphasizes the development of skills and attitudes that make up an entrepreneurial mind-set such as lateral thinking, questioning, independence and self-reliance among young people. In addition to this, young entrepre-neurs should be provided with further education during vocational training, business incubation and the start-up phase of their businesses. This paper focuses also on the link between entre-preneurship and civic education in Germany and Southern African countries. The entrepreneurs' sta-tus as self-employed risk takers within their com-munities makes them positive role models. Entre-preneurs who have gained knowledge on the subject of civic education are more likely to be good corpo-rate and civic citizens. If these entrepreneurs act in a corporate and socially responsible manner they have

the potential to become what is commonly referred to as “multipliers”. In this role they are able to pro-mote the virtues of the civic educated life on a broader basis than other citizens and can therefore make an important contribution to society. Due to their energy and innovative approach to problems it is especially important that young entrepreneurs participate in their communities and broader society in a responsible way. The first section of the paper focuses on the charac-teristics, necessary capabilities and motivation to start up a business of young entrepreneurs in Ger-many and Africa and the impact of youth entrepre-neurship on the society as well as on young entre-preneurs. Personal interviews with a range of young businessmen and -women will complement theoreti-cal findings and give insights in different businesses and the personalities of their founders as well as in country-specific political, social and economic reali-ties. In the third chapter, the focus lies on the opportuni-ties and barriers to business creation by young people which will be analyzed using the PESTEL-scheme. This scheme takes into account political, economic, social, technological, environmental and legal factors that young entrepreneurs have to take into account when starting up their businesses. The following section compares economic policies for promoting youth entrepreneurship in Germany and identifies new markets of interests for young entrepreneurs. A special focus lies on finding ways of promoting responsible and sustainable business management through civic education. Finally the authors deal with the potential of youth entrepre-neurship policy and try to find new strategies for facilitating youth entrepreneurship within the Ger-man-African Partnership.

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2.1 Definition and types of youth entrepreneurship in Germany and Africa

n order to investigate youth entrepreneurship, opportunities and barriers for young people and the necessary policies to open up a business, it is

necessary to define the terms 'youth' and 'entrepreneurship'. Since the age range of 'youth' in academic research varies to a high degree depending on the author it is difficult to find a precise definition of this term. The United Nations usually define „youth‟ as all people between 15 and 25 years of age (United Nations 2007: 61). In this paper, the focus not only lies on young entrepreneurs who started up their own busi-nesses directly after school but also on young people who founded their own company during their stu-dies or after graduating. Therefore 'youth entrepre-neurship' in the following research includes all people between 18 and 35 years. The term „entrepreneurship‟ can be defined in an economic but also in a social and a cultural way. According to Haftendorn and Salzano entrepreneur-ship can occur “[...] at home, school, leisure and at work […]” and it includes “life attitudes and […] the courage to act in the social, cultural and economic background” (Haf-tendorn/Salzano 2003: 1). Ulrich Schoof defines it as the process of recognizing “[...] an opportunity to create value, and the process of acting on this opportunity, whether or not it involves the formation of a new entity” (Schoof 2006: 7). In general, entrepreneurship occurs in different sectors and types of businesses. For this reason Schoof distinguishes three different types of entre-preneurship according to their working sectors.1 The first and most common type is economic entrepre-neurship which primarily aims at creating wealth and generating profit. An economic entrepreneur is will-ing to take risks, focuses on innovative projects and

1 Schoof further distinguishes between inter-, intrapreneurship and co-operative entrepreneurship (Schoof 2006: 8ff.). Due to the limited scope of this paper we will not elaborate on these categories.

tries to invest resources efficiently with the highest possible outcome. Public entrepreneurship is the same as economic entrepreneurship, however its objectives and motivations are different. A public business is socially orientated and works within the realm of public institutions and organizations. This sector is increasingly important for young people. Finally, Schoof names social entrepreneurship. This type of busi-ness is directed towards social problems or the pro-vision of public goods and focuses on creating social value. Social entrepreneurs try to reach financial self-sustainability and deliver a socially acceptable return on investment. The difference between a traditional non-profit institution lies in the concept of setting clear, profit-related performance goals. Furthermore non-profit organizations are independent from the state, which is mostly not the case for social busi-nesses. Social entrepreneurship is a worldwide suc-cessful concept and particularly popular among young people (Schoof 2006: 8 ff.). As this paper is focusing on youth entrepreneurship in Germany and South Africa, it is essential to elabo-rate on the differences between the formal and infor-mal sector. Even though South Africa, being the larg-est African economy, has the smallest informal sec-tor on the continent, informal employment is in-creasing (UNDP 2003: 98ff; Verick 2006: 5ff).2 For many young people, especially with lower levels of education, this is an attractive sector when entering the labor market. Contrary to a formal business, an informal business is not required to pay governmen-tal taxes. At the same time informal workers are generally not covered by social security and labor legislation, which causes many problems for their security. It is very difficult for the government to control the great variety of mostly small and micro-companies since their economic activities are unre-gistered. Further characteristics for the informal sector are a high poverty rate among workers, a high proportion of women and self-employment people who receive much lower wages than in the formal sector. . Since informal businesses are very unpre-dictable, often difficult to sustain over a longer pe-

2 The percentage of the informal sector in 2003 was about 39% of total employment in South Africa. Hence the informal sector almost doubled since 1991 (20% informal employment) when the Apartheid-regime broke down (UNDP 2003: 98ff).

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riod of time and risky for both economic and per-sonal reasons, it is crucial to develop educational programs that give informal workers a chance to enter the formal sector (Verick 2006: 5).

2.2 Motivations of young people to engage in business

t is often said that a person cannot win a game they do not set out to play. Interpreted in the context of entrepreneurship, this statement sug-

gests that success as an entrepreneur depends on the motivating factor behind that decision. Lau, Shaffer and Au (2007) classify these motivational factors in two groups. External measurable factors such as the status of the economy, the actions of competitors and increased income and prestige, on the one hand, and subjective internal factors which refer to a per-son‟s individual appraisal of their career experience based on personal standards, on the other hand. In a study conducted by Henderson and Robertsons (2000), it was established that the most common reason for becoming an entrepreneur was the extrin-sic need to earn more money and earn a prestigious status in society. In 2009, TIME magazine named Mr. Alhaji Aliko Dangote from Nigeria as Africa‟s richest entrepreneur. Unable to secure employment soon after obtaining a Bachelor‟s degree, Mr. Dan-gote launched his career as a street vendor selling rice and sugar. Tired of constantly being disrespected each day due to his line of work, he sought to make more money subsequently rising in society. He bor-rowed various loans to expand his business, which he founded in 1977 at the age of 20 as a small trad-ing firm, and transformed it into the Dangote Group, the largest cement factory in Africa. The billionaire Dangote is controversial but he is also a role model and a challenge to young African entre-preneurs. Equally important external motivational factors such as the status of the economy and the availability of capital are shaped by government policies and regu-lations. People are driven to venture into entrepre-neurship in countries where governments are politi-cally stable, less legal restrictions and barriers to en-try for private businesses, currency stability and pro-vide opportunities for investment capital (Shane, Locke & Collins 2003). As demonstrated in Mada-gascar, deliberate government reforms such as priva-

tization create opportunities for entrepreneurs where technologically innovative and profit opportunities arise in revamping previously underutilized bureau-cratic state departments. There are also critical internal factors that influence the entrepreneurship process. Shane, Locke and Collins (2003) report that individuals who have a high need for achievement engage in entrepreneurial activities and tasks as they require a high degree of responsibility and require individual skill and effort. Entrepreneurs derive a sense of accomplishment and satisfaction from completing tasks independent of others, in a way that challenges them, and where their principles and values are not compromised. Most importantly, they want to be their own boss, set their own rules and not be limited by others. In the case of young entrepreneurs, this need to take on responsibility and make decisions autonomously must be met at the same time as the process of growing up and becoming an adult. Self-efficacy is another motivational factor for entre-preneurs. Self-efficacy is the self-confidence to be able to gather and implement necessary personal resources, skills and competences to accomplish a certain goal or target (Shane, Locke & Collins 2003). Compared to regular employees, individuals with high self-efficacy feel that the only way their goals can be achieved is by venturing as entrepreneurs and enjoying the benefits of owning a process from the planning of the business to the development and realization. Individuals with high self-efficacy often pursue a not so successful line of business that they are familiar with, commonly through family heritage or peer association with the belief that their personal strategies and higher standards will result in success. Lastly, the excitement of taking a risk is also a moti-vational factor for becoming an entrepreneur. Risk-takers are challenged to deviate from the norm of schooling, and establish a new way of life with the hope of joining the ranks of youthful self-made capi-talists like Mark Zuckerberg, the founder of the so-cial network Facebook, and earning a place in histo-ry. Risk taking is a necessary trait for entrepreneurs especially in the beginning of the process as they are faced with much more continued uncertainty than managers of already established companies. In order to succeed they must take the risk of facing situa-tions with unclear outcomes and view that as attrac-tive and non-threatening (Budner 1982). Young entrepreneurs can be particularly good at risk-taking,

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as they are less likely to be affected by previous ex-periences and they bring a youthful audacity with them.

2.3 Required Capabilities of Young Entrepreneurs

n a personal level, motivation and creativity are definitely amongst the most important factors in being an entrepreneur. However,

there are several capabilities a prospective young entrepreneur is required to have in order to engage in a successful business. There is always the risk of failure when starting up a new business. An entrepreneur therefore needs to have a strong and stable character and has to be able to deal with a high level of insecurity, competitive pressure and possible professional setbacks. This implies having no fear of being a pioneer and of taking risks, as well as high perseverance despite of many hurdles. At the same time an entrepreneur needs to be realistic and should consider potential risks well before taking them. Decisiveness and con-scientiousness should be well balanced as an entre-preneur has to be able to cope with bearing respon-sibility, not only towards his or her employees and shareholders, but also towards clients, the govern-ment, banks and the society as a whole. Considering that financiers, customers, business partners and even family and friends are often very skeptical towards new innovative ideas (Langer 2010), a young entrepreneur has to be able to con-vince doubters with a self-confident and professional appearance. Especially when personally interacting and negotiating with business partners, self-assured behavior and social adaptability are an essential pre-condition for achieving strong bargaining power (Baron & Markman 2003: 41ff.). In addition, com-municativeness and “a high level of expressiveness [are] often a „plus‟ from the point of view of generating enthusiasm” (ibid.) on the part of both trade partners and em-ployees. Another essential entrepreneurial capability is eco-nomic thinking in order to have a basic understand-ing of how markets work and how to calculate po-tential risks. Entrepreneurs should always keep an eye on competitors and look out for new opportuni-ties that increase productivity and promote business. On the one hand, this implies openness towards new ideas and a high level of flexibility in order to adapt

to the changing circumstances of the market. On the other hand, being a couple of steps ahead of the competitors requires an ability to think strategically. Good managerial and leadership qualities are crucial. Besides these personal competences, the start-up of a business venture also requires a certain degree of education in entrepreneurship (OECD 2001: 81ff.). This is not necessarily a precondition for a young entrepreneur but must be acquired in the course of time in order to achieve sustained success. Van der Sluis et al. assert that the relationship between schooling and performance is unambiguously posi-tive (2005: 225 ff.). Among other things, it is impera-tive for an entrepreneur to have the most basic un-derstanding and knowledge of financial management. This would ensure that the entrepreneur has accurate financial reports that would help to guide them in making future decisions and choices. Therefore if an entrepreneur has any plans for growth, a solid finan-cial management is critical from the start-up phase and onwards. Further, it is of real use for entrepreneurs to know the broad legal framework for operational purposes and for engaging potential clients (Verma 2011). Understanding legal issues, before entering a given business sector protects potential entrepreneurs from unintentionally disregarding the rule of law which governs their industry; a circumstance which would jeopardize the likelihood of their growth and success. Knowledge of legal provisions also ensures that any arrangement with one‟s stakeholders is completely transparent. The entrepreneur should have legal knowledge of business agreements includ-ing disclosures, payment terms and cycles, contrac-tual terms and conditions, delivery terms, price agreements, et cetera, so that they are legally pro-tected from defaulters. A comprehensive and flexible marketing strategy is needed during the initial stage of an organization‟s development until a successful brand name is created for the products and the business gets firmly estab-lished. This implies that an entrepreneur requires marketing skills in order to positively identify the organization‟s potential market and also to be able to strategically tailor their products with potential cus-tomer‟s needs in mind. An entrepreneur also requires the ability to discern different trends in their market of choice and be versatile enough to adapt to these trends. A thorough understanding of consumer be-

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havior and consumption patterns is therefore an inevitable necessity for an entrepreneur. Communication expertise is a vital component when starting up a business. Reaching out to and widening networks is essential if an entrepreneur wants to improve his/her business (Fill 2010). This may take the form of formal or informal networks particularly those concerned with specific sectors or localities (CEEDR 2000). In such manner, the business will gain a good reputation as its image is being built up. Moreover, an entrepreneur„s initiative to network will ultimately improve the business and the product or service. Nevertheless, it is important to mention that several factors override one‟s capabilities to-wards being a successful entrepreneur within this context. The economic, socio-cultural and political environment in which one is willing to operate plays a significant role in determining an entrepreneur‟s success. Daniel S. Fogel asserts that these factors usually influence people‟s willingness and ability to undertake entrepreneurial activities (Fogel & Gnya-wali 1994). Environmental constraints also refer to the availability of assistance and support services that facilitate the start-up process. For instance, empirical studies of entrepreneurial environments of various countries show that countries that keep rules and regulations at a minimum, offer tax and other incen-tives, and provide training and counseling services to start-up entrepreneurs increase the likelihood of new venture start-ups (ibid.). Chapter 3 will elaborate further on these factors. Looking at the above mentioned required capabili-ties, one might get the impression that being a suc-cessful entrepreneur depends very much on a per-son's character and that entrepreneurial spirit can‟t be learnt. However, we believe that the ability to start a flourishing business is a mixture of an entre-preneurial personality, good education and the right technical preconditions. It is therefore important to foster creative educational programs aimed at train-ing young and highly motivated students and giving them financial and technical support for innovative business ideas.

2.4 Impact of youth entrepreneurship on the society and on young entrepreneurs

ostering youth entrepreneurship and the pro-vision of financial and technical assistance is relatively costly. Consequently one might ask

for the impact and benefits of these initiatives to the society. Several studies have been conducted on this issue and most conclude that entrepreneurs have an important function within a country‟s economy. First of all, starting a business venture exempts one from being unemployed and thereby from relying on social assistance. Moreover, a successful business start-up will eventually lead to the creation of em-ployment, thereby reducing the unemployment rate of a community or country. However, although the insolvency rate of young entrepreneurs might be high, as discussed above, they do have a positive role in society (van Praag & Versloot 2007: 33). Another positive effect, which does not depend on the success of the business, is the development of new skills and the acquisition of experience. Eco-nomic thinking and best practices in management and dealing with setbacks are skills which can be used in any other position – whether employed or self-employed. These skills and experiences are in high demand and thus might “increase the likelihood that these young people finding a job elsewhere” (Llisterri et al. 2006: 16). Youth entrepreneurship also helps to address some of the socio-psychological problems and delinquency that might arise from joblessness in society. There-fore, there is a direct effect on the employment situa-tion if new young entrepreneurs hire fellow youth from the „dole‟ queues (Curtain 2000). Youth entre-preneurship is playing an increasing role in job crea-tion across the world. In both developed countries and less-developed countries, self-employment is emerging as an important source of employment, livelihoods and economic dynamism. In developed countries and more industrially advanced developing countries, production and employment relationships are becoming increasingly flexible and informal, casualization) which involve sub-contracting produc-tion to small enterprises.3 This is largely in response to increasing global competition and information technology. In developing countries and transition

3Flexibilization refers to the move from standardized, large-scale production to small-scale, flexible forms (Hoogvelt, Ankie 1997; Rasmussen, J. et al. 1992; Streeten 1991).

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economies, the bulk of new employment in recent years has been in the informal sector as well. Youth-run enterprises (YREs) also provide valuable goods and services to society, especially the local community (Stone, et al., u.d).4 This results in the local community‟s revitalization. It has also been observed that new small firms tend to raise the de-gree of competition in the product market, thereby bringing gains to consumers (Curtain 2000), virtual tangible and positive impact on society. In addition, these enterprises may create linkages between youth entrepreneurs and other economic actors, such as through sub-contracting, franchising etc., creating an economic hub in highly developed entrepreneurial societies (White and Kenyon 2000). White and Kenyon further note that social and cul-tural identity is promoted through youth enterprises, as is a stronger sense of community where young women and men are valued and better connected to the society. They note that youth enterprises give young people, especially marginalized youth, a sense of „meaning‟ and „belonging‟. This can shape their identity encourage others to treat them as equal members of society. The popularization and demo-cratization of entrepreneurship can allow the disad-vantaged in society to succeed regardless of social or family background (White et al 2000). Given this situation, the promotion of youth enter-prise in general and youth entrepreneurship in par-ticular is vital. The importance of this promotion should also be seen in the context of improving social attitudes towards entrepreneurship. Collective-ly, these influences are referred to as an „enterprise culture‟.5 Seven interviews have been conducted in Germany and Africa, supporting and illustrating the findings of this chapter. The summary and transcript of the interviews are available on the site of www.bpb.de/goafrica in the rubric Common Paper 2011/12.

4 Stone, et al., u.d, in a survey of YREs in Minnesota, USA, observed that they build houses, publish books, run restaurants, staff child care centers, provide business services, and offer others services and goods. 5 Drawing on Gibb (1988), White and Kenyon (2000: 18) define an „enterprise culture‟ as a “set of attitudes, values and beliefs operating within a particular community or environment that lead to both „enterprising‟ behaviour and aspiration towards self-employment”.

What is the nature of your business?

My current project is Launisch.de, an internet start-up and a social platform for emotions. The purpose of the platform is to categorize and rate articles or postings according to moods. On this project I‟m working with two partners.

What motivated you to start the business?

I keep coming up with internet ideas that are not out there yet and have an entrepreneurial spirit which won‟t let me rest until I turn some of my ideas into running businesses. The feeling that I would in this way contribute in a big way to society keeps me working hard on new concepts. What was your source of finance for your star-tup? I am financing the projects in the starting phase more or less with personal savings and partner con-tributions. My intention is to attract viable investors

in the long run and hopefully get a return on invest-ment too. Most internet projects live from adver-tisements, so I‟m always working with partners with a background in business administration. How long did it take you to establish the busi-ness and break-even? I've been working on the concept and implementa-tion of launisch.de for the last one and a half years But the platform is not yet in production, so we‟ll see how it turns out. What difficulties did you face while starting up the business? The most difficult part is to get the project financed. Additionally working as an employee, I‟m still fully employed by MeinAuto.de and that doesn't leave enough time to concentrate and get my ideas realized fast enough. I‟m presently doing a lot of overtime with the insight that the longer you wait the vaguer the idea becomes. So pulling launisch.de through is my main objective now. Was there a point when you were about to give up? The vain search for finances and the lack of interest from investors makes you develop doubts about a business idea. But I think it is the market that finally decides in the end. You can only win if people find your project useful. What capabilities and skills do you think an entrepreneur should have? An entrepreneur should be a fast decision maker and have good communications skills with customers, employees and partners. He should also be patient, persistent and confident in his ideas. What were the reactions of your friends and fam-ily when you decided to start your own busi-ness? Most of my friends were excited and very suppor-tive. My parents, especially my mother, who is also an entrepreneur, believe 100 percent in my capabili-ties. It is very inspiring to be surrounded by positive and progressive thinking people. My family and friends definitely belong to that category. Which factors would have facilitated the found-ing of your business?

Coming from Cameroon to Germany, I had to bridge a big cultural gap and completely change my mindset. The way of doing business here is funda-mentally different from the way Cameroonians go about things. State sponsored funding and a plat-form for foreign entrepreneurs in Germany would have also helped. The African lobby in Germany doesn‟t have much of a voice and that doesn‟t make it easier. As far as African entrepreneurs in Germany are concerned there is no solid foundation to build on What does work mean to you? Work for me has to be first of all some sort of a hobby. It‟s stress when you wake up and already are in a bad mood, just thinking about work. Your job should be fun and that can only happen if you like what you are doing. Identification with your career is definitely a huge motivating factor Where do you see yourself and your business ten years from now? In ten years from now I see myself having a full operating company in Germany with a branch in Cameroon.

What is the nature of your business? I own and manage a cyber café with three associates. We offer different services, like printing documents, photocopy, computer graphics, data entry services, producing invitation cards, maintenance of comput-ers and printing of posters. We also sell computing materials such as hard drives and USB sticks. What motivated you to start the business? I could not find any permanent employment, and I wanted to make money. My associates and I dreamed of our own company which would make our parents proud, especially since we were really young and had not yet worked in a formal environ-ment before. We chose the computing industry be-cause we had knowledge about it. Being our own boss allows us to be free, to work in a manner that suits, to spend the profits as we desire and work flexible hours. What was your source of finance? To get funding, we agreed that each of us had to sell any valuable goods we owned. So we sold items such as our bicycles, music instruments and even our computers. And we also did some part time work in repairing old computers. How long did it take you to establish the busi-ness and break even? The first two months were really difficult for us and we were about to give up. We only started to realize profits in the third month; so far the past five months have been good. What difficulties did you face while starting up the business? In the beginning, we had a lack of materials such as the computers, scanners and photocopiers. It took about two months to get the license to access inter-net. This was a real challenge because internet ser-vices are our core products, the other services only supplement this service. This was one of the reasons that we did not attract many customers to our café. Additionally, there were many other cyber cafés operating near our premises at much cheaper rates so there was a lot of competition. Our families also did not support our idea of entrepreneurship and often told us to look for formal employment.

What current challenges do you face now that you have established your business? The biggest challenge we have is the devotion of the associates to the business. Apart from the cyber café, each of us manages other personal smaller entities. One sells computers, the other sells cars etc. Some-times, I am the only one who is working in the café, which makes it difficult to properly attend to all the customers while handling the finances and other supplies. Other than that, we are all still young and need time to engage in other activities such as rela-tionships! At times we need to work till midnight and over the weekend and it is quite stressful. What capabilities and skills do you think an entrepreneur should have? Starting a business is not easy. Entrepreneurs there-fore need to be optimistic and have the motto: “Never give up” in mind. In my opinion, young people are creative and always find solutions. Entre-preneurs should not be afraid of competition and also be flexible and set realistic targets in a field they are knowledgeable. What were the reactions of your friends and fam-ily when you decided to start your own busi-ness? Only a few of our family members and friends en-couraged us. The majority questioned the viability of our business, perhaps because they were jealous as some are currently running their own cyber cafés. Which factors would have facilitated the found-ing of your business? It would have been useful to have more knowledge in the IT-industry. We knew the basics, however for some problems we had to learn on the job. If for example I had had a degree in Computer Sciences things would have been easier. Where do you see yourself and your business ten years from now? In ten years, I am sure that I will have obtained at least a formal diploma in computer graphics. Then, I hope to start my own business without any partners specializing specifically in advertising. For this com-pany I hope that will expand beyond our borders.

What is the nature of your business? NICHE ART AND ARCHITECTURE TOURS BERLIN introduces participants to remarkable art and architecture locations in the German capital that are off the beaten track. The tours are geared to art and architecture enthusiasts looking for competent insider knowledge. Rather than focusing on galleries and buildings featured in most tourist guides, NICHE explores unique hotspots and backdrops that contribute to Berlin‟s thriving contemporary art and architecture scene. What motivated you to start the business? We founded our business at the beginning of 2009 in reaction to a fascinating phenomenon: By necessity, art and architecture lovers tend to visit only the well-known galleries and buildings in Berlin. That‟s be-cause new urban developments and alternative art spaces rarely make it into tour guides. But of course, it‟s the newest trends and developments that appeal most to experts and connoisseurs – and those spac-es, in turn, can benefit from a new audience. The idea for NICHE ART AND ARCHITECTURE TOURS BERLIN was born. We (two art historians and one architect) had already devoted our free time to art and architecture and wanted to share our pas-sion as well as make those treasures accessible to a wider public. We love to transfer knowledge and create dialogue between the people working in Berlin and those who want to know the scene better.

What was your source of finance? We did not have to make bigger investments and still have very little fixed costs. We started the business during our studies depending on our savings. We then won a business plan competition and invested the trophy money. How long did it take you to establish the busi-ness and break-even? Our break-even was immediate and through the competition we had press-coverage from the begin-ning. We‟re still growing though. What difficulties did you face while starting up the business? Being three partners who set up a business in their free time required much coordination. Also doing it on our own involved a lot of trial-and-error. The business plan and the prior market analysis was thus vital. What current challenges do you face now that you have established your business? At the moment we are trying to expand our activities – both horizontally and vertically. We are recruiting people and are trying to professionalize operational sequences. Was there a point when you were about to give up? We definitely did have moments when studying, working and running a business felt like an overload we couldn‟t handle anymore. What capabilities and skills do you think an entrepreneur should have? One should be very creative – but persistent, follow one‟s plan but adapt to changing conditions quickly. Working with people and being genuine is very im-portant for us. We treat everyone – be it client, part-ner or employees – the way we want to be treated. But we never lose sight of our goal, which is to make money with this service.

What were the reactions of your friends and fam-ily when you decided to start your own busi-ness? Everyone encouraged us and, more importantly, supported us whether with their expertise or emo-tionally. Which factors would have facilitated the found-ing of your business? More time for the development and some financing for young entrepreneurs. Our business lives on the contacts we had and made since then – it needed time to develop. Where do you see yourself and your business ten years from now? I see the three of us working as heads of a company with several employees which is active in other fields such as curating, publishing and consulting in both fields: art and architecture. We‟d like to expand to new capital cities, too. What does work mean to you? I work with my best friends, meet and support amaz-ing artists, architects and the likes – even our clients are as passionate as we are for the arts. I love my work and I am proud of what we have achieved so far.

his chapter examines the macro-environmental forces and preconditions of different angles of society affecting business

creation by young people. To simplify the extremely diverse and complex macro-environmental forces and surroundings, the PESTEL- framework is used as a strategic tool to categorize environmental forces into political, economic, social, technological, envi-ronmental and legal ones. The varied effects of the different factors that are likely to influence business creation in a positive or negative way and their inter-play will be analyzed in the following five sub-chapters.

3.1 Political Factors

n developing nations, the political environment can be a possible enhancer or a serious barrier to the development of entrepreneurship (Themba

et al 1999: 104). The same holds true – albeit to a lesser extent – in industrialized countries such as Germany. Entrepreneurship in both South Africa and Germany is therefore affected by several politi-cal and institutional factors which include: the coun-try‟s macro-economic policies, governmental support and political stability.

(a) Macro-Economic Policies

Macro-economic policies, frameworks, legislation, regulations and laws can either promote or discou-rage entrepreneurial development in a country (Clover & Darroch 2005: 241, Dockel & Ligthelm 2005: 54). In South Africa some of the government regulatory laws are considered a threat to the Small and Medium Enterprises (SME) sector. Although overregulation is still an issue, South Africa has seen significant trade regulation that has supported entre-preneurship (Luiz 2002: 55) such as the Reconstruc-tion and Development Program (RDP) and the Growth Equity and Redistribution (GEAR) policies (Nasser et al 2008: 394). In the “Doing Business Report 2010” of the World Bank group, South Afri-ca ranks on place 34 for the ease of doing business, and on place 75 for starting-up a business out of 183 countries. Germany ranks 22nd for the ease of doing business and 88th for starting up a business. With an overall tax rate of 44.9%, new entrepreneurs face high entry barriers here. Germany benefits from the European Common Market (The Heritage Foundation & The Wall Street Journal 2010), for instance through the favorably low EU weighted tariff rate of 1.3% (2008) or from non-tariff barriers such as agricultural subsi-dies. This poses an opportunity to entrepreneurs who want to start a business in the European mar-ket. Concerning the collaboration between German and Southern African entrepreneurs, the above-mentioned trade regulations might, however, func-tion as a barrier, especially as many African countries mainly export agricultural products and other raw material.

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(b) Governmental Support for (Youth) Entrepre-neurship

The South African government is working hard to-wards promoting youth entrepreneurship in the country, for example through the National Youth Development Agency (NYDA). The NYDA offers start-up capital in the form of loans for new youth entrepreneurs. However in South Africa, while en-trepreneurial support is typically provided in the form of incentive programs or inducements to en-courage the founding of new enterprises (Mueller & Thomas 2001: 67), many entrepreneurs have no knowledge about existing government support me-chanisms or how to access them. Some entrepre-neurs find that services like grants or procurement opportunities are complicated, inflexible or inade-quate for actual entrepreneurial needs (Fielden et al 2002: 56). Therefore the challenge facing the post-apartheid South African government is to institute enforceable rules, regulations and policies with the aim of promoting a national interest that includes the vibrancy of business enterprise (Ahwireng-Obey & Piaray 1999: 79). Both opportunity and necessity entrepreneurship is important for Germany – the former in order to strengthen a knowledge- and innovation-based economy; the latter in order to cope with the high unemployment rate, currently at 7.3% (Federal Em-ployment Agency of Germany 2011). When it comes to the encouragement of opportunity entrepreneur-ship, the EXIST program, which collaborates with German universities, is probably the most popular and successful government initiative in Germany (Heydebreck 2007: 115 ff.). In recent years, trouble-some unemployment rates have necessitated an in-creased rate of entrepreneurship (see Bergmann & Steinberg 2006). With the introduction of the social welfare reform “Hartz IV” from 2003 to 2005, the German government has raised the profile of self-employment to being a considerable alternative through the distribution of start-up grants to unem-ployed people who want to start their own business (see more on the different policies in part 4.4).

(c) Political Stability

Regional instability in the Southern African Devel-opment Community (SADC) and other parts of Africa has led to an influx of people from these countries into South Africa as the country has politi-

cal stability as well as one of the strongest economies on the continent. These immigrants provide compe-tition for local entrepreneurs as they are sometimes very knowledgeable and experienced regarding en-trepreneurship. Corruption in the issuing of gov-ernment business contracts has led to a phenomenon known as “tenderpreneurship”, which will be ex-amined in more detail in section 3.3. This has had a negative effect on potential entrepreneurs‟ percep-tions on doing business in South Africa. The democracy in Germany established in 1949 can be considered as highly stable – as a federal country with 16 states, it features a decentralized structure in which decisional powers in areas such as local taxa-tion, education or infrastructure are borne by the individual state. Corruption can be considered as a challenge for transparency and on-going political stability. This is not limited to the Siemens scandal that made headlines, but also concerns the employ-ment of company lobbyists in federal ministries (Transparency International 2009: 336). In sum, political stability is very important as a determinant of the success of entrepreneurship and should be monitored and supported.

3.2 Economic Factors

conomic factors, in terms of opportunities and barriers such as access to capital, the unemployment, economic growth, inflation

and market forces can be decisive in the success of youth entrepreneurship.

(a) Access to Capital

Capital is an essential pre-requisite for any business creation and the degree of accessibility to capital constitutes an important determinant in youth entre-preneurship, especially because young people often lack financial resources or face difficulties in acquir-ing them due to their inadequate business manage-ment experience and financial credibility. However, there exist both public and private sources of capital, which include personal contacts as well as financial institutions.

E

Figure 1: Relationship between Unemployment Rate and TEA in Germany and South Africa.

0

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Unemployment rate of South AfricaTEA of GermanyTEA of South AfricaUnemployment rate of Germany

A wide spectrum of private financing is available – the potential entrepreneur‟s own and families‟ funds, bootstrapping, “angel‟ or informal investors, micro-financing institutions, support from non-governmental organizations, business partnerships and venture capital – yet, in most instances, the cost of capital from private institutions can be relatively high, which may discourage potential young entre-preneurs. In this case, capital from public institu-tions, with lower interest rates and longer payback periods, may be an option. According to the Global Entrepreneurship Monitor (GEM) 2010 Report, Germany provides one of the highest levels of public support for entrepreneurs among the 21 innovation-driven countries to which it belongs, while South Africa – classified within the 24-efficiency-driven economies6 – exhibits poor public support, which is one of the three least valued entrepreneurship framework conditions in the country. The concept of “dual economy”, composed of the formal economy and the informal economy, is an important aspect in the accessibility to capital. Pros-pective entrepreneurs from the formal economy, which is regulated, can find financial resources from various institutions more easily, compared to those in the informal economy, who have low financial and legal reliability. Nonetheless, apart from the possibili-ty of benefitting from micro-finance, the graduation of entrepreneurs from the informal to the formal sector through legal recognition can be effected, as in the case of South Africa. Governmental programs have been carried out as nearly 90% of entrepreneurs in disadvantaged urban communities in South Africa (GEM South Africa 2009 Report) operate within the informal sector and contribute extensively to the economy.

(b) Unemployment

Unemployment may act as an incentive towards raising the level of entrepreneurship. With few job prospects and a need to earn an income, people

6 GEM Report 2010: The GEM categorizes economies into three different groups: factor-driven, efficiency-driven and innovation-driven economies, based on the Geneva World Economic Forum 2010‟s (WEF) “Global Competitiveness Report 2010-11” which identifies three phases of economic development based on GDP per capita and the share of exports comprising primary goods.

often opt for self-employment, be it in the formal or the informal sector. This form of entrepreneurship out of “necessity” is sometimes even encouraged through governmental programs directed at promot-ing the formation of Small and Medium Enterprises (SMEs). From this, it can be construed that the un-employment rate and the level of entrepreneurship are positively related, i.e. when the former increases, the latter rises too. However in many developed countries such as Ger-many, the allocation of social assistance to many unemployed – though special entrepreneurial pro-grams – may curtail the level of entrepreneurship because since people are still receiving financial re-

sources, they may not be motivated to earn a living through self-employment. Furthermore, in a country which has a low supply of labor in some fields, such as is the case of Germany, people may reconvert themselves into another sector so as to get job op-portunities there, thus minimizing the effect of un-employment on the state of entrepreneurship. Figure 1 clearly indicates that for both South Africa and Germany, the level of unemployment is not directly linked to the level of entrepreneurship, which is represented by the Total Early-Stage Entre-preneurial Activity (TEA)7. A positive relationship is

7 GEM 2010 Global Report: TEA is defined as the “prevalence rate of individuals in the working-age population who are actively involved in business start-ups, either in the phase preceding the birth of the firm, or the phase spanning 3½ years after the birth of the firm”

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Figure 3: Inflation Rate in Germany and South Africa

Figure 2: Relationship between Real GDP Growth Rate and TEA in Germany and South Africa

witnessed only in two cases for South Africa (from 2002 to 2003 and 2009 to 2010) and four instances for Germany (from 2004 to 2005, 2005 to 2006, 2008 and 2008 to 2009).

(c) Economic Growth The greater the rate of economic growth, the higher the national income, which leads to more purchasing power and increasing demand, resulting in new mar-kets being developed and more supply needed, con-sequently creating new and rising opportunities for entrepreneurial activities. It can be presumed from this that the level of entrepreneurship is directly connected to the economic growth rate. Moreover, as developing countries usually have higher economic growth rates than developed coun-tries, the former economies tend to enjoy a higher entrepreneurship level. This can be due to the fact that existing markets in developed countries have tight entry barriers and people prefer to work in well-established firms offering stable and secure employment opportunities.

However, there may be some exceptions to the di-rect link between economic growth and the level of entrepreneurship within dynamic economic envi-ronments which may impact on entrepreneurship in either a positive or a negative way. This may also be the case even in economically stable spheres which though they offer unchanging and predictable condi-tions, favor already-established firms to the detri-ment of potential entrepreneurs. Negative economic

growth may promote entrepreneurship through tough labor market conditions, which may increase entrepreneurial activities (as discussed in the para-graphs on unemployment above), while recessions generate more business creation opportunities due to changing market drivers (for example, bankruptcy of existing firms and changing consumption habits). In addition to this, the entrepreneurship level may be influenced by economic growth in foreign countries, particularly effects on exports of goods and services and imports of raw materials. Since the state of entrepreneurship is influenced by factors other than national economic growth rates, and as observed from Figure 2, entrepreneurship is not necessarily directly linked to economic growth.

(d) Inflation

The price development of goods and services is an important factor for entrepreneurship. Inflation has an ambiguous effect and holds either opportunities or disadvantages. Price instabilities are however mostly considered as negative due to a lack of relia-bility in expectations. When an entrepreneur knows

that the supply prices are rising by the same percen-tage as the year before, it is simple to use the ex-pected development for his own price settings. This gives the entrepreneur the opportunity to speculate on the price changes. If there has been evidence that wages, for example, are reacting more slowly on inflation than product prices, this could be beneficial for entrepreneurs in the service sector.

Table 1: Involvement in Entrepreneurial Activity by Sector in South Africa.

The negative effects nevertheless should not be dis-regarded. With inflation decreasing purchasing pow-er, there is the risk of slow wage adoption. Consum-ers are therefore in the unlucky situation where product prices are rising faster than their wages. People think twice when they buy products, accord-ing to their decreasing real budget. This obviously negatively influences consumer confidence, which worsens the problem of shrinking purchasing power. Furthermore, companies are reluctant to invest when they cannot rely on stable prices and fear decreasing demand. This in turn jeopardizes economic devel-opment, which may have apparent negative effects on entrepreneurship.

As demonstrated in Figure 3, Germany‟s inflation is lower than that of South Africa in the given period of time, which is not necessarily economically harm-ful, due to neutrality of money, which means that prices and income change in the same way and no real changes are perceived. It is however important that the value of money changes in a constant man-ner so that individuals can predict price changes to plan their future investments. The statistics indicate that South Africa had a more volatile inflation rate than Germany, which can be problematic to entre-preneurs, as mentioned before. There are very similar effects regarding foreign ex-change. Even though it has to be born in mind that many start-up companies do not play on the interna-tional market.

(e) Market forces

Market forces, being a significant factor influencing the level of entrepreneurship, include, according to Michael Porter‟s Five Forces model (Lipsey & Chrystal, 2004), the bargaining power of suppliers, the bargaining power of consumers, the threat of substitutes and new entrants and the competitive rivalry within the industry. These market forces can be experienced in national or local markets as well as on the international arena. At the national level, developing countries often have more market access opportunities because in most cases, a considerable amount of unexploited resources can be used to create innovative products and enter new or existing markets. In developed countries, on the contrary, harsh barriers to market entry may be faced due to the existence of estab-lished firms, with a strong and loyal customer base,

good supplier relationship and a significant market share. As shown in the table below, the majority of young entrepreneurs in South Africa operates in the consumer or retail sector (71.2%) which has low barriers to entry – in terms of start-up capital and skills requirement – but generate low margins due to high competition. The same trend exists in Germany, with migrants (with a TEA of 7 compared to 4.5 for non-migrants) concentrating on consumer services (GEM Germany 2010 Report).

Internationally, young entrepreneurs in developing countries may find it initially difficult to sell their products because of fluctuating exchange rates, lack of finance and market knowledge, inadequate com-munication and transport networks and restrictive trade policies. For a country of the size of South Africa, young entrepreneurs can find it more profit-able to initially concentrate on the national market. According to the GEM Germany 2010 Report, Germany ranks first among the 21 innovation-driven economies with lower market barriers, favoring en-trepreneurship, which may be due to its proximity to other developed nations and its membership in the European Union and the accompanying advantages.

SECTOR

Business

Entities

TEA (%)

Extractive services

(agriculture, forestry, fishing and

mining)

5.2

Transformative services

(construction, manufacturing,

transportation, communication,

utilities and wholesale distribution)

16.4

Business services

(finance, insurance and real estate)

5.5

Consumer services

(retail, motor vehicles, lodging and

restaurants, personal services, edu-

cation and recreational services)

71.2

Economic factors such as access to capital, unem-ployment, economic growth, inflation and market forces, are important elements for understanding the operational principle of entrepreneurship. These economic aspects can be easily used by policy mak-ers through favorable adjustments to public financial support, in order to encourage youth-led entrepre-neurship. Nevertheless economic factors are not the only determinants of entrepreneurship and other elements such as social factors may also act as op-portunities and barriers to youth entrepreneurship.

3.3 Social Factors

here are macro sociological factors such as general social and cultural surroundings, that strongly influence entrepreneurial activities

(Jacobsen 2003: 66). The relationship between these interactions are complex and many studies – for example work done by Trompenaars and Hampden-Turner (1997, 1995), Deal and Kennedy et al. (2000), the renowned 7-S-Framework used by McKinsey (Peters and Waterman 2004), the Cultural Web from Johnson and Scholes (Johnson, Scholes et al. 2007) or the Global Entrepreneurship Monitor (GEM) Reports –investigate cultural differences influencing business structures and entrepreneurial activities.

(a) Social and Cultural Norms

According to the GEM Global Report (2011: 49) and the GEM Report on South Africa (2009: 28), the social and cultural norms in South Africa and Ger-many are among the most negative entrepreneurship framework conditions and therefore rather con-straining entrepreneurial activities. Some key deter-mining factors will be examined with reference to the work of Geert Hofstede, which comprehensively compares socio-cultural differences from over 70 countries and other studies supporting his significant findings. Following Hofstede‟s results (1967-2009), Germany‟s business activities are, in general, more short-term oriented. People within society tend to respect tradi-tions and set a high value on fulfilling social obliga-tions. Short-term orientation is also a major obstacle in South Africa, where people, especially from poor-er communities, want to achieve short-term profits instead of reinvesting profits into their businesses (Harris, van Vyk 2011). In comparison to the world

average, Hofstede (Hofstede 1967-2009) highlights Germany‟s generally democratic structures, illustrat-ing equality for everyone, whereas South Africa is consistent with more paternalistic or autocratic struc-tures, a situation, however, still below the world average. Another finding from Hofstede reveals a strong masculinity orientation in both countries in compari-son to the world average. This implies that on the one hand, gender roles are more distinctive and dif-ferent. On the other hand, it reveals that people (male and female) within society are more orientated to the so called “male” values including for example competitiveness, the ability to assert oneself, the accumulation of material assets or more accurately profit-orientation. Additionally, both countries are inclined to show, most notably in relation to the international average, a strong emphasis on individual action rather than on collectivistic actions. This implies that people within society are not that strongly dependent on groups such as the family or religious organizations.

(b) Risks and Uncertainty

Furthermore, Hofstede indicates a relatively low uncertainty tolerance in Germany. This indicates among other things that Germans tend to stick to the implementation of strict rules, laws, policies and regulations and especially with regard to entrepre-neurship, and thereby avoid uncertain and high-risk operations (ibid.). This risk-adversity is supported by the findings of the GEM Report on Germany (2010: 24), which highlights a disproportionately high fear of failure. 43% of the German population sees the risk of failure as a reason not to start a business no matter how high the probability of failures in reality might be; in this case perceptions tend to rule ac-tions. The International Labor Organization (ILO) also refers the high uncertainty avoidance particularly in young entrepreneurs. For them, a business failure tends to be seen more often as a personal failure that is accompanied with a loss of social reputation (Simpson, Christensen: 43). According to the Ger-man business magazine Brandeins (Brandeins 2008), the main factor restraining someone from starting up a business in Africa is the weak nature of the social system. This affects people who want to get away from poverty but start to struggle when they earn

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money because typically they need to support their extended family. In comparison, Germany has a sufficient state welfare system. Employees have health insurance, safe pensions and access to finan-cial support if they are unemployed and are more likely to choose this option over self-employment with an uncertain future.

(c) Problem of entrepreneurship in South Africa

Another important finding for South Africa is the problem of „tenderpreneurship‟. According to Harris and van Vyk (2011), there is a trend where people set up a business to provide a service to the government or local municipalities, and then get a sizeable amount of money from the government contract. This type of business creation does not take part in the real economy but relies on excess funds from municipalities. However, these studies describe a rising culture with-in society and are not applicable to all individuals. Moreover, the research that has been done so far is in its nascent stages and it‟s therefore challenging to draw definitive conclusions about the extent to which this trend has been incorporated into entre-preneurship and society as a whole. In conclusion, there is no blanket formula to deal with different socio-cultural attitudes in society and transform bar-riers to opportunities. Thus, the changing pattern of cultural determinants is a medium or long-term process. To evaluate and assess socio-cultural back-grounds and their impact and to carefully consider the issues are the first steps in starting to create an awareness and understanding. According to the ILO, media campaigns, credible role models and youth business events, competitions or awards can create positive attitudes for the youth towards entrepre-neurial activities. In addition, a more enterprise-orientated education can be useful in promoting specific knowledge and skills and attributes which will help young people in their decisions to start their own business (Schoof 2006: 30 ff.). The right entre-preneurship-promoting education should be put in place, combined with adequately developed infra-structure to facilitate an increased level of entrepre-neurship.

3.4 Technological Factors

echnological factors typically refers to basic facilities, necessary for economic activities, which are usually provided by the state, in-

cluding infrastructure. Developing infrastructure can be extremely costly and requires significant forward-planning on the part of government. However, infra-structure development represents long-term go-vernmental investments and once facilities are in place, costs are restricted to maintenance and up-grades (Snickers 1989: 251-252). For the purposes of this study, this section will look at the type and level of public infrastructure required for entrepreneurs to be successful. The focus will therefore be on trans-port (port, rail and road), power and telecommunica-tion infrastructure (World Economic Forum 2010: 4).

(a) Positive relationship between developed infra-structure and entrepreneurship

It is well accepted that the level of infrastructure development can have either a limiting or enabling effect on entrepreneurship (Van de Ven 1993: 211). Mostly the relationship is conceived as a positive one: an increase in infrastructure results in better prospects for successful entrepreneurship. For ex-ample, although Douala, Cameroon has a busy and successful port, the road infrastructure connecting the port to the city is poor, thereby dampening the port‟s positive effects on business and entrepreneur-ship (Guest 2004: 172). It can however be argued that under certain circums-tances a lack of infrastructure leads to increased innovation and novelty in entrepreneurship. This may be an area in which young entrepreneurs can play a role, because although they lack experience in the sector, they can be valuable contributors to de-veloping novel solutions for overcoming infrastruc-ture shortcomings. However, in extremely low infra-structure areas it is less likely that high-value entre-preneurs will be produced (Low, Henderson, & Wei-ler 2005: 62). It therefore seems that, on the whole, the correlation between infrastructure and entrepre-neurship is a positive one.

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(b) Infrastructure in Germany

The overall quality of German infrastructure ranked 5th out of 139 countries assessed in the 2010/2011 Global Competitiveness Index. Further, Germany ranked within the top ten in the following areas – which means that each of these is considered a nota-ble competitive advantage – quality of roads, quality of railroad infrastructure, quality of port infrastruc-ture, quality of air transport infrastructure, quality of electricity supply and quality of fixed line telephone services (World Economic Forum 2010: 165). Ger-many therefore has the infrastructure necessary for the success of entrepreneurs in the SME, as well as high-value entrepreneurial sector. (c) Infrastructure in South Africa

South Africa, along with Mauritius, topped the Afri-can infrastructure rankings, but lagged far behind Germany (World Economic Forum 2010: 40). On the whole, South Africa ranked 56th out of 139 coun-tries on the overall quality of infrastructure assess-ment. They received the following rankings in specif-ic areas: quality of roads 43rd; quality of railroad in-frastructure 47th; quality of port infrastructure 49th; quality of electricity supply 94th and quality of fixed telephone services 98th (World Economic Forum 2010: 303). It therefore seems clear that the South African en-trepreneur has good transport infrastructure to work with, particularly because of the transport infrastruc-ture development that took place in preparation for the World Cup (World Economic Forum 2010: 40). However, power and telecommunication, both of which are of critical importance for successful me-dium and high-value entrepreneurial enterprise, could be significantly improved upon. It should also be noted that the World Economic Forum 2010 statistics do not capture the variable distribution of infrastructure in South Africa and that more remote or rural areas are likely to suffer from decreased access to transport, power and telecommunications (Limao & Venables 2001: 451). The overall result is that infrastructure in urban areas allows for success-ful entrepreneurship at all value levels, while rural areas are likely to be conducive to small low-value enterprises. It should be noted that South Africa is anomalous in Africa and that other countries, even within the Southern African Development Community

(SADC), do not have the same levels of infrastruc-ture development. For example, Botswana ranked 84th out of 139 counties, assessed on the overall quality of their infrastructure, Mozambique ranked 119th, Madagascar ranked 130th and Angola ranked 136th (World Economic Forum, 2010). This indicates that entrepreneurs in these countries will have less access to infrastructure and that this may dampen their potential to be successful. The level of infra-structural development may however be limited to environmental conditions which are not conducive to technological improvements.

3.5 Environmental Factors

atural resources are used as raw materials, some of which may be overused to the point of depletion. This transformation

process produces waste that is potentially dangerous to human life and the environment. Therefore, young entrepreneurs are facing a wide spectrum of new problems affecting the environment. (a) Environment in South Africa

In South-Africa poverty is a major reason for and consequence of the environmental degradation. A vast majority of countries depend on their natural resource base for economic and social development. Thus, two-thirds of South-Africa's people live in rural areas and rely on agriculture and other natural resources for income. With the rapid growth of pop-ulation and urbanization, this means that environ-mental degradation will definitely increase. Energy consumption in South Africa varies dramatically and is dominated by fuel consumption. The use of wood for fuel is predominant in both rural and urban areas, and this causes deforestation and can lead to soil erosion. Finally, increased food insecurity result-ing from rapid population growth, degradation of agriculture and arable lands, and mismanagement of available water resources combined with poor eco-nomic policies to support food production, is anoth-er serious environmental problem.

(b) Environment in Germany

Despite the remarkable progress Germans have made in reducing it, air pollution remains a continu-

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ing nationwide problem, especially with more vehicle usage, industrial pollution and modern gadgets.

Therefore young entrepreneurs must integrate envi-ronmental concerns into the vision of their business and become more environmentally-friendly. The rising awareness of the importance to preserve the environment as well as the demand for alternative energy resources and services for the reduction of pollution can provide new opportunities for innova-tive young entrepreneurs. Environmental degrada-tion and respect for the environment can be uplifted through legislation and subventions that protect the environment while promoting business creation. Furthermore, new economic sectors can provide opportunities for young entrepreneurs to start-up business. Alternative energies, transportation or environment-friendly production are sectors in need of innovation and dynamism, especially from young entrepreneurs.

3.6 Legal Factors

egal and administrative hurdles associated with starting up a business will influence whether or not a young person will venture

into entrepreneurship. The more hurdles there are, the more disheartening it is to embark on entrepre-neurship. At the same time, legal and administrative factors can also provide security for investment and business ventures. For a young entrepreneur in Germany or South Africa, there are a multitude of legal issues to think about when it comes to starting a business. Everything from the business name, to its structure and operation has legal implications. At the same time, the legal environment can provide impor-tant protection for the interests of young entrepre-neurs. (a) Business Structure

The young entrepreneur in Germany or South Africa firstly needs to decide which business structure is best suited to their business, based on important considerations such as liability issues and which form provides the best tax structure. Moreover, different forms of business structures have different legal pre-requisites for setting up. The most important forms of business structures both in Germany and South Africa are: individually as a single owner enterprise

(sole proprietorship); jointly with others in a partner-ship; through a close corporation (where only natural persons may be involved); through a private or pub-lic company; or through a business trust.

(b) Licenses or Permits Acquisition

Depending on what type of business the young en-trepreneur engages in, they may need a variety of licenses or permits. At a minimum, one will need a business license and tax registration. For instance in South Africa, the Business Act 71 of 1991 places the requirement of a trading license on businesses in-volved in the sale or supply of meals or perishable foods; provision of certain types of health facilities or entertainment; or hawking in meals or perishable foodstuffs. A trading license would be obtainable from the local authority for the area where the busi-ness is to operate. However in reality, most informal traders in South Africa – some due to ignorance and some due to the mere dread of complicated proce-dures – operate without it.

(c) Insolvency

Another problem linked to formal and informal trade is the risk of insolvency. Whereas insolvency of formal business enterprises is subject to proceedings covered by insolvency law and therefore somewhat regulated and calculable, insolvency of informal businesses is – by definition – not. Especially in South Africa, this might impose another significant barrier to business creation or re-entering business after insolvency.

(d) Administrative Hurdles

In comparison to the rest of the world, both coun-tries are not in the lead when it comes to administra-tive support to entrepreneurs founding a business. In Germany, administration and bureaucracy have re-mained among the most significant hurdles for busi-ness creation for years (GEM Country Report Ger-many 2009: 24). According to the World Bank‟s Doing Business Report 2010, it takes nine proce-dures to register a firm in Germany. In the sub-category “Starting a business”, the country ranks at number 84, indicating that it is much easier to run an existing business than to set up a new one. South Africa is ranked 67th and thus slightly better posi-

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tioned in the latter category. One has to overcome at least six legal procedures within an average of 22 days to register a new business. Even though it is easier to set up a new business in South Africa, both countries could improve their international ranking. In sum, administrative and legal arrangements re-main very important barriers for youth entrepreneur-ship in both countries. Given the size of South Afri-can‟s informal sector, these factors are of paramount importance. The aim of this chapter was to analyze macro-environmental forces and their constraining or en-hancing impact on youth-led entrepreneurship. This was done by drawing on the six analytical categories of the PESTEL framework. Accordingly, opportuni-ties and barriers to business creation by young people were investigated in the areas of politics, economics, society, technology, environment and law. In the course of the analysis it became clear that within each of these categories, there are multiple factors affecting youth entrepreneurship in an either positive or negative way. This chapter does not claim to have discovered all of them. Neither does it seek to provide a hierarchy of issues. In contrast, its aim is to bring a variety of important factors in different areas to the reader‟s attention. By analyzing the ma-cro-environment from various angles, it thus sheds light on a number of different challenges in these areas. The role of politics in addressing these chal-lenges will be addressed in the next chapter.

uilding on the previous chapters, which ela-borated on individual and large-scale precon-ditions for successful entrepreneurship, this

chapter analyzes targeted political efforts to promote young entrepreneurs. In the first part of this section, existing instruments that promote youth entrepre-neurship will be identified. These instruments can be categorized as funding, counseling and training. Fur-thermore, this chapter provides a summary of some of the most important programs that help to imple-

ment and inform youth entrepreneurship policy in Germany and South Africa. Here, the focus will lie on both programs promoted by state ministries as well as private sector-initiatives and NGOs. In addi-tion to this, an overview of future opportunities, trends and market potentials for young entrepre-neurs will be explored. The last part of this chapter highlights the importance of enhancing civic educa-tion for responsible economic behavior of young entrepreneurs.

4.1 Instruments and economic policy for promoting youth entrepreneurship in Germany

ven though there is neither a central organi-zation nor an overall strategy in Germany that coordinates youth policy and implemen-

tation (Bertelsmann-Foundation 2009: 141) one can identify numerous initiatives, organizations and projects that promote youth entrepreneurship. A significant factor that contributes to the diversified implementation of German youth entrepreneurship policy is the German federal system, causing differ-ences in each state. However, there have been nu-merous initiatives and programs on federal, regional, as well as on local levels. (a) Funding For young people the lack of finance, experience, skills, knowledge and familiarity with the business world are the main factors in discouraging self-employment. Therefore, financial instruments are a crucial factor because they build the foundation of every start-up enterprise. The lack of adequate finance is one of the most prominent impediments to young people seeking to create their own business (Schoof 2006: 41). Especially young entrepreneurs have problems getting access to finance and face a high probability of not receiving any or sufficient loans (Kohn et al. 2010: 68). This is due to the fact that many banks see young start-ups who don‟t have an established credit record as a high risk. In most cases, the local bank is the first institution where future young entrepreneurs can apply for a loan. However, the bank needs to be convinced of the merit and profitability of the business venture, so the presentation of a clear concept and business plan is essential.

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Besides the local bank there are also other institu-tions that give loans to young business start-ups. The most common financial instrument for young entre-preneurs in Germany is the “Startgeld” (start-up bonus) offered by the Development Loan Corpora-tion (Kreditanstalt für Wiederaufbau – KfW, see below). The KfW often works in cooperation with local banks, state banks or micro finance institutions by granting additional loans or by acting as a finan-cial back-up instrument. In practice this means that a KfW-loan can be additionally enforced by a state loan guarantee or the KfW covers loans granted by local banks and takes partial or full coverage in case the business fails and the young entrepreneur is not able to repay the loan (existenzgruender-jungunternehmer.de 2010). (b) Counseling and Training A convincing and effective business plan is indis-pensable and besides the funding, is an important factor for any start-up. Here, Germany obtains a multitude of initiatives promoting youth entrepre-neurship in terms of consulting and training (Brixy et al. 2010: 22). While the state and local banks build the core of finance-assistance for future entrepre-neurs, there are many consulting firms, NGOs and associations which focus on counseling and provid-ing other forms of support. These programs and initiatives range from business-projects in elementary schools and universities up to professional consult-ing service for future start-ups. They also offer fi-nancial support for further training after the business has been established. Consulting is significant because the more business assistance a young entrepreneur obtains at the be-ginning, the better his or her chances are of creating a successful and sustainable business (Schoof 2006: 61). Together with experts, young entrepreneurs can set up a business plan, negotiate with banks and get general coaching in business management in order to successfully realize their business venture. This is even more important since according to the Euroba-rometer Survey (2004), administrative complexity is seen as a major obstacle for entrepreneurship and self-employment (Schoof 2006: 52). Experts say that the infrastructure concerning con-sulting is fully developed in Germany and agree on

its importance in the promotion of the establishment of businesses. Despite this, only half of the people who intend to set up a business make use of consult-ing services (Brixy et al. 2010: 32). In conclusion, youth entrepreneurship policy can be described as a multi-actor framework which exists on federal, regional and local level and provides instru-ments such as funding as well as counseling and training offered by public and private institutions. Unfortunately, it lacks a federal coordinative body to improve policy and implementation on all levels. The report of the Bertelsmann-Foundation suggests a consolidated federal policy-strategy can be imple-mented by regional and local governments as well as NGO and private associations (Bertelsmann-Foundation 2009: 161). A fruitful dialogue between federal ministries, private companies and NGOs as well as a closer cooperation between economic- and education policy would lead to more effective, co-ordinated and lasting results. 4.2 Instruments and economic policy for promoting youth entrepreneurship in South Africa

ccording to the South African Finance Mi-nister, Pravin Gordhan, businesses that em-ploy less than 50 individuals represent 68%

of private South African employment (Sibanyoni 2011). It is therefore difficult to overstate the impor-tance of small businesses and entrepreneurs in ad-dressing the high rates of unemployment in South Africa. What follows is a range of public, private and NGO entrepreneurial assistance. As in the German example the following section addresses the issues of funding, counseling, training and skills development with the addition of Broad Based Black Economic Empowerment. (a) Funding

South African entrepreneurs often struggle with the “funding gap” and access to follow-up support. The South African Department of Trade and Industry has tried to address these challenges with the help of organizations like Khula Enterprise Finance and the Small Enterprise Development Agency (SEDA) (KHULA 2010 & SEDA 2010). These organizations serve as “incubators” that help with funding and mentorship. Incubators have proven to be relatively

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successful with SEDA, achieving a survival rate after graduation of the participants of 70% (Endeavor & First National Bank 2010:23). From the NGO sector the South African Institute for Entrepreneurship and the international non-profit organization Endeavour also deliver capital and advisory assistance to entrepreneurs (South Afri-can Institute for Entrepreneurship 2010, Endeavor 2010). In the private sector, Business Partners is a risk finance company that offers financing and sec-tor-specific advice to SMEs (Business Partners 2010).

(b) Counseling, Training and Skills Development

In the area of skill development the South African government has created the Sector Education and Training Authority (SETA). The 23 SETAs provide skills development by means of internships, learner-ships, skills programs and apprenticeships within all the economic sectors in South Africa. This is primar-ily done by appropriating skills levies from employ-ers and distributing it to learners within the sector in the form of grants and bursaries (Skills Education Training Authorities in South Africa 2010). Young entrepreneurs can apply for these grants and bursaries to obtain a qualification in New Venture Creation within the specific industry from a certified college. After the entrepreneurs have obtained the one-year qualification they will partake in a mentor-ship program from the same college and obtain a capital stipend from the SETA or from their own initiative (South African Institute for Entrepreneur-ship 2010).8 The South African Institute for Entrepreneurship is an NGO that addresses entrepreneurship training for illiterate or semi-illiterate adults by distributing training materials that simulates real world business circumstances (South African Institute for Entrepre-neurship 2010).

(c) Broad Based Black Economic Empowerment

The South African government has also created a points system to incentivize bigger businesses to do business with entrepreneurs from previously disad-vantaged backgrounds. Within the framework of

8 South African Institute for Entrepreneurship; Personal Communication with Ishmael Vayej, Head of Operations, 21 October 2010.

Broad Based Black Economic Empowerment (BBBEE), larger enterprises are awarded points on their BBBEE scorecards that allow them compete for government tenders if they have achieved a cer-tain BBBEE rating (South African Institute for En-trepreneurship 2010). However, there is much dis-cussion going on about the efficacy and sustainability of this program.

(d) Conclusion

As in Germany there are a myriad of different pub-lic, private and NGO entrepreneurial support initia-tives. South Africa and Germany both lack an all-encompassing coordinating structure and in South Africa entrepreneurs are sometimes unaware of how to access the assistance at their disposal. Although South African entrepreneurs face various challenges, entrepreneurship and small businesses were explicitly mentioned in the 2011 State of the Nation and Budget Speeches, thereby demonstrating their im-portance to government. 4.3 Trends and identification of markets with potential for young entrepreneurs

4.3.1 South Africa

ost analysts make very positive predictions with regard to South Africa‟s future eco-nomic development, due to stable growth

rates of around 4% over the last decade and strong investor confidence in recent years (Ehlers 2011; GTAI 2010). However, if one wants to identify promising market trends for young entrepreneurs, it is important to bear in mind that the duality of the South African economy. The stark division between the formal and an informal sector present different opportunities for young entrepreneurs.9 In the formal sector, the market-entry barriers for new businesses and SMEs are often considerably high. This is because South Africa‟s key industries in the formal economy – the mining sector, car manu-

9 The main difference between the formal and the informal economy lies in the variation of accountability to the state. Whereas all businesses in the formal sector are required to have official documentation such as business registration, trading licenses, work permits and taxation records, the informal sector includes all forms of unregistered businesses.

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facturing industry or the chemical and pharmaceuti-cal industry – are dominated by large conglomerates and big multinational companies, making South Africa being one of the most corporatized econo-mies in the world (Castle/Kantor 2000). Since econ-omies of scale favor large enterprises in these indus-tries, and the amounts of initial capital, technical capacities and personnel needed for market-entry are very high, a strong growth rate in the respective markets is not necessarily associated with increased start-up possibilities for young entrepreneurs. Therefore the highest market-potential for SMEs and young businesses in South Africa‟s formal sector lies in the service industry. For instance, South Afri-ca is becoming a favored international location for business process outsourcing and off-shore business activities (DTI 2011). Business process outsourcing (BPO) refers to instances where international com-panies relocate business processes that they usually perform in-house to a third-party service provider who will carry out the service on behalf of the com-pany. The BPO industry's focus sectors are financial services, insurance and telecommunications, with outsourced processes including sales and call center services, data capture and conversion, accounting, benefits administration, human resource functions as well as web-design and development. The BPO sec-tor has an expected annual growth rate of about 50% in the next five years (SouthAfrica.info 2008), pre-senting various possibilities for young entrepreneurs in South Africa. The South African information technology (IT) and electronics sectors, which are both characterized by technology leadership and a highly competitive con-sumer market, are also expected to continue showing strong growth in the near future. South African elec-tronic and IT products are penetrating the African market and the country has been ranked as one of the top-30 software development outsourcing desti-nations by the Gartner Research Group. These posi-tive market-prospects leave a wide range of possibili-ties for software developers, IT service providers or innovators interested in starting a business in this sector. Partnerships between academia, government and private industry like the Johannesburg Centre for Software Engineering or Google‟s recently an-nounced Cape Town-based technology incubator are designed to assist young entrepreneurs in starting their businesses (Google-Africa 2011).

Another common entrepreneurship trend in recent years in South Africa is “tendering”. This term refers to requests made by the government to have inde-pendent service providers fulfill the needs of the state. Newspapers regularly advertise calls for ten-ders from state departments and local municipalities, requesting services such as catering, servicing schools, building state houses, providing sanitation in rural areas, financial services (auditing, taxation etc.) and many more. The intended purpose for out-sourcing as opposed to using state-owned enterprises is to encourage the start-up of micro, small and me-dium businesses, particularly those run by citizens from previously disadvantaged backgrounds.10 Last but not least, the tourism industry bears poten-tial for business start-ups of young entrepreneurs in South Africa. Currently tourism contributes almost 10% to the country‟s GDP and in 2009 roughly 250.000 German tourists visited the country (GTAI 2010). Investment into tourism infrastructure by the state as well as new ecologically sustainable tourism projects (ecotourism) bring about new possibilities for young entrepreneurs. In the informal sector, entry barriers for young en-trepreneurs are relatively low, with the main disad-vantage being that the state is not able to trace the money that is made in this sector and is therefore unable to collect taxes from it. As a result, small businesses in the informal sector do not contribute to the official net worth of the South African econ-omy. However, opening up a small restaurant, be-coming a street vendor, a home-based hairdresser or a backyard mechanic can be a way for young people to rise out of unemployment and absolute poverty. Starting a business in the informal sector may also help young entrepreneurs to acquire basic entrepre-neurial skills by experience, and if their businesses reach a certain size they can later transition into the formal sector. As recent studies show, the high un-employment rate in South Africa has led to a new wave of informal and formal businesses by young South Africans who cannot find jobs and therefore

10 In theory, tendering is an ever expanding market, which is full of potential for young entrepreneurs. However, due to the stringent requirements of the formal sector, many are unable to benefit from this market which considerably narrows the pool of potential recipients. In order to tender, one requires a registered business, a business plan, quotations and other documentation.

decide to take their fate in their own hands (GEM 2009; Investment at Work 2011).

4.3.2 Germany

he structure of the German economy is large-ly export-oriented. While in South Africa, apart from supplying components to the

manufacturing industry as well as machines and chemical products, increasing domestic consumption and growing purchasing power in South Africa and other African countries can bring about export-potential for smaller German enterprises that pro-duce consumer goods of all kinds (e.g., household appliances, electronics). However, as is the case for young South African entrepreneurs in the formal economy, the highest potential for young entrepreneurs in Germany lies not in the manufacturing sector but in the IT, com-munications and innovative technology sectors. “Life Sciences” (e.g., bio-technologies, environmental sciences, ecology) in Germany have enormous mar-ket-growth potential and young entrepreneurs with innovative ideas and basic marketing and business skills are strongly encouraged by the government and universities to start up their own enterprises. Initiat-ing E-Businesses by selling services or commodities through the Internet is another trend that many young freelancers have recently taken up and this trend is likely to continue in the future. Despite their relatively low market potential, other economic sectors in Germany have attracted the attention of entrepreneurs. For instance, in the ga-stronomy sector the trend has persevered in recent years with 60.000 new start-ups per year on average since 2000, despite a mostly oversaturated market and a high failure-rate in the past (BMWi 2011). Other markets that face a consistent number of new start-ups despite over-saturation are business con-sulting, law firms and freelance media enterprises. Last but not least, a constantly growing market with enormous potential for young entrepreneurs in Germany is the health sector. Today the health care industry in Germany is the biggest economic sector accounting for about 10% of all business start-ups annually, and given the country‟s demographic de-velopment it is expected to continue to grow in the coming decades (Fischer Consulting 2011). With a trend towards privatization and outsourcing in the health care sector, young entrepreneurs can provide

services such as aged care work, physiotherapy and home care services.

4.3.3 Civic Education for Responsible Young Entre-preneurs

ntrepreneurs have a responsibility towards the societies they operate in. According to Liikanen (2003) responsible entrepreneur-

ship means “to run a business in a way that enhances its positive contribution to society whilst minimizing negative impacts on people and environment.” He also points out that responsible entrepreneurs should

Treat customers, business partners and competi-tors with fairness and honesty.

Care about the health, safety and general well-being of employees and customers.

Be respectful to natural resources and environ-ment.

Act as good citizens in the local community.

(a) Elements of civic education

According to the International Encyclopedia of Education, civic education is broadly concerned with the devel-opment of citizenship or civic competence. Civic education for responsible young entrepreneurs in-cludes the following:

Basic Civic Knowledge

This includes knowledge about civic life, politics and government. Young responsible entrepreneurs should therefore be encouraged to acquire relevant intellectual and participatory skills in order to operate their businesses effectively within their societies. It also involves being able to think about political is-sues as well as understanding these issues so as to be able to make informed political decisions.

Civic Dispositions and Attitudes

Civic dispositions refer to a person‟s inherent traits which are both private and public in character. This entails accepting responsibility for the consequences of one‟s actions as well as fulfilling one‟s moral and legal obligations as members of the society. It is only when this disposition is acknowledged and observed

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that young entrepreneurs can be more responsible and successful in their business operations.

Participation and Civic Duty

This refers to the duties of the individual to society and the state. Every young entrepreneur needs to perform his or her duties as a citizen. It involves assuming the personal, political and economic re-sponsibilities of a citizen and voting during elections, paying of taxes to the state, respecting the rights and dignity of others and if possible engaging in their communities. Since entrepreneurs don‟t live in isola-tion and for that matter are integral members of the society, the decisions people make through elections, referendums and other public issues affect them and their business activities.

Social and Environmental Responsibility

Social responsibility represents a way of acting which will contribute to the general development of the society. Young entrepreneurs are encouraged to ensure that their business operations benefit the entire society and this can be done by taking up the responsibility to educate their employees to be also responsible citizens. Entrepreneurs can also serve as role models for future entrepreneurs by engaging in socially responsible activities.

Civic education can therefore be referred to as a subject that makes individuals aware of civic matters such as politics, governance, human rights as well as individual‟s rights, duties and responsibilities to the state. This education helps to remove apathy and increase popular participation in national activities which contributes to the strengthening of democracy and nation building. The obvious advantages of civic education make a strong case for popular participa-tion but even more so for entrepreneurs due to the possibility of them being multipliers through their economic activities and role models in their com-munities.

(b) Existing programs of civic education with a link to business

In Germany the responsibility for civic education is divided between public and private providers. In the

public sector, there are institutions and programs dealing with civic education on the European level, the German national level, the federal states level and the local level.11 On the national level, several federal ministries provide civic education training. The Federal Agency for Civic Education (bpb), which falls under the portfolio of the Federal Minis-try of the Interior, is the major national institution of civic education. Its events and publications are aimed at the German population, especially at multipliers like teachers. Thus far no special provision has been made for entrepreneurs, but an initiative is being planned under the guise of the Africa Start-Up pro-gram developed in cooperation between the bpb and the Africa Association. Due to the federal system in Germany the organiza-tion of civic education in schools, vocational schools and universities falls on the Federal State govern-ments. A summary of the educational plans of Baden-Württemberg12 is an example of this. The main focus of the school syllabus is the acquisition of compe-tences. These competences are treated on a more comprehensive and theoretical basis at the Gymna-sium and Realschule than the Hauptschule where practical competences are deemed to be more im-portant. Throughout, students are encouraged to use their learned competencies to form their own opi-nions on new topics by considering political, eco-nomic and social parameters. The Gymnasium, Real-schule and Hauptschule syllabus generally mention key words related to the definition of „civic educa-tion for responsible young entrepreneurs.‟ Neverthe-less, the general nature of school education makes it difficult to impart specific knowledge on entrepre-neurship and how it relates to civic matters. Looking at civic education for responsible young entrepreneurs at universities in Germany, a distinc-tion has to be made between fields of study directly related to economic topics and others. Some univer-sities, like Tübingen or Hohenheim, offer special courses on ethics or Corporate Social Responsibility (CSR) in their business administration and econom-ics curricula, sometimes these courses are compul-

11 Only the national level will be considered in this paper. 12 Landesbildungsserver Baden-Wuerttemberg:

http://www.schule-bw.de/entwicklung/bistand/

sory but this does not count for all universities (Sneep 2011; Jacobsen/ Pennekamp 2010). In other fields of study, imparting entrepreneurial skills is not part of the curriculum. However, some universities, like the University of Mannheim, do have special campus wide programs especially designed for entre-preneurship education (Mannheimer Gründer Guide 2011). In many developing democracies, including South Africa, issues around job creation, crime prevention, AIDS prevention and pension and maintenance awards are of more immediate concern than broader issue of civic education. In South Africa this makes youth education policy frameworks, especially at the local or municipality level unstructured and short term. However in recent times the National Youth Service (NYS) have been tasked to help harness the potential of youth in South Africa and increase their employa-bility. The quest to develop young entrepreneurs in South Africa is also largely being spearheaded by the Umsobomvu Youth Fund (UYF) which builds upon the work done by NGOs. In addition to this, the Youth Advisory Centers (YAC) is largely responsible for providing youth entrepreneurship education. They also provide training workshops for up-and-coming entrepreneurs. The key to the success of establishing the culture of responsible entrepreneurship in South Africa is edu-cation and this depends on the efforts of all stake-holders including the state, educators and young entrepreneurs themselves (Isaacs et al 2007). Accord-ing to the Youth Development Network, during the period 1994-1999, post-apartheid South Africa has been characterized by a policy formulation phase aimed at solving the problem of large youth unem-ployment. However, the challenge since 1999 has been one of implementing these policies. In spite of these shortfalls, there has been a special USAID sponsored program “Democracy for All”, which has been in place since the 1990‟s spearheaded by Street Law, a South African NGO, under the auspices of the University of KwaZulu-Natal‟s Centre for Socio-Legal Studies. The program involves sending trained university students into South African high schools to teach students about the issues regarding democ-racy, human rights, elections, conflict resolution and how citizens can behave responsibly in society (Bril-liant, 2000). Apart from the educational impact of the home, school is considered the main medium by

which significant impact can be made on youth en-trepreneurship development. According to Isaacs et al. (2007), entrepreneurship development and civic training in South Africa is “not a new phenomenon”. As far back as 1994 a coordinated entrepreneurship strategy (through the 2005 Revised National Curriculum for Grades R-9) was developed and implemented. In South Africa, the National Department of Education is responsi-ble for developing entrepreneurship education policy but each provincial education department is respon-sible for its implementation. Researchers such as Isaacs et al have discovered the following shortfalls in the school curricula regarding entrepreneurship and civic education:

Schools do not have sufficient human and phys-ical resources

Teachers are neither equipped nor trained to teach entrepreneurship education

Schools receive little support from the govern-ment

The syllabus on entrepreneurship education is not always available

Entrepreneurship is not considered a priority

Meaningful relationships with businesses are non-existent (Isaacs et al, 2007)

(c) Recommendations

Based on these findings it is recommended that for young entrepreneurs to be more responsible and aware of the risks and consequences of their busi-ness, the role of civic education and entrepreneur-ship education should be of prime concern. Moreo-ver these ideas should also be incorporated into the current youth entrepreneurship development and education framework. This includes the following:

Encourage the involvement of community stakeholders in youth entrepreneurship educa-tion

Make use of existing municipal and provincial government resources

Involve the young people in the preparation, design and implementation of projects

Stakeholders should encourage and sustain pri-vate sector support

Develop and manage partnerships among the youth networks

Integrate education on HIV/AIDS

The last point is necessary because in South Africa young people are the most vulnerable groups when it comes to HIV/AIDS infection. The question there-fore which arises for young people is “How do I get a job; and how do I survive” (Youth Development Network, 2004). Employment and HIV/AIDS are two key developmental issues that affect Africa. For instance, one cannot conduct workshops on how to start a small business without asking questions about how an entrepreneur‟s HIV status will impact on the type of business and its success. In addition, there is the issue of how to deal with and manage employees who may be affected or infected by HIV/AIDS. As a result the Youth Development Network in South Africa has developed a tool kit called “Integrating HIV/AIDS in Life Skill and Employment Training Programs” (YDN). Moreover, civic education should be participatory. The greatest emphasis should be on helping the participants develop their own skills and tactics for enhancing their roles as citizens. An awareness of and education in their civic responsibilities will help encourage a culture of responsible entrepreneurship. 4.4 Potential of youth entrepreneurship policy within the German-African Partnership

he bpb contributes to the promotion of a German-African partnership with the provi-sion of knowledge about the African conti-

nent and especially with its yearly student exchange program “Go Africa… Go Germany...”. Concerning the potential of youth entrepreneurship policy within the German-African partnership, the programs run or supported by the Federal Ministry for Economic Cooperation and Development (BMZ) and the Federal Foreign Office (AA) are of particular interest. Initiatives like the Weltwärts- and the ASA-program provide opportunities for young people to live and work in developing countries for some time and to gain inter-cultural experience and understanding. 13 These voluntary services do not

13 The Weltwärts-program is the development volunteer‟s service of the BMZ. More than 10.000 young people aged 18-28 have been sent out for a 6 to 24 month long stay to developing countries worldwide so far. The aim is to provide intercultural experience and understanding as well as knowledge about global interrelations. The ASA-

necessarily have a direct reference to youth entrepre-neurship but they advocate knowledge about global inter-relations and relevant skills for a responsible young generation. A special branch of ASA, called “ASApreneurs – Shaping a Sustainable World” fo-cuses on future business leaders. 14 InWent is also running the International Leadership Training for skilled employees and (future) business managers from developing countries.15 A wide range of organizations and institutions pro-viding civic education also exists in the private sec-tor. These include churches, party-affiliated founda-tions, civil society foundations, associations like the Deutsche Afrika Stiftung e.V. and unions. Many of these do have special programs concerning responsi-ble entrepreneurship and/or the German-African partnership.16 It is noticeable that concerning civic and entrepreneurial education for young people and the promotion of a German-African partnership, there are some special programs run by trade associ-ations and the business community in Germany: The Southern Africa Initiative of German Business (SA-FRI), for example, offers its Students Experience Program STEP for students from the SADC region. A similar approach is taken by the “Afrika kommt!” Initiative of German Business.17

program is a voluntary service borne by InWent. It includes preparation and post processing seminars in Germany and a 3-month internship in a project in a developing country for 250 scholarship holders every year. 14 Through their internships the scholarship holders are supposed to learn responsible entrepreneurial action and Corporate Social Responsibility (CSR) in a global context. ASApreneurs cooperates closely with the private economy and other economic stakeholders like unions. 15 Approximately 400 persons per year get the opportunity to spend a 12 month long training on the job period in a German company plus a 12 month long preparation and post processing period in their home countries. 16 Giving a broader overview would go beyond the scope of this paper, therefore, the focus will be mainly put on the public sector and the involvement of the private economy. 17 “STEP” and “Afrika kommt” offer six or nine month long internships in German companies for highly qualified business and engineering students or young professionals and (future) management leaders from Africa. The programs include cultural seminars, preparation and post processing measures in the scholarship holders‟ home countries as well as alumni networks.

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For promoting a strong German-African partnership through responsible young entrepreneurship, a triad of entrepreneurship education, civic education and intercultural knowledge is imperative. Considering this triad, a lack of congruency has to be observed in Germany. A lack of civic education measures in the classical entrepreneurship and management educa-tion at universities and vocational schools still exist. Their training is highly focused on economic exper-tise. Presently, young entrepreneurs are not an im-portant target group of general civic education activi-ties. In general many (civic) educators and school teachers may still have negative attitudes towards entrepreneurship and “the capitalist system”: In the German educational system, entrepreneurship is not highly promoted and the provision of entrepreneuri-al skills does not play an important role in schools or university fields of study apart from business studies. Programs linked to the German-African partnership are playing a certain role in civic education but only a negligible one in entrepreneurship education. A ma-jor obstacle to a fruitful economic partnership is the biased image of Africa prevalent in Germany. Afri-ca‟s potentials in terms of innovation, economic growth and as a trade partner are widely ignored. Figure 4: The ICE-Triad to promote responsible Youth Entrepreneurship within the German-African Partnership.

Some recent developments indicate steady changes. In the aftermath of the financial crisis, western socie-ties are searching for more sustainable ways of eco-nomic development (Koe Hwee Nga/ Shamugana-than 2010: 259). For German businesses the ac-knowledgement of their CSR becomes an increasing-ly important competitive factor. The buying public is increasingly concerned about the social and econom-

ic implications of their lifestyle and consumption (BMZ 2009: 7f.). On the other hand, the successful hosting of the 2010 Soccer World Cup in South Africa, the public attention it brought about for the African continent and some positive recent econom-ic developments in many African countries are start-ing to change the existing image of Africa in Germa-ny (Fischermann 2010; Grill 2010; McKinsey Global Institute 2010). Its economic capabilities and poten-tial are becoming recognized, especially by political leaders, entrepreneurs and investors. In addition to that, intercultural knowledge and experience between Germany and Africa are increasing because of the general upward global integration process and the broad, multiplier-focused approach of existing ex-change programs. Political efforts are necessary to make the best out of these prospects. First of all, business ethics should be systematically included into the curriculum of future young entrepreneurs and business managers at universities throughout Germany. Especially in in-ternationally orientated economics courses, questions of global development and justice should be dealt with. The African continent should be taken into more consideration within the context of the global economy. Universities should try to capitalize on their alumni-networks to provide practical insights to their students. In addition to that, student voluntary engagement should be promoted, e.g. in the context of BAFöG. The educational institutions could fur-thermore cooperate with extracurricular providers of civic education. Academic as well as extracurricular civic education should try to reduce general resentment towards entrepreneurs and emphasize the additional value that the society as a whole could draw from a culture of responsible entrepreneurship. Young entrepre-neurs and future managers should be considered as a special target group of civic education measures to further promote this culture. Moreover, civic educa-tion providers should further work on the correction of the biased image of Africa in Germany. Intercul-tural exchange between Germany and African coun-tries should therefore be further promoted in addi-tion to civil society and private partnership initiatives aimed at improving mutual knowledge of each other. This is not only an end in itself but very important for possible economic cooperation, as only profound knowledge about the counterpart‟s needs, values and attitudes will make this cooperation fruitful. Having

said this, well-designed ambitious programs already exist (see above). As only a few people get the chance to participate in such a program, it is very important to engage them as multipliers in their home countries upon completion of the program. A common problem in such programs is that only few (often already privileged) people know about them. For that reason the information of existing programs should be enhanced. If these measures are implemented, the promotion of a German-African partnership on eye-level with mutual benefit seems genuinely possibly through youth entrepreneurship and economic cooperation. In conclusion, the promotion of responsible entre-preneurship and youth partnership in Africa and Germany depends on our ability to confront the challenges that affect Africa such as unemployment, political instability, poverty and lack of adequate resources, HIV/AIDS and crime. In Germany, it is necessary to increase the awareness of the impor-tance of civic education and to recognize young possible future executives as a relevant target group. Concerning the German-African partnership an improvement in the knowledge about Africa and correction of the biased image of Africa is recom-mended. Awareness should be raised of the various bilateral assets of an eye-level partnership. It is only when those problems are dealt with, that we can build a meaningful partnership on a local, regional, national and global level.

n this paper we referred to young people aged between 18 and 35 years, who start their own business. Entrepreneurship was defined as re-

cognizing “an opportunity to create value, and the process of acting on this opportunity” (Schoof 2006: 7) and it in-cludes economic, public as well as social entrepre-neurship. We focused on young entrepreneurs in Germany and South Africa.

1. Young entrepreneurs in Germany and Southern Africa

he first section concentrated on the personal capabilities and responsibilities of young en-trepreneurs and was complemented by several

interviews with young entrepreneurs in Germany and Africa.18 (a) Young entrepreneurs and their role in society

(Youth) Entrepreneurship can have a considerable impact on societies. It plays an important role for the economy, in value and job creation as well as in skills development and innovation. That is why, on the one hand, (young) entrepreneurs have a strong re-sponsibility towards the societies they operate in. Responsible entrepreneurship means “how to run a business in a way that enhances its positive contribution to society whilst minimizing negative impacts on people and environment” (Liikanen 2003). On the other hand the political, socio-cultural and economic environment in which young people are willing to operate plays a significant role in determining an entrepreneur‟s success.

(b) Skills, motivations and responsibilities of suc-cessful young entrepreneurs

If one is willing to foster youth entrepreneurship and to advance its possible benefits for the society, dif-ferent aspects have to be considered. First of all, whether a young person can become a successful entrepreneur depends fundamentally on his or her motivations for engaging in business as well as their personal skills and relevant character traits. In addi-tion to subjective internal motivating factors, like a high need for achievement or satisfaction from completing tasks independent of others, a variety of external motivating factors also exist. The most common reason for becoming an entrepreneur seems to be the intrinsic need to earn more money and a prestigious status in society (Henderson & Roberts 2000). Important skills and personality traits such as motivation, creativity, the willingness to take risks, a strong and stable character as well as eco-nomic and strategic knowledge and thinking are all

18 These interviews are available on the www.bpb.de/ goafrica website under the section ”Common Paper“.

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needed to become a successful entrepreneur. Young entrepreneurs can be particularly good at risk-taking as they are less likely to be affected by previous ex-periences and they bring a youthful audacity with them.

2. Opportunities and barriers for business creation

by young people

he ability to start up a flourishing business therefore is a mixture of an entrepreneurial personality, good education and the right

political, socio-cultural and economic environment. These macro-environmental opportunities and bar-riers are also shaped by government policies and regulations. In this paper we used the PESTEL-framework as a tool to categorize and analyze politi-cal, economic, social, technological, environmental and legal opportunities and barriers for successful and responsible Youth Entrepreneurship in Germa-ny and South Africa.

(a) Political factors

The political environment can either promote or discourage entrepreneurial development in a country. It includes macro-economic policies, governmental support for (youth) entrepreneurship, political stabil-ity and corruption. In South Africa some of the regu-latory laws are considered hindrances to the devel-opment of SMEs. Germany benefits from the Euro-pean common market, but for the collaboration between German and South African entrepreneurs, trade regulations often function as a barrier, especial-ly as many African countries mainly export agricul-tural products. Although the German and South African government try to support Youth Entrepre-neurship, e.g. with start-up capital, many young people do not know about these support mechan-isms.

(b) Economic factors

The second consideration is the economic factors. Access to capital is a very important determinant in youth entrepreneurship because young people often lack the financial resources needed to start their own business. Loans with lower interest rates and longer

payback periods are provided from public institu-tions in Germany as well as in South Africa to pro-mote (youth) entrepreneurship. In the South African context differences between the formal and informal sector have to be considered. The informal sector contributes extensively too many African economies and for many young people, especially with lower levels of education, it is an attractive sector when entering the labor market. However, for various reasons informal businesses are very unpredictable, economically and personally risky and have severely limited opportunities to access capital. Therefore the graduation of (young) entrepreneurs from the infor-mal to the formal sector is an important aim. Other relevant economic factors are the unemployment rate, economic growth rate, inflation and market forces. These economic aspects can easily be used by policy makers through favorable adjustments to encourage young people to start their own business.

(c) Social and cultural factors

Social and cultural factors also strongly influence entrepreneurial activities. The social norms and atti-tudes towards entrepreneurship in Germany and South Africa are among the most negative in the world and therefore constrain entrepreneurial activi-ties (based on the analysis of Gert Hofstede). Fur-thermore both countries hold a strong masculinity orientation in comparison to the world average, which might hinder business creation particularly by women. Notably, in Germany the tolerance of un-certainty is relatively low and the fear of failure is high, whereas in South Africa more paternalistic and autocratic social structures prevail, both facts that might discourage young people from starting up a business. In both countries business activities often seem to be short-term orientated and in South Africa “tenderpreneurship” is a significant problem. On the other hand, both, the German and South African society, seem to place great importance on individual rather than collective action, a cultural norm that might help fostering business creation by (young) individuals. There is no unique formula to deal with different socio-cultural attitudes in society and how they can be turned from barriers into opportunities. This is also a medium or long-term process. Evaluat-ing and assessing socio-cultural backgrounds and their impact are important first steps in creating awareness and understanding.

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(d) Technological factors

Successful (youth) entrepreneurship also requires basic technological facilities and infrastructure, which are usually provided by the state. The overall quality of German infrastructure is high according to the 2010/2011 Global Competitiveness Index. Ger-man infrastructure can facilitate (young) entrepre-neur‟s success. South Africa, along with Mauritius, topped the African rankings, but lagged far behind Germany. South Africa has good transport infra-structure, particularly because of the development that took place in preparation for the World Cup 2010. However, power and telecommunication, which are also of critical importance for successful enterprises, could be significantly improved upon. Moreover the distribution of infrastructure is varia-ble between urban and rural areas. Nevertheless, South Africa is an anomaly in Africa and most other Sub-Saharan African countries, even within the SADC-region, which do not have the same levels of infrastructure development.

(e) Environmental factors

Young entrepreneurs in Germany and South Africa are faced with environmental problems such as pol-lution, global warming, floods and overexploitation of natural resources that could eventually negatively affect their businesses. Therefore, young entrepre-neurs must integrate environmental concerns into the vision of their business and become more envi-ronmental friendly. Furthermore, new economic sectors can provide opportunities for young entre-preneurs to start new businesses, for example in the alternative energy, transportation or environment-friendly production sectors.

(f) Legal factors

The last component assessed in the PESTEL-scheme is the legal factor. Young entrepreneurs in South Africa and Germany have to consider a multi-tude of legal and administrative issues considering their business activities, starting with the name and structure for their company. They also need a variety of licenses and permits and have to consider the risk of insolvency. In both countries administrative hur-dles for starting a venture are relatively high com-pared to the rest of the world. In conclusion, on the

macro-level there is a multitude of factors affecting (youth) entrepreneurship in either a positive or nega-tive way. These factors are challenges that can and have to be addressed by policy makers.

3. Youth entrepreneurship policy and civic education

he last chapter dealt with the political dimen-sion of young entrepreneurship, elaborating both on the political measures to promote

business creation and on measures to foster the feel-ing of civic responsibility of young entrepreneurs. Special attention was given to the potential of a German-African partnership for youth entrepreneur-ship.

(a) Instruments and economic policy for promoting youth entrepreneurship

Instruments of an economic policy to promote (Youth) Entrepreneurship can be categorized into funding, counseling and training. In South Africa as well as in Germany numerous public and private initiatives to support (young) entrepreneurs exist. Start-up loans with lower interest rates and longer payback periods are provided from public institu-tions in both countries, and there are a variety of programs and organizations that provide training and counseling for (potential) new entrepreneurs e.g. in business plan creation, financial management, mar-keting or legal issues. But both countries lack an all-encompassing coordinating structure and an overall strategy for their (Youth) Entrepreneurship policy. In our opinion a fruitful dialogue between federal ministries (in the case of Germany), private organiza-tions and NGOs as well as a closer cooperation be-tween economic- and education policy would lead to more effective results.

(b) Markets with potential for young entrepreneurs

As markets with potential especially for young entre-preneurs we identified the IT sector and the sector of environmental technology for both countries. For South Africa one has to keep in mind the split which still exists between the formal and informal sector. In the formal sector the market-entry barriers are often considerably high; the highest market-potential

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here probably lies in the service industry. New pos-sibilities can also be seen in the tourism industry, especially in ecotourism. In the informal sector mar-ket-entry barriers are lower and starting an informal business can be a first step out of poverty and un-employment for young people. The German econo-my is largely export-oriented. The highest potential for young entrepreneurs is seen in the IT, communi-cations and innovative technology-markets. Another constantly growing market is the health sector.

(c) Civic education for responsible young entrepre-neurs

Funding and entrepreneurship education are impor-tant aspects in the promotion of successful (youth) entrepreneurship. But (young) entrepreneurs should not only be individually economically successful but their business activities should also serve society at large. To achieve this second important goal, in our opinion, civic education is imperative. Civic educa-tion for responsible (young) entrepreneurs should promote basic civic knowledge (e.g. about the politi-cal system and current political issues), civic disposi-tions and attitudes (such as compliance to democrat-ic principles and reciprocity), participation and civic duty (such as voting and paying taxes) as well as social and environmental responsibility (e.g. towards their customers, employees, business partners and the environment in which they operate). Civic educa-tion in South Africa and Germany is provided by both public and private institutions, in schools and through extracurricular activities.

In Germany, general civic education is integrated into the curricula of all types of schools but entre-preneurial education is only significantly promoted in commercial-orientated high schools. At university level, many business study courses do not integrate civic education or Corporate Social Responsibility (CSR) into their curricula. Extracurricular entrepre-neurship education in Germany focuses mostly on economic knowledge but not on CSR or civic educa-tion for responsible (young) entrepreneurs. Other fields of study on the other hand, largely do not address questions of entrepreneurial knowledge. Extracurricular civic education in Germany is pro-vided by public and private institutions like the fed-eral agencies for civic education, churches, founda-

tions, unions or associations. It is often open to the entire population or targeted at specific groups, like school children, teachers or residents with a migra-tion background. To date, (young) entrepreneurs do not appear to be an important target group of (extra-curricular) civic education in Germany. In many developing democracies, including South Africa, other social issues such as job creation, po-verty reduction, crime and HIV prevention are of more immediate concern than the broader issue of civic education. It is for that reason that publicly and privately provided civic education often seems un-structured and focused on the short-term. Schools often do not have sufficient funding and equipment to provide broader civic education, while entrepre-neurship education also is not a priority. Public insti-tutions like the National Youth Development Agen-cy (NYDA) and development cooperation projects like the USAID program “Democracy for All” try to improve the employability as well as the civic educa-tion knowledge and practice of young people in South Africa.

(d) Youth entrepreneurship in the context of a German-African partnership

The title of this paper is “Youth Entrepreneurship in Germany and Africa – Promotion through partner-ship”. This headline implies two different requests. First: What can a German-African partnership on an eye-level contribute to the promotion of (youth) entrepreneurship in both regions? And second: What can a positive entrepreneurial culture and responsible young entrepreneurs contribute to the further pro-motion of a fruitful German-African partnership?

Concerning the potential of youth entrepreneurship policy within the German-African partnership, the programs run or supported by the German Federal Ministry for Economic Cooperation and Develop-ment (BMZ) and the Federal Foreign Office (AA) are of particular interest. Initiatives like the welt warts- and the ASA-program (especially its branch ASApreneurs) or the GIZ‟s International Leadership training and support young people from Germany and Africa with intercultural experience and know-ledge, civic education and occasionally entrepreneur-ship education is essential.

It should be noted that concerning entrepreneurship education for young people and the promotion of a German-African partnership, there are special pro-grams run by trade associations and the business community in Germany, like the STEP program of the SAFRI initiative or the “Afrika kommt” initiative of the German Business. Programs like these illu-strate the increasing, economical interest for Africa in Germany. There are approximately 600 German companies with operations in South Africa. These companies employ over 90,000 workers. Most German compa-nies in South Africa are in the secondary sector and are involved in machinery, electronic, chemical, pharmaceutical, automobile and metal production. The Southern African-German Chamber of Com-merce and Industry serves as a representative of these companies and the German economy in South Africa. Although these companies are contributing to South Africa‟s development through offering much needed employment, they are not doing much towards the promotion of entrepreneurship among South Africa‟s economically marginalized groups who lack the skills and education needed to make them employable. More joint efforts in this area could bring about tangible and lasting results.

In order to promote responsible youth entre-preneurship through a German-African partner-ship on an eye-level, as well as promoting a

strong German-African partnership through respon-sible youth entrepreneurship, the triple goal of inten-sifying entrepreneurship education, civic education and intercultural knowledge is imperative. Considering this triad, a lack of congruency has to be observed in Germany. A lack of civic education measures in the classic entrepreneurship and man-agement education still exists. On the other hand, young entrepreneurs have not yet been identified as an important target group of general civic education activities. In the German educational system, entre-preneurship is not strongly promoted and the provi-sion of entrepreneurial skills does not play an impor-tant role in the system. The country is missing a supportive entrepreneurial culture. Programs linked to the German-African partnership are playing a

certain role in civic education but only a negligible one in entrepreneurship education. A major obstacle to a fruitful economic partnership is the biased im-age of Africa prevalent in Germany. Africa‟s poten-tial in terms of innovation, economic growth and as a trade partner is widely ignored. The education system in South Africa is often blamed for the lack of entrepreneurship excellence in the country as many school leavers do not receive adequate learning in subjects which can make them economically literate. At tertiary level entrepreneur-ship education is more theoretical than practical and is therefore limited in its ability to develop the skills, attributes and behaviors necessary for successful entrepreneurial engagement. The link between en-trepreneurship education and civic education in South Africa is weak as the two fields are usually taught separately. However tertiary institutions and technikons in South Africa teach business ethics courses which incorporate CSR. CSR, although use-ful in molding responsible business leaders, largely ignores political education. There is a serious need for South African educational institutions to directly link entrepreneurship education with civic education in order to produce business leaders who are con-scious of their social, political and economic respon-sibilities toward the country who conduct their oper-ations with strong business ethics as their guideline.

Figure 5: Reciprocal Promotion of Youth Entrepreneur-ship and Partnership.

Recent developments indicate steady changes in perceptions of Africa in the developed world. In the aftermath of the financial crisis, western societies are searching for more sustainable ways of economic development (Koe Hwee Nga/ Shamuganathan 2010: 259). For German businesses the acknowled-gement of their CSR becomes an increasingly impor-

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tant competitive factor. Consumers increasingly concerned about the social and economic implica-tions of their lifestyle and consumption (BMZ 2009: 7f.). Additionally, the broadcasting of the Soccer World Cup 2010 in South Africa brought positive public attention to South Africa and the continent at large. Furthermore, recent economic developments in many African countries are starting to change the existing image of Africa in Germany (Fischermann 2010; Grill 2010; McKinsey Global Institute 2010). Its economic capabilities are becoming increasingly recognized, especially by political leaders, entrepre-neurs and investors. In addition to this, intercultural knowledge and experience between Germany and Africa are increasing because of the general upward global integration process and the broad, multiplier-focused approach of existing exchange programs. Political efforts are necessary to make the best out of the bilateral prospects between South Africa and Germany. First of all, business ethics should be sys-tematically included into the curriculum of future young entrepreneurs and business managers at uni-versities in Germany and South Africa. Special em-phasis should go towards questions of global devel-opment and justice in international-orientated eco-nomics courses. Universities should try to capitalize on their alumni-networks to provide practical in-sights to their students. In addition to this, student voluntary engagement should be promoted, e.g. in the context of BAFöG. Furthermore, educational institutions could cooperate with extracurricular providers of civic education. Academic as well as extracurricular civic education should try to reduce general resentments against entrepreneurs and emphasize the additional value that society as a whole could draw from a culture of responsible entrepreneurship. (Young) entrepreneurs and future managers should be considered a special target group to provide with civic education to fur-ther promote this culture. Civic education providers should continue to work on correcting the biased image of Africa in Germany. Intercultural exchange between Germany and African countries and public-private partnership initiatives aimed at improving mutual knowledge about each other should therefore be further promoted. . This is not only an end in itself but very important for possible economic co-operation, as only profound knowledge about the

counterpart‟s needs, values and attitudes will make this cooperation mutually rewarding. Some well-designed ambitious programs already exist. As only a few people get the chance to participate in such a program, it is very important to engage them as mul-tipliers in their home countries upon completion of the program. A common problem of such programs is that only few (often already privileged) people know about them. For that reason the information of existing programs should be enhanced. Civic education provided to South African youth should also encompass a component of responsible business engagement. This will go a long way in ensuring that South Africa has responsible business and political leaders who contribute positively to-wards the country‟s development. Germany could assist South Africa with its civic education program and entrepreneurship promotion by providing tech-nical and financial assistance in both areas. The German government, civil society, private sector and independent entrepreneurs can identify business areas which have growth potential in South Africa and work towards mutually beneficial business en-gagement. This business engagement has to have a significant component of Corporate Social Respon-sibility (CSR) that empowers South Africa‟s econom-ically marginalized groups. Some of these areas of bilateral business engagement could be in Informa-tion Technology (IT), tourism, „green‟ business (energy), social entrepreneurship, natural resources and minerals among many other areas of possible business engagement. If these measures are implemented, the promotion of youth entrepreneurship through a German-African partnership on an eye-level and the amplified promotion of this partnership through youth entre-preneurship and economic cooperation seem possi-ble and mutually beneficial for both parties. In conclusion, the promotion of responsible entre-preneurship and youth partnership in Africa and Germany depends on our ability to confront the challenges that affect Africa such as unemployment, political instability, poverty and lack of adequate resources, HIV/AIDS and crime. In Germany, it is necessary to increase the awareness of the impor-tance of civic education and to recognize young possible future executives as a relevant target group. Concerning the German-African partnership, im-

proved and well-informed knowledge about Africa to correct the biased image that is held is of para-mount importance. Awareness of the various bilater-al benefits of a partnership on an eye-level should be raised. It is when those problems are dealt with, that we can build a meaningful partnership at a local, regional, national and global level.

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Figure 5: Reciprocal Promotion of Youth Entrepre-neurship and Partnership. Source: Authors‟ design.

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