Getahun Fenta Kebede, Addis Ababa University, Ethiopia
Abstract
Ethiopia is rapidly urbanising and migration from rural to urban areas plays a major role in this urbanisation. Rural youth choose to migrate to urban areas because of lack of productive employment and entrepreneurial opportunities in the agricultural sector. The capacity of urban centres to plan for and accommodate the massive influx of youth migrants by providing formal employment is limited. Consequently, young people find themselves without access to alternative employment opportunities, and lacking entrepreneurial skills and access to finance. As a result, the majority are pushed into self-employment in the informal sector, primarily street vending. The objective of this paper is to explore the causes and types of informality in Ethiopia and identify barriers that hinder young people from formalising informal businesses and launching and running new businesses. Data for this study were collected in four urban centres – Addis Ababa, Adama, Bahir Dar and Hawassa – as they house the largest share of unemployed youth and informal workers in Ethiopia. The findings show that there are several political, regulatory and administrative bottlenecks, including politicisation of entrepreneurship; lack of understanding of the nature and demands of young people; weaknesses in business organisation and developing markets; weak instructional systems; low levels of service capacity and inefficiency; lack of entrepreneurship education; youth negligence; and corruption. These hinder youth entrepreneurship programmes.
These are also some of the impediments to attaining inclusive development in Ethiopia. Government and nongovernmental organisations working on youth entrepreneurship programmes must assess and understand young people’s needs and aspirations, in the context of their local environments, and know how to support them to access finance and the necessary business infrastructure.
Developing business, technical and soft skills for enterprise start-up and expansion needs to be emphasised, along with minimising administrative and regulatory procedures.
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