Boosting Youth Entrepreneurship

Entrepreneurial Ecosystem

In Burkina Faso the vast majority of adults are involved in starting or running a business (a total of 57.6% in 2015, up from 37.7% in 2014).

This is not surprising in a country where entrepreneurship has an extremely positive association for many – 83.4% of adults regard entrepreneurship as high status and 73.8% see it as a good career choice.

This is complemented by the high number of adults that perceive there to be opportunities to start a business (58.1%) and believe they have the capabilities to start an entrepreneurial venture (78%). Less than a fifth of adults say they have a fear of failure.

Despite this, entrepreneurs have to battle the country’s poor physical infrastructure (though the country scores better on its commercial and legal infrastructure), as well as a shortage of entrepreneurship education and technology transfer.

Added to this, while Burkina Faso is ranked higher than many similar economies when it comes to starting a business (at 78 out of 189 countries), it came in a low 143rd out of 189 countries in the 2016 on the Ease of doing Business.

In urban areas almost 30% of young people aged 15 to 24 are unemployed, while the rural areas are especially marked by a relatively high rate of underemployment (26.7%). There is also a great demand for public-sector jobs. In 2015, more than 200,000 people applied for 11,000 vacancies in the public sector. New jobs are therefore more likely to come from young people themselves starting their own companies.

Boosting Youth Entrepreneurship

Over the years thegovernment and its international partners have undertaken a number ofinitiatives by offering, among other things, technical and financial support to help Burkinabes to start their own business.

One of these initiatives is the Fond d’Appui aux Initiatives des Jeunes (FAIJ) (or Support Fund for Youth Initiatives). Created in 2007 by the Ministry of Youth, Vocational Training and Employment, it targets young people who have successfully completed training in entrepreneurship. The fund provides loans of between 200,000 West African CFA francs ($350) and 2 million West African CFA francs ($3,500) for projects. Projects submitted by associations and non-profit organisations can receive up to 5 million West African CFA francs ($8,500).

To qualify for funding, applicants must be no older than 35 years, have received training in entrepreneurship, have a mentor or a sponsor and have formulated a draft of their project for selection.

The FAIJ differs from a bank as it offers flexible financing terms and levies an interest rate of five percent (in Burkina Faso banks charges interest rates of between seven percent and 13%). The fund grants a preferential rate of two percent for disabled young people and a rate of 3.5% for women recipients.

Impact

Between 2008 and 2013 the fund backed 3 875 projects (a third of them initiated by women) amounting to 3.67 billion West Africa FCFA ($6.1 million). 43% of all applications received by the fund were awarded loans. The funding helped create 13 485 jobs in total (3 875 direct jobs and 9 610 indirect jobs). Women make up about a third of those who have received funding.

The bulk of the funds, or 45.6%, went to the agriculture sector, while 32% went to the craft sector. The funding is awarded primarily to productive sectors, enabling young entrepreneurs to make a major contribution to wealth creation in the country.

However, despite these encouraging figures, there have been a number of criticisms of the programme. These include the poor technical and managerial support provided to young people by the fund – which means that less than half of all applicants submit a business plan to the fund. In addition, as the fund excludes young people who have not passed the equivalent of the third class of high school (Grade 9), about 85% of targeted young people are excluded from receiving support from the fund.

A government training programme, however, might be able to address some of these concerns. In June 2016 the Ministry of Youth, Vocational Training and Employment launched the seventh iteration of the Programme Annuel de Formation de 5 000 Jeunes en Entrepreneuriat, which aims to put 5,000 youth a year through business training. Those that graduate from the programme can access various ministry funds, including the FAIJ.