Entrepreneurship, a lever for economic growth and employability of youth in Madagascar ....

Entrepreneurship, a lever for economic growth and employability of youth in Madagascar ....

Ekonomika • Editor-in-Chief
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The increase in youth unemployment is a permanent threat to the economic and social stability of a country with a very young demographic profile like Madagascar. In order to face this problem, the promotion of entrepreneurship is one of the alternative solutions allowing both job creation and the development of new income generating activities. Indeed, it is in this perspective, entrepreneurship is a lever for the development of Madagascar in the context of achieving the new Millennium Development Goals (MDG). Still, for Madagascar, according to the GEM or Global Entrepreneurship Monitor report published in 2018, one adult out of five is in the process of creating or managing a business for less than three and a half years according to GEM criteria. With an Entrepreneurial Activity Rate (EAR) of 19.5%, Madagascar maintains its 8th place in the world in 2019 by being the first among low-income economies.

Despite this statistic, entrepreneurship in Madagascar is an obstacle course. Obstacles are of various kinds: an unfavorable business environment, cumbersome administrative formalities, a difficult political context, as well as the weight of the culture and society. Similarly, access to financing remains a major problem, particularly for young entrepreneurs with a low level of education, especially in rural areas. A World Bank study confirms, moreover, that the banking sector is still recalcitrant to take risks and mostly resorts to secured loans given the lack of visibility on the quality of start-ups and SMEs. The capital market, on the other hand, is not adapted to small-scale young entrepreneurs, who cannot turn to investment funds either. There are still microfinance organizations, but they only provide small amounts of money at extremely high interest rates. Having exhausted all alternatives, entrepreneurs must therefore make do with their own resources, which are often insufficient, or opt for informal loans. For some young people, participation in entrepreneurship competitions is an alternative to benefit from both a period of incubation by the promoters and partners of the competition, as well as support in finding financing solutions for the realization of their project. 

However, this difficult context has a positive aspect: it forces entrepreneurs to be creative, courageous, and adventurous, all qualities that will contribute to its success. Despite these constraints, youth entrepreneurship is at the heart of current political priorities. Thus, various types of support/accompaniment in favor of young microentrepreneurs are currently available at the country level via the Malagasy government through the Fihariana Program, and technical and financial partners through projects such as the PEJAA (Program of incubation of young people for the promotion of agricultural and agro-industrial entrepreneurship), through a value chain approach financed by the ADB or African Development Bank), Miarakap (Impact Investment Company dedicated to the financing and support of Small and Medium Enterprises with high potential), as well as from the private sector with support structures such as Nexta and the Fabrique d'Entreprise based in Tamatave. It should be noted that the support/accompaniment provided by these structures is often in the form of incubation and is aimed at the bearers of ideas or projects for the creation of innovative companies. They intervene from the birth of the idea to the realization of the project. These support structures also provide support to incubated companies in terms of training, coaching, mentoring, and assistance in setting up and running their business. To this end, it brings together special resources and services dedicated to accompanying and assisting businesses in the early years of their life.

Despite the existence of a national policy favorable to the development of entrepreneurship, as well as the existence of some support/accompaniment structures favoring the incubation of young entrepreneurs in urban and rural areas, we also note that the establishment of a favorable environment for entrepreneurship in the country, as well as the investment in particular in education and training remains essential in order to cultivate at the same time the entrepreneurial spirit and to have also the necessary competences to a development of the entrepreneurial projects which rest especially currently on the control of new technologies of information and the communication. 

In our next articles, we will show you the sectors of activity where every entrepreneur should invest, the steps to follow in the creation of a company as well as the mistakes to avoid and many others.

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