Home » Posts tagged 'Entrepreneurship'
Tag Archives: Entrepreneurship
Entrepreneurship Education as a Development Strategy in Indonesia
By Kaitlynn Pimentel
Indonesia is the 4th most populated country in the world, home to 260 million people, but the success of the country is being stunted by their alarmingly high unemployment rate. The country is experiencing a youth bulge, with half of the population being aged 28.6 years or younger (Indonesian Investments, 2017). Currently, 5.8% of the Indonesian population is unemployed; which is abnormally high, as pre-pandemic unemployment rates were only 4.9% (World Bank, 2022). According to the Social Monitoring and Early Response Unit Institute (SMERU Institute), about 1/3rd of those unemployed are youth, ages 15 to 30 years old, and the percentage of unemployed youth. The effects of the COVID-19 pandemic were drastic- between August 2019 and August 2020- youth employment increased from 13.03% to 15.23% (SMERU Institute, 2021).
In addition to a high unemployment rate, Indonesia grapples with extreme poverty. According to the World Bank, about 167.8 million Indonesians live on less than $7.00 per day, with 62 million Indonesians living off of less than $4.00 per day, and a staggering 9.8 million Indonesians living beneath the international poverty line of $2.15 per day.
Indonesia is a patriarchal society, attempting to create equality between men and women; however, women in Indonesia only “earn 59.27 percent of what their male counterparts with the same level of schooling bring home” (Jakarta Post, 2022). According to the World Economic Forum (2022), Indonesia is ranked in 92nd place out of 146 countries in the global gender index which is much lower than it’s nearby south asian countries such as the Philippines who placed an impressive 19th out of 146 countries.
Based on my research, I believe that in order to improve unemployment, poverty, low access to education, and gender inequality- government agencies need to implement a creative and empowering form of education: Entrepreneurship Education. Firstly, Entrepreneurship education when using project-based, practical, and interpersonal teaching strategies creates a guided path for young people to create income for themselves and reduce the local and national unemployment rate (Olajide, et.al, 2014). In addition, “there is strong empirical evidence suggesting that economic growth over time is necessary for poverty reduction and entrepreneurship boosts economic growth,” (Mitra & Abubakar, 2011). Finally to address gender inequality, a researcher by the name of Esra Sena Türko (2016), who works teaches a Erzurum Technical University in Turkey studied the effects of entrepreneurship education on gender inequality, and found that it can reduce discriminatory gender stereotypes, especially concerning negative notions of women as business owners or sole income earners.
I am not trying to argue that Entrepreneurship is a cure-all for developing countries and conflict; however, my research and experience working with development NGO’s in rural Bali has shown me that by giving individuals access to entrepreneurship training and resources- they can not only improve their ability to generate income and job opportunities for their communities, but they can also solve complex social problems via social entrepreneurship (Rae, 2010).
The government of Indonesia acknowledges the use of entrepreneurship education as a vital role in their development and reduction of unemployment, and has been creating programs and policies to increase entrepreneurship in the country. The program that I researched was the JAPRI program which stands for JAdi Pengusaha MandiRI (Become an Independent Entrepreneur). This program was funded by the USAID and managed by IIE Indonesian team in order to offer short-term training programs to women, youth, and individuals with disabilities followed by a 6-month mentorship and coaching program to help assure the longevity of the training impact. The program began in April 2017 and concluded in April 2022 with a successful reporting of 19,744 youth women and disabled individuals completing entrepreneurship training, over 4,000 new businesses created, and over 600 community members and university lecturers becoming JAPRI business coaches (JAPRI Report). The program partnered with local governments, Indonesian NGO’s, and Universities to develop and implement localized training as well as connect local coaches and mentors.
I had the honor of speaking with David Simpson, the liaison and lead administrator for the JAPRI program. He spoke about the vision of the program which was essentially to use the tools and resources in entrepreneurship to offer poor and vulnerable populations in Indonesia a sustainable way to get out of poverty. He discussed how entrepreneurship is especially impactful because it creates a positive chain reaction of job creation and economic opportunity in Indonesian communities. Simpson highlighted the importance of working with national and local governments, as well as local NGOs and Universities. He said the JAPRI program was designed with collaboration in mind, and that is why it was so successful.
I posed the following question to David: “If I were going to develop a small scale entrepreneurship education program for youth ages 15 – 30, what should I do differently than the JAPRI model?”. Simpson advised me to include more emphasis on financial literacy education as well as resource maps for entrepreneurs to finance their SMEs through existing Indonesian loaners and banks. He also talked about the importance of reaching rural communities. The JAPRI program was primarily administered on the Island of Java, which is home to the nation’s capital (Jakarta) and about 60% of the Indonesian population; however, this leaves the remaining islands of Indonesia falling further and further behind. Simpson ended our conversation by encouraging NGO’s to implement entrepreneurship training because it is a key focus of the government’s development plan, but officials simply don’t have the resources and funding to maintain quality assurance across the thousands of Indonesian Islands.
After my delightful conversation with David Simpson, I did some research into what the current entrepreneur ecosystem looks like in Indonesia. According to Kompas, I found that only 3.47% of the Indonesian workforce are entrepreneurs, which is relatively low compared to Indonesia’s neighboring countries such as Thailand (4.26%), Malaysia (4.74%) and Singapore (8.76%). Indonesia has the goal of growing their entrepreneurship rate to 4% by 2024. In regards to youth entrepreneurship, I found larger participation rates in Entrepreneurship, with about 19.90% of Indonesian youth creating their own enterprises. It is important to note that the majority of Indonesian youth entrepreneurs work alone (SMERU Institute, 2021). The remaining breakdown of youth-led led enterprises is shown in the graph below:
From this report, it should be made clear that Entrepreneurship is not only a powerful tool to fight against injustice and unemployment in Indonesia; but also, that the local and national governments in Indonesia are well aware of the benefits of Entrepreneurship Education. From my personal experience working in Indonesia- I have seen the implementation of Entrepreneurship at the University level, but with such a low percentage of Indonesians attending University- I believe we must implement it at a much earlier stage in education.
Below are my recommendations for Entrepreneurship Education Programs in Indonesia based on my research and informational interview with IIE’s David Simpson.
- Partner with local governments and NGO’s to create an education program for entrepreneurship.
- Use local examples of successful entrepreneurs as inspiration and long-term mentors for program participants.
- Ensure special parameters to meet the needs of women and those with disabilities who face inequality in Indonesia.
- Apply the program to rural regions in Indonesia.
- Provide pathways to financing resources and market access.
- Include financial literacy training, especially for the poor and vulnerable populations.
References:
Simpson, David. Telephone Interview, March 1, 2023. Interview conducted by Kaitlynn Pimentel.
Juliastuti, Anna. (2022, April) Jadi Penguasha Mandiri Final Report. Institute of International Education. https://www.iie.org/wp-content/uploads/2022/12/USAID-JAdi-Pengusaha-MandiRI-JAPRI-Program-Final-Report-April-2017-April-2022.pdf
Mitra, Jay & Abubakar, Yazid & Sagagi, Murtala. (2011). Knowledge creation and human capital for development: the role of graduate entrepreneurship. Education + Training. 53. 462-479. 10.1108/00400911111147758.
Moberg, K. 2014a. Assessing the impact of Entrepreneurship Education – From ABC to PhD. Doctoral Thesis, Copenhagen Business School.
Oluwafemi, Christianah Oluwabunmi, Martins, O. Rebecca, Adebiaye, H. Olajide
6 April 2014. Journal of Poverty, Investment and Development.
https://core.ac.uk/display/234695092?utm_source=pdf&utm_medium=banner&utm_campaign=pdf-decoration-v1
Pape, Utz Johann. (2022, October) Poverty & Equity Brief Indonesia East Asia & Pacific. The World Bank. https://databankfiles.worldbank.org/public/ddpext_download/poverty/987B9C90-CB9F-4D93-AE8C-750588BF00QA/current/Global_POVEQ_IDN.pdf
Population of Indonesia. Indonesian Investments. https://www.indonesia-investments.com/culture/population/item67
Rae, D. 2010. Universities and enterprise education: responding to the challenges of the new era. Journal of Small Business and Enterprise Development, 17, 591-606.
Safitri, Kiki. (2021, May). Pemerintah Targetkan Rasio Kewirausahaan Indonesia 4 Persen. Kompas.
Share of Indonesian population over 15 years old in 2022, by highest education level (2023, January). Statista. https://www.statista.com/statistics/1298842/indonesia-share-of-population-by-highest-education-level/
Tamyis, Ana Rosidha; Widyaningsih, Dyan; Fatah, Akhmad Ramadhan. (2021) UNDP and IsDB. The State of the Ecosystem for Youth Entrepreneurship in Indonesia. https://smeru.or.id/en/publication/state-ecosystem-youth-entrepreneurship-indonesia
Türko, Esra Sena (2015). Can Entrepreneurship Education Reduce Stereotypes Against Women Entrepreneurship? Faculty of Economics and Administrative Sciences, Erzurum Technical University, Erzurum, Turkey Received: May 23, 2016 Accepted: June 26, 2016 Online Published: October 26, 2016 doi:10.5539/ies.v9n11p53 URL: http://dx.doi.org/10.5539/ies.v9n11p53
World Economic Forum. (2022). Global Gender Gap Report 2022. https://www3.weforum.org/docs/WEF_GGGR_2022.pdf
Yuniar, Resty Woro. Indonesians are made to choose between food and school fees as inflation hits poorest hardest (25 September, 2022). South China Morning Post.
The Power of Entrepreneurship in Developing Countries.
Kaitlynn Pimentel
March, 2023
Defining Poverty
The Dictionary’s definition of poverty is: “the state of being extremely poor.” In addition, when you google the word “poverty,” the internet generates photos of skinny children covered in dirt holding out empty food bowls. These simplified and undignified depictions of poverty lead people to believe that poverty reduction is a matter of money, when in reality, wealth is only one dimension in the complex apparatus of global poverty. The first Sustainable Development Goal (SDG) developed by the United Nations (UN) is: “End poverty in all its forms.” The international poverty line is $2.15 USD per day, and the UN aims to ensure that nobody is earning an income below that amount (World Bank, 2022). The specific targets of the goal include creating social protections for the poor, ensuring access to resources and financial services like microfinancing, and the implementation of policy based frameworks that are also gender-sensitive (United Nations, 2022). What I am trying to prove is: Money alone can not solve poverty, but knowledge and resources can. Today, scholars are beginning to understand poverty through a different lens as “a multidimensional concept focusing more on socio-economic dimensions than being a mere measure of financial deprivation,” (Khan et al., 2014). These dimensions could include a community’s isolated location, non-existent transportation options, and crumbling infrastructure; therefore, any solutions to poverty must aim to improve all of a communities problems simultaneously. So how do we combat the various and complex dimensions of poverty? I believe that we don’t. Instead, we should help communities gain the resources, funding, education, and protections they ask for so they can combat poverty on their own.
Complex Interventions
Hisrich, (1990) defined an entrepreneur as “someone who demonstrates initiative and creative thinking, is able to organize social and economic mechanisms to turn resources and situations to practical account, and accepts risk and failure.” I agree with Hisrich, and to put it more simply, I believe that an entrepreneur is someone who recognizes a problem, and takes a risk to turn it into an opportunity for positive change. Notice that the words “profit” and “business” are missing from both Hisrich and my definitions. If we, as developers, programmers and philanthropists, want to solve systemic inequality and poverty in a community- then we need to look at all of the problems. Banks (2014) explained that economic issues in developing regions can be “rooted in systemic issues such as household poverty, high levels of physical, emotional and sexual violence, negative stereotypes of young people as lazy or criminal and a lack of inspirational role models.”
To address all of these issues, organizations must understand and come up with creative solutions to complex and systemic problems.
One exceptional organization that does this well is: The Adventure Project. The organization dedicates themselves to providing entrepreneurship and specific job training so that communities in Sub-Saharan Africa are able to rely on trained professionals to handle crucial matters like clean water wells, irrigation for crops, childbirth, and more. The organization has helped create 2,747 jobs in 6 countries, and improved food access, sources of safe drinking water, health care, and the local environmental condition for 2.1 million people (The Adventure Project, 2022). By offering job training and/or entrepreneurship education, micro-loan options, and financial literacy classes- The Adventure Project has formed alliances with communities to help them implement long-lasting systems of self-reliance.
Another NGO implementing data-driven Entrepreneurship interventions is: Village Enterprise. They work in Mozambique, Republic of Congo, Ethiopia, Kenya, Uganda, Rwanda, and the Democratic Republic of Congo. They have 200 local African employees on the ground implementing a “entrepreneurship graduation program” in which participants are given knowledge, leadership training, startup funding, group business savings accounts, and a mentor. Most notably, Village Enterprise focuses specifically on women and youth in Africa with 82% of their program participants being women business owners (Village Enterprise, 2022).
They recognize that women are disproportionately victimized by poverty, as stereotypical gender-roles make women more likely to do unpaid domestic work. According to UN Women (2022), “in all regions of the world, female poverty rates are higher than male poverty rates.” Theory of Change for the organization predicts that giving community members training, seed money, and financial literacy education will result in more businesses which will create higher household incomes and savings accounts, which will increase the global standard of living and end extreme poverty. The NGO is currently undergoing a series of evaluations working with Innovations for Poverty Action to further measure the effectiveness of their model.
Developing Communities Receptive to Entrepreneurship
These programs would be especially applicable to developing communities, because most individuals are already entrepreneurs- and additional training can offer a hand up to improve the success of their business! The graph below, provided by Yoonyoung Cho (2015) at the IZA World of Labor, represents the results of a labor survey taken from 74 developing countries. Entrepreneurs are considered to be within the segments of “Agriculture,” “Own Account,” or “Employer.” From analyzing the graph, we can deduce that about 60% of the labor surveyed are already entrepreneurs with the highest rates of entrepreneurship existing in Sub-Saharan Africa, East Asia and the Pacific, and South Asia. With this in mind, programs for entrepreneurship training would likely be well-received as individuals are already building their own SMEs (Small-Medium Enterprises) out of both necessity and ambition.
One reason that entrepreneurship is so common in developing nations is the fact that growing nations typically have youth bulges- when the population of youth is greater than the population of grown adults. Today the world is home to the largest generation of young people in history – “1.2 billion people and close to 90 percent of the world’s youth live in developing countries” (UN, 2023). Entrepreneurship can be a tool to decrease the unemployment rate in these countries where the amount of young people is larger than the jobs available to them.
Conclusion
Entrepreneurship training is needed in developing countries both to reduce the unemployment rates, and to improve the existing businesses in developing regions. Programs like the Adventure Project and Village Enterprise bring new prospects into communities and allow for individuals to create a better quality of life for themselves. It is vital for organizations to utilize a holistic approach to entrepreneurship that includes access to financing, different markets, and education to address mental health issues, gender inequity, and violence. Going forward, I think it would be interesting to look into the different resources offered by different projects, as well as programs in South East Asia or Latin America.
Sources:
Banks, Nicola (27 Nov, 2014). Why Entrepreneurship Alone Can’t Alleviate Poverty. World Economic Forum. https://www.weforum.org/agenda/2014/11/why-entrepreneurship-alone-cant-alleviate-poverty/
Cho, Y. Entrepreneurship for the poor in developing countries. IZA World of Labor 2015: 167 doi: 10.15185/izawol.167
Khan, A. U., Saboor, A., Hussain, A., Sadiq, S., and Mohsin, A. Q. (2014). Poverty assessment as a multidimensional socio-economic concept: The case of the Rawalpindi region in Pakistan. Asia Pac. J. Soc. Work Dev. 24, 238–250. doi: 10.1080/02185385.2013.844724
Hisrich, R.D. (1990) Entrepreneurship/Intrapreneurship. Am Psychol 45(2), 209–222
UNESCO (31 Jan, 2023). Thematic Fact Sheet Youth and Empowerment. https://www.unesco.org/en/youth-and-empowerment
United Nations. (n.d.). Goal 1 | Department of Economic and Social Affairs. United Nations. Retrieved February 23, 2023, from https://sdgs.un.org/goals/goal1
UN Women (01 Feb, 2022). Poverty Deepens for Women and Girls, According to Latest Projections. https://data.unwomen.org/features/poverty-deepens-women-and-girls-according-latest-projections
Village Enterprise (2022). Our Impact. https://villageenterprise.org/our-impact/
World Bank (2022). Fact Sheet: An Adjustment to Global Poverty Lines. https://www.worldbank.org/en/news/factsheet/2022/05/02/fact-sheet-an-adjustment-to-global-poverty-lines#1
