South Africa's youth unemployment crisis is deepening, as Stats SA's latest Quarterly Labor Force Survey (QLFS) shows. The data shows that 258,000 South Africans under the age of 34 lost their jobs in the first quarter of 2026, underscoring growing pressure on the country's labor market.
This brings the total number of unemployed youth to 4,7 million, bringing the youth unemployment rate to 45,8%. The figures indicate the scale and persistence of the challenge, with almost half of the country's working-age youth unable to access meaningful economic opportunities.
In this context, entrepreneurship is increasingly established as a viable path for young South Africans seeking income and independence, yet access to funding remains a significant barrier.
This is according to Megan Dedekind, area manager of Business Partners Ltd, who notes that many young entrepreneurs are struggling to secure formal finance. “The main problem is not a lack of ideas or inspiration,” she says. “Instead, most traditional finance systems still focus only on collateral, long trading histories and credit records – things that most young business owners don't have yet.”
This gap between how youth-owned small and medium enterprises (SMEs) operate and how funding decisions are made is hindering the growth of otherwise viable businesses. Without the right guidance to prepare for funding along with equitable access to appropriate capital, promising youth-led businesses are often unable to start, grow, invest in critical infrastructure and equipment. This ultimately limits their ability to create jobs and build sustainable wealth for themselves.
“As a result, businesses that could contribute meaningfully to local economies and job creation often remain small or stagnant,” says Dedekind. “In some cases, they fail altogether, not because the concept is flawed, but because the funding model does not accommodate the early-stage realities or the new business model.”
However, she emphasizes that access to funding alone is not enough to ensure success. “Funding should be combined with practical support, as many first-time entrepreneurs face challenges related to business management, financial planning and regulatory requirements.
These capabilities, such as cash flow management, compliance and operational efficiency, are critical factors for long-term sustainability, yet are often underdeveloped in the early stages of business.
“Mentoring, training and ongoing guidance play a vital role in helping young business owners build resilience and make informed decisions as they grow,” she says.
At the same time, Dedekind points out that traditional approaches to assessing risk are increasingly out of step with the realities of the modern, digital economy. New and innovative businesses often demonstrate potential through alternative indicators, such as customer traction or digital engagement, rather than long-term financial records.
“We need to rethink how we define risk and capacity,” she explains. “A business without a long track record is not necessarily a high-risk venture, especially in sectors where growth can be rapid and data-driven insights are readily available.”
Unlocking youth entrepreneurship on a large scale will require a change in the way funding institutions make loans to emerging businesses. This involves moving from a conservative model that prioritizes asset backing toward a more inclusive framework that recognizes future possibilities.
According to Dedekind, this change is important not only to support entrepreneurs, but also to stimulate economic growth and address South Africa's persistent unemployment crisis.
He believes that SME financiers have an important role to play in bridging this gap. “We are all learning and adjusting as financiers do. At Business Partners Ltd, we have a suite of non-financial initiatives such as the SMEToolkit platform, which equips aspiring young entrepreneurs with workshops as well as essential business start-up resources that build the practical skills needed to launch and grow sustainable businesses. From a funding perspective, we take a more tailored approach, based on the needs of the businesses we back. We combine funding with hands-on support and technical assistance to improve long-term viability.
“When entrepreneurs are supported holistically, the likelihood of success – and by extension, job creation – increases significantly,” she concludes.