Economic impact assessment of the national youth development agency (NYDA) grant fund in the Eastern Cape

Fotoyi, Asanda

Title: Economic impact assessment of the national youth development agency (NYDA) grant fund in the Eastern Cape
Creator: Fotoyi, Asanda
Subject: Economic impact analysis
Subject: Youth development, Eastern Cape
Date Issued: 2022-12
Date: 2022-12
Type: Doctoral's theses
Type: Thesis
Identifier: http://hdl.handle.net/10948/59424
Identifier: vital:62093
Description: Since the dawn of democracy in South Africa, the country has adopted several youth policies aimed at promoting young peoples’ education and training, employment, entrepreneurship, and healthy lifestyles. Still, however, the country battles high youth unemployment rates, which increased from 35.7% in 2010 to 41.0% in 2019. Such issues exist despite the NYDA being established in 2008 to coordinate youth strategies in the country. The NYDA strategic areas include: economic participation, education and skills development, health and wellbeing, knowledge management, and governance. Of note is that NYDA grant funding has been specifically designed to provide young South African entrepreneurs with an opportunity to access both financial and nonfinancial business support to establish or expand their businesses. Over a period of 7 years (2013-2019), the NYDA has grant funded a significant number of youth-owned businesses across the country, to the value of about R204.5 million. Given the large amount of public funds invested through NYDA grant funding, it is important to assess whether or not this investment has been favourable in terms of achieving its goals. This determination is especially important, as governmental resources are scarce and subject to opportunity cost, in that some alternatives have been forgone in favour of the NYDA mandate. The present study was, therefore, necessary, as, since the inception of NYDA grant funding, its economic impact has not been scientifically measured or assessed. As such, there has not been any scientific basis to justify NYDA grant funding. In particular, this thesis assessed the economic impact of the NYDA grant funding in the Eastern Cape. The effectiveness of the NYDA grant funding was examined against its objectives: improved entrepreneurship participation, business skills development and support, and improved creation of job opportunities. The primary hypothesis was tested using a cost-benefit analysis (CBA). The CBA method was adopted as it is a well-established economic assessment method to test policy interventions. This method is also based on methodological rigour and was determined to be most applicable for this present research endeavour. v The notion behind using the CBA was to quantify the net benefits of NYDA grant funding for youth businesses by comparing the benefits with the corresponding costs. In order to determine other factors that influence the turnovers of NYDA grant funding recipients’ businesses, secondary hypotheses were then tested by using a least absolute deviation (LAD) regression analysis in respect to cross-sectional data relating to the respondents’ annual turnovers over the years 2014-2019. The LAD estimation method was used primarily due to its robustness in comparison to ordinary least squares (OLS). This study made use of a questionnaire to collect data on the demographics of the NYDA grant funding beneficiaries. As well as the beneficiaries’ business characteristics, their subjective perceptions on the impact of the NYDA support interventions, and business-specific challenges. The Raosoft calculator was used to calculate the sample size at a 5% margin of error. The scientifically sound sample size of the respondents, according to the Raosoft calculator, was 246 out of 681 clients. The respondents were drawn from the Eastern Cape areas by means of face-to-face survey interviews as well as a digitised research instrument that was circulated using several online platforms (e.g., email, WhatsApp, and Facebook). The total number of respondents who ultimately participated in this study was 253. In order to achieve Denzin’s (1978) triangulation, a focus group session was also conducted with selected NYDA grant beneficiaries. The focus group discussion for this research was held using the online platform, Microsoft Teams (MS Teams). The survey analysis findings of the study suggest that the demographics of the NYDA grant funding beneficiaries are a general reflection of the Eastern Cape’s overall youth entrepreneurship trends. As such, there were more male youth entrepreneurs compared to female youth entrepreneurs. The involvement of youth in business improved in correspondence with age -groups. The population groups of the grant funding beneficiaries also reflected the country’s racial demographics. In terms of business characteristics, the survey analysis findings revealed that NYDA grant funded businesses function across various sectors of the economy and largely operate out of homes. These businesses primarily serve local households and communities, have generally been operating for 3-5 years, and were largely started because the owner recognised an opportunity in the market. In terms of business assistance from vi NYDA, it was found that the grant funding was mostly utilised for asset finance. In terms of business challenges, market conditions were highlighted as negatively impacting youth businesses. However, the participating business owners were primarily inward-looking when seeking to address their challenges. A further finding from the survey analysis revealed that many NYDA grant funded businesses tended to increase the number of jobs created in the period under review. The CBA findings, in turn, showed that the public expenditure in Eastern Cape youth businesses through NYDA grant funding was economically viable during the period under review, since the benefit-cost ratio (BCR) exceeded ‘1’ (the net present value (NPV) was also positive). The regression estimation findings further indicated gender, education, and industry gross domestic product (GDP) growth rates also had a significant impact on the annual turnovers of the youth businesses. The focus group findings highlighted that most beneficiaries derive value from NYDA grant funding. However, there is scope for improvement in the areas of access to finance, turnaround times, access to markets, links to the entrepreneurship ecosystem, administrative burden, mentorship, monitoring and evaluation (M&E), and organisational culture. Based on the findings of the study, this thesis concludes that in the period under review, in the Eastern Cape, NYDA grant funding yields positive social returns; and delivered on its objectives (i.e., improved entrepreneurship participation, business skills development and support, and improved creation of job opportunities). The empirical findings of this study further supports this thesis’s recommendation for: 1) improvements in the NYDA grant funding budget; 2) closing gender gaps in youth entrepreneurship; 3) improving participation of disabled youth in business support services; 4) promoting entrepreneurship as a career path; 5) providing youth business support in rural areas; 6) diversifying economic sectors of youth businesses; 7) offering access to finance for youth business growth and expansion; 8) establishing youth businesses access to markets; 9) reducing administrative burdens for youth businesses; 10) improving accessibility of business development trainings; 11) offering mentorship for youth entrepreneurs, 12) providing infrastructure for youth businesses; 13) extend Covid-19 relief support for youth businesses; and 14) standardising practises in youth business support services.
Description: Thesis (PHD) -- Faculty of Business and Economics Science, 2022
Format: computer
Format: online resource
Format: pdf
Format: 1 online resource (295 pages)
Publisher: Nelson Mandela University
Publisher: Faculty of Business and Economics Science
Language: English
Rights: Nelson Mandela University
Rights: All Rights Reserved
Rights: Open Access

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