An Econometric Analysis of Entrepreneurship and Unemployment for Sub-Saharan Africa: 2006 -2016

Abstract

High unemployment rate in Sub-Saharan Africa continue to persist with a current rate of 6.14% in 2016, 6.28% in 2017, 6.16% in 2018, 6.17% in 2019 from 6.18% in 2020 (World Bank, 2020). Several factors account for the high unemployment rate including poor infrastructural facilities such as power supply which discourages entrepreneurial activities, poor standard of education resulting in unemployable youths, corrupt political environment which channels funds for productive activities into private pockets, high population growth rate, neglect of the manufacturing and agricultural sector and insecurity of lives and property. The resultant effect include high crime rate, high rate of depression due to long state of hopelessness, loss of skills by the unemployed, low economic growth, high poverty rate and increased rural-urban migration. Several programs are implemented by the government towards curbing high unemployment rate which can be categorized into 3 groups: infrastructural development, promotion of entrepreneurial activities and encouraging foreign investors. Hence this study assesses the impact of entrepreneurship start-ups on reducing unemployment in the sub-Saharan Africa region using a sample of 10 countries for the period 2006-2016. The study applied traditional panel data methodology of pooled OLS, random effect and fixed effect, and finds a positive relationship between the two variables thus suggesting that if entrepreneurship is well harnessed it can sufficiently reduce unemployment in the region.