Protecting young startups during Covid-19 pandemic
Op-Ed- By Kanni Wignaraja,UN assistant secretary general and director of the United Nations Development Program’s Regional Bureau for Asia and the Pacific - Originally published in AsiaTimes
From the way youth see it, business as usual just won’t cut it. Consider the staggering statistics.
According to a survey done in 2014 by the World Economic Forum’s Partnering Against Corruption Initiative and the UN Office on Drugs and Crime, 72% of millennials – youth between 18 and 34 in this survey – believe corruption is holding back their country. An equal number think it is causing lost opportunities for their generation.
Not much has changed since that survey was done, but now add to this mix the specter of Covid-19. One potential risk is an increase in corruption and fraud, further affecting already weakened economies. Young social entrepreneurs are particularly at risk from these threats. If they are not equipped with tools and guidance on how to succeed with integrity, in a difficult business environment, our economies will be poorer for it.
The Asia-Pacific region is home to more than 60% of the world’s youth, about 700 million young people. It is estimated that they account for half of the jobless people in the region. Entrepreneurship offers a way out, and many are already taking this route.
The region has one of the highest young startup rates across the globe, and 40% of these startups are creating jobs. In Malaysia, Thailand and Indonesia, micro, small and medium enterprises (MSMEs) account for more than 70% of the jobs in the private sector.
It is by no means an easy journey, so it is critical to guide them through this tough business terrain, especially during the Covid-19 outbreak. Even under normal circumstances, young social entrepreneurs and social innovation startups can be vulnerable to complicated bureaucracy, corruption, and fraud. They have little experience with navigating red tape, usually not much of a cash cushion to tide them through lockdowns, and have not built up the business depth to sustain it during an extended shock.
The Covid-19 crisis has further heightened this vulnerability. In March, Youth Co:Lab, a project co-led by the UN Development Program (UNDP) and Citi Foundation, surveyed 410 young social entrepreneurs across 18 countries in the Asia-Pacific region. Nine out of 10 reported that Covid-19 had negatively impacted their business. Only 9.5% reported that their business had received a tax break, loan, grant, subsidy, or other form of support.
While authorities have been taking measures to alleviate the economic impact of the pandemic, the rapid escalation of the crisis has forced them to act faster. In doing so, safeguards in the form of compliance, oversight, and accountability measures have been temporarily relaxed in some countries. This has made economic stimulus packages vulnerable to corruption and fraud.
In other cases these stimulus packages have been directed toward big businesses alone, undermining their intended impact. So young entrepreneurs miss out on taking advantage of initiatives that could help sustain their businesses in this time of crisis. While shuttering a business can happen quickly, reopening is a hard road back.
For young social entrepreneurs, temporary measures put in place to restrict movements, and in some cases limit information or access to financial instruments, can also jeopardize recovery. While public health standards, social distancing and contact tracing remain necessary, the way in which they are implemented is critical.
There has to be care taken to protect civic rights and data privacy, as well as to extend support through business credits and social protection to tide them over. Poor governance, a lack of transparency and inadequate attention to the needs of micro and small entrepreneurs erodes trust in leadership and public institutions and exacerbates inequalities. It also increases the risks and costs of doing business.
We must also value that it is the young business owner, investor and worker who are often the more socially and environmentally conscious than their older peers and want to pursue more sustainable ways of producing and consuming that is better for people and the planet. Investing in them through this period of crisis is an investment in the next generation of investors and job creators.
A reputation of integrity and “doing the right thing” influences how a business is perceived by its own employees, as well as consumers and investors, and increases the company’s value. Ethically run and socially conscious enterprises have a positive impact on employees and business partners, contributing to decent jobs and dignified working conditions.
Engaging young people in advocacy and educational programs that inculcate these values and ways of doing business, at an early stage, has been widely acknowledged as a primary way to bring about change in business culture. UNDP has developed a Business Integrity Toolkit for Young Entrepreneurs, to aid them in developing and sustaining ethical businesses that can survive and thrive, by embracing strong values and principles, as espoused by the UN and the Sustainable Development Goals.
Given the high rates of startups in the Asia-Pacific region, and their drive for innovation and enterprise, there is little doubt that these young entrepreneurs will play a key role in the Covid-19 socio-economic recovery journey. By supporting them in ensuring business integrity and driving sustainable business, we will contribute not only to rebuilding our economies, but also to achieving a societal culture that puts a premium on protecting a more sustainable future for all.
Co-led by UNDP and Citi Foundation, Youth Co:Lab establishes a common agenda for countries in Asia-Pacific to empower and invest in youth so that they can accelerate the implementation of the Sustainable Development Goals (SDGs) through leadership, social innovation and entrepreneurship. Read more about Youth Co:Lab here.