There are moderate numbers of those in Belarus who see good business opportunities, according to the GEM 2019/2020 National Report. There is also relatively high perceived fear of failure. This signals the importance of taking action to raise the level of attractiveness of entrepreneurship in the country.
In this regard, it is vital to assist people in developing their skills and knowledge. Actions on fostering the growth of business-related education starting from primary schools to higher education institutions will allow the formation of the entrepreneurial and creative mindset in the society. Maryia Akulava, Researcher at the Belarusian Economic Research and Outreach Center (BEROC), and Radzivon Marozau, Research Associate at BEROC, provided more analysis in the below Q and A interview.
What are some ways that you think policymakers can benefit from the research highlighted in the 2019/2020 GEM Belarus Report?
We see that those in the 18-24 age category and those 25-34 have the highest TEA rates in the country at 6.4% and 12.3% respectively (TEA is the percentage of 18-64 population who are either a nascent entrepreneur or owner-manager of a new business). The 18-24 age group has the highest entrepreneurial intention (20.2%) rate. The key strength of the 18 to 24-year-old entrepreneurs is that the opportunity costs of going into business for them are lower compared to the older age cohorts. The opportunity costs increase due to the growing levels of income and family responsibilities. Moreover, the willingness to bear uncertainty and face risk goes down with age. Therefore, measures to foster entrepreneurship among the younger age group will likely have greater impact.
The national report also underscores the importance of increasing the quality of entrepreneurs. This is still not commonly understood and articulated by stakeholders.
You mentioned education in your previous response. In what ways can entrepreneurial education at universities, colleges and business schools be improved?
The private sector has been developing for 30 years. The authorities have paid very limited attention to entrepreneurial issues. In addition, the full employment policy implemented by the authorities in the state enterprises resulted in the low mobility of the labor force, low level of unemployment as well as a lack of motivation. Current economic challenges have forced the authorities to reconsider the role of the private sector.
There is a substantial gap in knowledge related to entrepreneurship as for a long period of time there was no interest in becoming self-employed. There are few classes related to business issues at all levels, from primary education to universities. Introducing them will be beneficial for the growth of public awareness in entrepreneurial issues and will enhance the self-perception of one’s the ability to start and run a business.
Belarus joined GEM in 2019 as part of the cooperation between BEROC and the International Finance Corporation (IFC). What were some of the motivating factors for this?
Both BEROC and IFC are interested in raising the public discussion on the importance of the private sector for the economy and female entrepreneurship.
IFC focuses on practical business- or economy-related projects, while BEROC is conducting academic and policy research. The possibility to combine efforts and resources resulted in a fruitful cooperation around the GEM project.
On the positive side, 91% of Belarusian entrepreneurs are self-confident in their entrepreneurial capabilities. On the other hand, only 38% of non-entrepreneurs believe they have knowledge and skills needed for entrepreneurial activities. Why do you think that is the case and what can be done to maintain the confidence levels of existing entrepreneurs and help increase the confidence of the group that doesn't think they have the needed entrepreneurial skills?
During a long period of time the official attitude towards entrepreneurs was neutral or negative. As a result, the majority of population thinks that it is very difficult and sometimes dangerous to run a business. Moreover, Belarus lacks well-elaborated courses on business and entrepreneurship that not only provide relevant knowledge but develop entrepreneurial characteristics and intentions. Activity-based learning is absent at all educational levels; this negatively impacts the level of people’s self-confidence in terms of individual entrepreneurial capabilities.
The research was conducted before our world encountered a global pandemic. Based on the research in the GEM report, are there any specific findings and/or related recommendations that are applicable to Belarus fostering entrepreneurship in the midst of the disruptions posed by COVID-19?
There was no lockdown in Belarus. Due to finances, the Belarusian authorities were limited in being able to extensively support businesses suffering from the economic crisis.
The data from the 2019 GEM Belarus Report showed that the ratio of businesses closed during the last 12 months amounted to 1.7% and there are serious risks of growing bankruptcies, unemployment and poverty in the country.
At the same time the motive “To earn a living because jobs are scarce” was 51.7% of entrepreneurs involved in the Total early-stage Entrepreneurial Activity. The consequences of the COVID-19 outbreak will likely lead to the substantial growth of this number in 2020.
In this regard it is very important to provide any support to those, who will become unemployed or bankrupt in order to make their recovery easier and faster.
Moreover, our findings show that Belarusian businesses had comparatively strong orientation to the employment growth even in 2019 when the Belarusian economy demonstrated very modest GDP growth. This may imply that in the post-pandemic period, SMEs and not state-owned enterprises will be the main if not only job creators and that is at odds with official rhetoric.