U2 lead singer Bono—long an advocate of increased aid and policies to fight extreme poverty in Africa through a campaign he created called ONE—surprised some observers when he said in a speech at Georgetown University last year, "Aid is just a stopgap. Entrepreneurial capitalism takes more people out of poverty than aid."
The idea of fighting poverty through entrepreneurship is catching on in South Africa at a time when South Africa is coping with a GDP that grew just 2.5 percent in 2012, compared to an average of 4.5 percent annually from 2002 to 2008—before the global financial crisis. The nation is also suffering from high unemployment among young people, with nearly 29 percent of people aged 25 to 34 unemployed in the third quarter.
South Africa's Department of Trade and Industry and several other government entities have tried to encourage young people to start businesses through the Gro-E Youth Scheme, launched in April 2013. It provides low-interest loans and other services to start-ups launched by young people in the country.
However, the push to mint new entrepreneurs is off to a slow start. A government publication in December quoted an official from the Gro-E program saying that the quality of the applications has been weak—with just two of them approved at the time of the interview. The Global Entrepreneurship Monitor 2012 South Africa Report found that just 2.3 percent of the population is currently involved in running established businesses, the second lowest rate in the world. Just 5 percent of young people aged 18 to 24 were involved in early-stage entrepreneurship in 2012, though in a more encouraging sign, 9 percent of those ages 25 to 34 were part of the start-up scene, the report found.
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CNBC recently spoke with Edith Jibunoh, a development economist and ONE's global policy director, about why the group is increasingly embracing entrepreneurship as a route to fighting poverty in South Africa and in other African nations. She manages the organization's work with institutions such as the World Bank, IMF, United Nations and African Development Bank. Before joining ONE, Jibunoh was the economist in the Office of the Nigerian President, supporting the virtual poverty fund for the Nigerian Millennium Development Goals.
The following is an edited version of CNBC's interview with Jibunoh.