Youth Co:Lab's ecosystem diagnostic framework

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Youth Co:Lab's ecosystem diagnostic framework is a tool that was used to map, assess and provide recommendations for strengthening the youth entrepreneurship ecosystem in Indonesia.
What are the main aims and objectives?

The central aim of the mapping exercise was to identify strategic entry points for strengthening the enabling environment for youth entrepreneurship in Indonesia. The study aimed to provide data-driven recommendations and information on actions needed to make the ecosystem for entrepreneurship more inclusive of youth-led enterprises.

Specifically, the objectives were:

  1. To assess Indonesia's ecosystem for youth entrepreneurship through Youth Co:Lab's ecosystem diagnostic framework, analyzing the strengths, opportunities, challenges and good practices within key domains of the ecosystem at both national and regional levels.
  2. To contribute to evidence-based programming and policy development to support youth-led enterprises in Indonesia.
  3. To guide interventions by UNDP, the Islamic Development Bank, and other stakeholders to support youth-led enterprises in Indonesia over the coming years.
  4. To provide a comprehensive analysis of the youth entrepreneurship ecosystem across different regions of Indonesia, including case studies of specific provinces, to demonstrate variations in youth entrepreneurship growth and development.
How does the program work?

The study applied Youth Co:Lab's ecosystem diagnostic framework to assess the ecosystem through 5 key domains: access to finance and incentives, human capital and entrepreneurship culture, business development support and infrastructure, policy and regulatory framework, and innovation and technology:

Access to Finance and Incentives:

  • Strengths: Availability of capital assistance from government and non-government sources, COVID-19 response schemes, financial literacy initiatives.
  • Challenges: Low financial literacy among youth, uneven distribution of financial institutions, local cultural barriers to accessing finance.

Human Capital and Entrepreneurship Culture:

  • Strengths: Incorporation of entrepreneurship education in curricula, government programs to support youth entrepreneurship.
  • Challenges: Unequal access to training, gaps in quality between government and private sector training, limited family support for entrepreneurship as a career.

Business Development Support and Infrastructure:

  • Strengths: Strong electricity and internet infrastructure in western/central regions, relatively well-developed road infrastructure, access to incubators/accelerators.
  • Challenges: Unequal access to infrastructure outside Java, uneven distribution of incubators, lack of sustainability in incubator programs.

Policy and Regulatory Framework:

  • Strengths: National laws and policies supporting youth entrepreneurship, inclusion in national development plans.
  • Challenges: Sub-optimal implementation of policies, lack of coordination between agencies, lack of gender and inclusion focus.

Innovation and Technology:

  • Strengths: Multi-stakeholder support for innovation, availability of science/techno parks, policies to support research.
  • Challenges: Low digital literacy and utilization among youth entrepreneurs, unequal access to technology between regions, gap between academic research and market needs.
What is the overall cost?

There is no available information about the cost of running the ecosystem audit.

How was it implemented?

The report was commissioned by UNDP and the Islamic Development Bank (IsDB) and published was in 2022. It was conducted using Youth Co:Lab's ecosystem diagnostic framework which is a comprehensive mixed-methods approach combining quantitative and qualitative data from multiple sources. 

The research used both primary and secondary data collection methods. Primary data was gathered through in-depth interviews, focus group discussions (FGDs), and regional dialogues with ecosystem stakeholders. Secondary data came from literature reviews, policy reviews, media tracking, and analysis of national surveys and statistics.

The analysis was done at both national and regional levels, looking at the western, central and eastern regions of Indonesia. It included case studies from specific provinces like West Sumatra, East Kalimantan and Maluku to showcase regional differences. Participatory Action Research and Design Thinking Methodology were used for the sub-national (provincial) case studies.

Stakeholder mapping was undertaken in each domain to identify key players at national and regional levels. The research involved consultations with a wide range of stakeholders including government agencies, universities, private sector, development partners, and youth-led enterprises.

What impact has been measured?

There is not yet any information about the impact the report has had on the youth ecosystem in Indonesia.

Notes + Additional Context

The context of youth entrepreneurship in Indonesia is characterized by both significant potential and notable challenges:

Indonesia has a large youth population, with young people making up a substantial portion of the unemployed. As of 2019, three quarters of unemployed people in Indonesia were youth. The youth unemployment rate increased from 13.03% to 15.23% between August 2019 and August 2020, exacerbated by the COVID-19 pandemic.

At the same time, youth entrepreneurship was seen as having strong potential to mitigate youth unemployment and contribute to economic growth, given Indonesia's demographic dividend and high public consumption. As of 2020, roughly 20% of employed youth were entrepreneurs. The government has identified youth entrepreneurship as important in national development plans.

However, young entrepreneurs face several obstacles. These included unequal access to education, training, infrastructure, and financing across different regions of the country. Cultural barriers, such as family expectations around desirable career paths, also affected youth opportunities to start businesses in some areas.

The COVID-19 pandemic brought additional challenges, with over 56% of young solo entrepreneurs reporting declining earnings in 2020. Access to support was uneven, with most incubators and accelerators concentrated in major cities and urban areas.

Overall, while there was significant potential and growing support for youth entrepreneurship, many young people still face barriers in terms of access to resources, skills development, and an enabling environment to start and grow businesses successfully across Indonesia. Addressing these challenges is seen as crucial to fully harnessing the economic potential of Indonesia's large youth population.

CURATED BY

Tom Hancock

Research Associate
Global Entrepreneurship Network
United Kingdom