Entrepreneurship has been challenging to embrace amongst youths because entrepreneurship is much more than skill acquisition but requires a strong will to forge ahead. Although entrepreneurship education teaches skills, the real challenge is an individual’s willingness to apply the skills acquired to real-life situations through self-employment in the face of escalating graduate unemployment in developing economies. This study aims at identifying factors affecting self-employment, encouraging entrepreneurship as a livelihood and reducing unemployment among graduates in Tanzania. The entrepreneurship theory is used in the study. The survey through snowball technique was able to identify 357 respondents in Dar es Salaam, Dodoma, Singida, Arusha, Iringa, Morogoro and Mbeya. Descriptive and multiple linear regression r statistical analyses were employed. The findings reveal that entrepreneurship theory variables used in the study knowledge and skills significantly positively affect self-employment. However, competence does not have a significant effect on self-employment. The result implies that entrepreneurship training to gain knowledge and acquire skills will improve the embracement of self-employment by graduates of institutions of higher education. This further suggests that training institutions ought to enhance the learning content of knowledge and skills in their training programs to equip learners with necessary tools for self-employment in eradicating the problem of unemployment to graduates of institutions of higher education.
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