What MPs hope a Youth Development Bank Bill will cure

What can be done to solve the crisis of youth unemployment? How can the youth be helped to access credit facilities? What can be done with programmes like the Youth Venture Capital Fund that are neither here nor there?
This is the puzzle that MPs Waira Majegere (Bunya County East), Mwine Mpaka Rwamirama (Western, Youth) and Juliet Suubi Kyinyamatama (Rakai Woman) have been scratching their heads to unravel over the past months.
The answer they are proposing is: The Youth Development Bank Bill.
With Parliament re-convening from recess next week, sponsors of the Bill hope to table a motion seeking leave to prepare and then table it for First Reading.
Rule 110 allows private members to sponsor private Bills and it is this rule that Mr Majegere and group are exploiting to prepare a Bill that he hopes will turn around the fortunes of youth financing in a country grappling with gross unemployment.
If private members are to make a stamp on legislation in the House, this is a rule that they have to take advantage of to table Bills to change the fortunes of their constituents. This would be better than resting on their laurels and lamenting about government policies that are failing as if they cannot do anything about them.
These MPs analysed the plight of unemployed youth and devised a piece of legislation that, if passed, can go a long way in ensuring that youth can easily access credit facilities.
A concept paper prepared by the Uganda Youth Parliamentary Forum on Youth Affairs quotes figures that indicate that more than 700,000 graduates enter the job market annually with only 12,000 jobs advertised in the formal sector, leaving a vast majority of the graduates, who are mostly youth, facing a bleak future.
The envisaged Bill seeks to cure the ills of initiatives like the Youth Venture Capital Fund, the Youth Livelihood Programme (YLP), Agricultural Credit Facility and Operation Wealth Creation – programmes that were meant to alleviate the problem of youth financing but have since run into headwinds.
The concept of the Bill argues that the YLP has been hamstrung by high rates of loan defaulting (with a 46 per cent default rate) and political interference which have coupled to undermine the intended goals of the programme.
Tales of youth defaulting on loans or simply using the money on unproductive initiatives like gambling and leisure are prominent in different parts of the country.
In Busia, the government had by June only received Shs84 million out of the Shs800 million that was given to the youth under the YLP.
It is, by and large the same situation in Lamwo District, where authorities are struggling to collect Shs422 million that was advanced to various youth groups in the district.
A recent evaluation of the YLP, however, revealed that the programme has only received 40 per cent of resources as of 2016 and reached 56 per cent of intended beneficiaries, according to research by the Uganda Youth Parliamentary Forum.
With the Youth Livelihood Programme hampered by many factors, the second option for disconsolate youth would think that the alternative was accessing credit facilities in the many financial institutions in the country.
But MPs behind the Bill argue that the cost of credit is prohibitive. High lending rates averaging 23 per cent in 2016 and shooting to as high as 30 per cent in some instances have excluded young people from accessing financial services crucial for job creation and enterprises.
Absence of a legal framework, Mr Majegere says, was one of the challenges of the Youth Livelihood Programme.
“All those Funds are not backed up by any law. The government just thinks of something and the following day, they start implementing it. Even donors think of a programme and the government starts implementing it without paying attention to it,” he says.
According to the Economic Forum Global Competitiveness Report (2016-2017), Uganda ranks in 120th place out of 138 countries in affordability of financial services. The situation is bleaker in the rural areas.
Mr Majegere says formal financial institutions often reluctant in financing rural areas and people without collateral, many of which include young people due to the perceived higher costs and risks.
In the rural areas, youth are left out of the money economy because of reasons ranging from legal restrictions, high transaction costs and negative stereotypes about youth – issues that are also pronounced in the Youth Venture Capital Fund.
It is against this background of failed government interventions to help the youth that inspired these MPs, working with the Uganda Parliamentary Youth Forum on Youth Affairs (UPYFA), to team up to develop the Youth Development Bank Bill.

Financial institution
The proposed Youth Development Bank will be a financial institution dedicated to addressing the needs of the young people while recognising their limitations in accessing financial capital such as lack of collateral.
“YDB will be a conduit of financial literacy as well as invest in research and development for opportunities for the youth. The outlook has a number of inward looking policies and laws in form of local content Bill and Buy Uganda Build Uganda Policy,” reads the concept.
Ms Kyinyamatama, a seconder of the Bill, says the YLP programme needs to be “revamped”, explaining that the government should always find a way of turning around programmes that do not meet its expectations.
“When the government comes up with programmes, it usually expects positive results. If the results are not positive, it does not mean that the programme has failed. The Youth Livelihood Programme has not failed per se but we need alternatives,” she says.
MPs backing the Bill argue that funds for the Youth Development Bank (YDB) will be raised through government of Uganda sequenced capitalisation, Uganda Development Bank shareholding in the bank, donations and grants in aid.
Additional funding will be secured from subsided deposits, membership fees particularly from youth saving schemes and youth entrepreneurship grants.
In the long-term, funding can be secured through profits ,secured and unsecured development bond issuance, equity and any other form of financing accepted by the respective financial sector regulations and law.