Wednesday March 7 2018

Where is the Shs16b Graduate Venture Fund?

Where Shs16b Graduate Venture Fund

Makerere University graduates celebrate their achievement last year. The National Resistance Movement had promised to set up and operationalise a fund to provide university graduates with funding to set them off into a host of personal commercial ventures as opposed to going out in search of jobs. PHOTO BY ALEX ESAGALA  


The promise:

In the run up to the 2011 General Election, the ruling National Resistance Movement (NRM), promised to set up and operationalise a fund to provide university graduates with funding to set them off into a host of personal commercial ventures as opposed to going out in search of jobs.
“The NRM government shall commence the disbursement of the Youth Graduate Fund,” the manifesto read in part.
The promise was number three on a list of five action points aimed at partially tackling the unemployment question.

At the time the promise was made, the economy had been reported to be growing at an annual average rate of 7 per cent per year and Gross Domestic Product (GDP) at 8.3 per cent. The rosy figures had, however, not translated into more jobs for the youth and graduates.
The African Development Bank’s (AfDB’s)Partnership Forum had put national unemployment figures at 83 per cent.

While it was not possible to put a finger on the countrywide unemployment levels among graduates, the World Bank had put youth unemployment in Kampala alone at 32.2 per cent and unemployment among university graduates in Kampala at 36 per cent.
Whereas the country educates many people, with close to 100,000 people being off loaded onto the job market every year graduate level occupations in Uganda are nothing to write home about.

The biggest employer in Uganda is the public sector, outside which graduates are employed in medium and large scale private sector firms. The later constitute a small share of the economy and, if the 2010 Census of Business Establishments is anything to go by, an even smaller share of the employment sector. It employs only 3.3 per cent of the total number of workers in Uganda. This includes professionals and graduates.

The small number of employees in the private sector is blamed on the structure of the Ugandan economy, which is predominantly of a household and microenterprises nature. Agriculture, artisanal manufacturing and informal services are the main areas of engagement and these may not require professionals.

The promise to create the fund was therefore seen to have been one of the ways in which to address the challenge of unemployment among university graduates.

Pursuant to the promise made in the manifesto, on June 14, 2012 while delivering the budget speech for the financial year 2012/2013, the then Minister for Finance, Planning and Economic Development, Ms Maria Kiwanuka, announced that the fund had been set up.
“Madam Speaker, to address the needs of graduates who have bankable project proposals but lack the requisite funding, I am establishing the Graduate Venture Capital Fund with an allocation Shs.16 billion to be implemented with all participating financial institutions,” she announced.

At the tail end of April 2013, the then Minister of State for Finance, Mr Matia Kasaija, while appearing before the parliamentary committee on Finance indicated that the fund had been set up on the bidding of the President.
“The President is in a dilemma. After promoting education, so many parents have educated their children up to university level, but a big number of the graduates are roaming streets looking for jobs. That is why he has decided to come up with the Graduate Venture Capital scheme,” Mr Kasaija told the MPs.

Mr Kasaija also told MPs that the kitty available would be doubled in the financial year 2013/2014. Government, he said, would raise the Shs16billion while the rest would be put on the table by 10 commercial banks.

The 10 banks which included Stanbic, Centenary and DFCU had reportedly signed Memorandums of Understanding (MOUs) with government had committed themselves to availing the loans at an interest rate of 15 per cent.
Minister Kasaija however hastened to add that given the acuteness of the unemployment problem among the youth, government was willing to avail more funds to increase the venture fund kitty in subsequent years.

However, the fund which was meant to have first come into play during the course of the financial year 2012/2013 has never taken off.
It is also not clear what happened to the money that the Minister said had been budgeted to fund the start of the fund.

Failure of the Graduate Venture Fund to take off means that many of the country’s potentially innovative young men and women cannot put into play some of the business projects that they come up with up. Ideas that are never given a chance to get implemented are never worth more than the papers that they are written on.
The problem is exacerbated by the fact that Uganda has very few business incubation centres to help emerging companies and entrepreneurs access training or professional assistance that would enable them to succeed.

While it is true that government has over the years put several other programmes such as the Youth Livelihood Development Programme and the Uganda Women’s Entrepreneurship Programme (UWEP) from which some of the graduates can access funding to carry out business ventures, some of the conditions imposed under these programmes place serious limitations on the scope and range of activities that they can engage in.
Applications for funding are submitted in groups and the amounts of availed often mean that the business activities into which applicants can venture are very few and also small.

At the same time, the problem of unemployment among the nation’s graduate youths which the venture fund was meant to have partially addressed has not been taken care. With more and more graduates being downloaded onto the job market every year, failure to kickstart suggests that general unemployment has risen over the last couple of years.

Findings per the 2014 national census indicates that 58 per cent of the population in the productive age bracket of 14 to 64 years, about 10.4 million people, is unemployed. There are about 18 million people within the said bracket. The report adds that 47 per cent of Ugandan males between the age group of 14 and 64 are unemployed.

It is largely on account of failure to generate jobs that the country has seen some university graduates form themselves into groups such as the jobless brotherhood. The brotherhood claims that it is a nonpartisan platform that the youths are employing in order to engage in activities such as throwing yellow pigs at the house of parliament and on streets of major towns as a way of drawing government’s attention to issues such as corruption, abuse of public resources and unemployment which are central to the youth’s concerns.

Official Position
The Spokesperson of the Ministry of Finance, Planning and Economic Development, Mr Jim Mugunga, could not explain why the fund failed to take off.
“We are not an executing agency. We mainstream programmes and ensure that they are catered for in the budget framework paper. When we make a provision it is made under a sector. So the implementation is done by the sector ministry,” Mr Mugunga says.
He also is not certain whether the money was ever released.

Monitor’s Position

The idea of creating a Graduate Venture Fund was great. It would have no doubt been helpful in assisting university graduates start up their own businesses and grow them.
It would have also been a great way of stirring up the spirit of innovation among the nation’s young people. The opportunity is not yet lost. The idea needs to be rekindled as the nation tries to fix the unemployment and apparent lack of business and entrepreneurial innovation.

Given that this has a lot to do with innovation it might just be a good idea that some aspects of the venture be placed under the Presidential Initiative for Science and Technology Innovation Programme,

However, unlike the Youth Livelihood project and the Women’s Entrepreneurship Fund, which are under the control of the Ministry of Gender, Labour and Social Development there seems to have been a lack of clarity on which Ministry or Sector was meant to control this fund. We need clarity on that.