Economic growth not matching employment demands - World Bank

Many young Ugandans have had to opt for migrant labour because they cannot find employment to absorb them. Photo | File  

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World Bank says that Uganda’s economic growth has not kept pace with population growth, which annually creates more than  600,000 job seekers 

The World Bank has said government must work towards ensuring that economic growth matches labour needs if Uganda is to mitigate the challenge of runaway unemployment. 

Speaking during the signing of a grant partnership with the Embassy of Sweden in Kampala on Tuesday, Ms Mukami Kariuki, the World Bank country manager, said Uganda’s economic growth has so far not kept pace with population growth, which creates between 600,000 and 700,000 new job seekers annually. 

“The economy simply is not able to absorb the number in the labour force. The Covid-19 crisis amplified existing structural issues in Uganda’s economy, exacerbating development challenges,” she said, noting that lower economic activity in industry and service sectors has led to job losses resulting in a slowdown in economic growth and an increase in levels of poverty.  

“Small and young firms in Uganda play a key role in employment creation – registered firms, five years and younger, account for more than 50 percent of formal employment,” she added, explaining that about 3.1 million household enterprises provide self-employment and employment for family members, majority (56.2 percent) of which, operate a service business, with a substantial proportion (20.3 percent) engaged in manufacturing and agro-processing activities.  The World Bank, through the Multi Donor Trust Fund, seeks to help government mitigate the effects of Covid-19 on private sector investment, employment and support new economic opportunities. 

The Fund targets directly at least 140,000 micro small and medium enterprises and 120,000 refugees, of which at least 40,000 are expected to be women-led microenterprises. 

Through the multiplier effect, qualitative aspects, the World Bank expects to safeguard more than 530,000 jobs in the crisis response phase of Covid-19 and generate more than 200,000 new jobs.  These benefits are expected to be at the lower income level, mostly in locations along the new growth corridors with significant improvements expected in economic and social dimensions of participating households. 

Ms Mukami said that through the Multi-Donor Trust Fund, the World Bank will mobilise donor contributions to invest in strategic areas to support the implementation in national development plans that focus on promoting sustainable and inclusive economic growth, job-creation and set the foundation for the economy’s future expansion and transformation in the aftermath of the Covid-19 crisis. 

The Fund, she said, will complement the $200m from International Development Association financed investment for industrial transformation and employment project. 

Ms Maria Håkansson, the Swedish Ambassador to Uganda, said through the partnership, Sweden will provide funding of $11m (Shs40b) in the next four years to implement activities that are critical to promoting sustainable economic growth.  

The Multi Donor Trust Fund, she added seeks to support implementation of the National Development Plan III through strengthening private sector growth to create sustainable jobs.

Unpaid work       

Uganda, according to Ms Maria Håkansson, has one of the world’s highest population growth rates, meaning that in order to harness the demographic dividend, government must create conditions to absorb between 600,000 and 700,000 young people into the labour force annually. 

“Today, only one in four employed Ugandans are in some form of wage employment, and among the youth, 60 percent are not paid for their work,” she said, adding that whereas women are an important part of development, they spend an average of 3.5 times more hours on unpaid work than men.