Where are the youth-led businesses?

Enterprise. Youth in Kanungu District demonstrate to MPs on the Committee of Science and Technology how they extract oil and make soap out of palm fruits using rudimentary tools last year. The MPs were on an inspection tour to assess government projects that support youth businesses. FILE PHOTO

What you need to know:

  • The Promise Tracker is Daily Monitor’s weekly special feature that tracks the promises made by leaders of all categories as well as public agencies to the people. The aim is to cause accountability, show status and analyse whether it was a realistic, unrealistic or empty promise.
  • One of Uganda’s biggest failures of our time has been in the area of providing support to indigenous businesses to grow them so that they are able to create jobs and pay taxes to fund other development activities.

The promise:
“Large companies shall be given special incentives when they give businesses to youth-owned enterprises. Furthermore, youth-owned enterprises will be given preferential treatment while supplying government departments. This initiative will help youths penetrate the market and make them competitive and more sustainable in business.”
That was one of the commitments the ruling NRM party made to empower youth to become job creators as stated in its manifesto ahead of the 2011 general election.

The document, also known as the “peace, unity and transformation for prosperity” manifesto stated that it would accomplish that goal through six interventions.
These included forming a youth enterprise start-up fund, establishing a youth business skills training programme and opening sheltered and serviced work places for the youth.
Another intervention was to establish a youth business linkage system, which would help youth access more business by giving incentives to those that partnered with them.

Earlier in the same document, the NRM had argued that the youth were central to its agenda and that is why many of its policies had been made to directly benefit the young people.
Those polices had seven key elements, including initiating, strengthening and streamlining all programmes and services for youth, facilitating programmes that support their social and economic empowerment, building youth capacity and providing them with relevant information and training, implementing programmes that protect, empower and prepare the youth for the future.

Others were providing youth with psycho-social support and other services in conflict situations, increasing youth involvement in decision making and leadership at various levels and mobilising resources for youth programmes and projects at all levels.
The party stated that jobs had been created in diverse parts of the country, adding that programmes such as mass immunisation and universal primary and secondary education programmes had been implemented to benefit the youth.
By October 2010 when the manifesto was launched, the population of Uganda was estimated at 32 million people, 78 per cent of them youth between the ages of 15 and 30 years.
The economy had been growing at about 7 per cent per year and Gross Domestic Product at 8.3 per cent per year, but unemployment remained a big problem.

The Partnership Forum of African Development Bank (AfDB) had put the rate at 83 per cent. This was attributed to lack of formal work experience, lack of job-related skills, economic decline, which led to laying off workers in some business establishments, and low levels of economic activity and investment.
The Global Entrepreneurship Monitor (GEM) recently ranked Uganda as one of the world’s most entrepreneurial countries, but the rate at which startups fail is also quite high.
A recent research carried out by Makerere University Business School (Mubs) with support from the European Union put the failure rate at 50 per cent, which means that one of every two businesses that start fail in the first three years. However, that situation dates back to before the manifesto was released.

In light of that, the promise to give incentives to companies that do business with youth-led companies and also give support to youth link businesses was, therefore, perceived as one that would support the growth and development of small businesses as well as expand and create more jobs.
More than eight years since the promise was made, no companies have got any incentives for doing business with youth-led enterprises and there has been no affirmative action for youth-led businesses to help them penetrate the markets and enable them grow. So what happened?

Donation. Members of Chamuka Youth Development Association in Kamwokya, Kampala, display a dummy cheque worth Shs30m that was given to them by President Museveni last year. Photo by Michael Kakumirizi

There has been an effort over the years to train youths across the country and equip them with the knowledge and skills that they might need in order for them to become their own employers.
For instance, Enterprise Uganda has enabled 64,446 youth and households benefit from the Business and Enterprise Start up Tool (BEST), while another 4,150 youths have benefitted from the Entrepreneurship Training Workshops (ETW).
These initiatives have provided youth with confidence and practical skills to start and run successful business establishment.
The trainings are modelled to enable the trainees to face the negative attitudes and beliefs which inhibit young people from creating jobs and reorients their mindsets to make them suitable for operations in a globalised business village.

There are also a host of other agencies that have opened and have run youth incubation centres for the youth, but training alone without providing them with the necessary capital and support to keep them going, especially in the first three years in business, only exposes them to either not get started or fail when they set out.
Some youth have been provided with funds through programmes such as the Youth Venture Fund, Youth Livelihood Fund and Women’s Entrepreneurship Fund.

However, assisting them to get markets for their produce means that they cannot market what they produce.
If findings of a study, “Lost opportunity? Gaps in youth policy and programming in Uganda” conducted by ActionAid and published in 2012 are anything to go by, Uganda, with a youth unemployment figure of 62 per cent, is the highest in Africa.
It is, however, important to note that the figure was 18 percentage points below the 80 per cent quoted by the Netherlands-based nonprofit international development organisation, Smart Development Works and 21 percentage points below the 83 per cent quoted by the AfDB.

The official position

The Commissioner for Youths in the Ministry of Gender, Labour and Social Development, Mr Mondo Kyateka, told Daily Monitor on Monday that nothing has been done in the direction of assisting youth-led enterprises to break into the market or help them to grow. “We have not yet developed any policy that could led to the establishment of such an incentives regime. It (policy) has never been put in place, but it is something that we can follow up with the people in charge of the manifesto and see how best it can be done,” Mr Kyateka said in a telephone interview.

Monitor position

One of Uganda’s biggest failures of our time has been in the area of providing support to indigenous businesses to grow them so that they are able to create jobs and pay taxes to fund other development activities.
Government has been borrowing big in order to fund the development of infrastructure to reduce the cost of doing business and positioning Uganda as a favourable investment destination. While this is appreciated, we need to do much more, especially in forming affirmative action to help local businesses grow.

South Africa has through its Black Economic Empowerment (BEE) done a great job of giving its black citizens economic privileges that were only the preserve of the white citizens during the Apartheid era. Through BEE Africans have access, to among others, skills development, social economic development and preferential procurement. It might be good for us to look in that direction. That is why we think that the idea of supporting the youth to help them grow their businesses was a great idea that still needs to be implemented.
However, even as we work towards that, there is a need to look at the electricity tariffs and the many taxes that are stifling economic growth.