The Budget and Youth Economic Opportunities - Part 2

8/10/2019 The Budget and Youth Economic Opportunities - Part 2

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THE BUDGET AND YOUTH ECONOMIC OPPORTUNITIES (Part 2)

An Analysis by James Abola

Akamai Global, Business and Finance Consultants

Part 2: The economic circumstances and chances of todaysUgandan youth.

ince the 1990s Uganda has experienced positive economic growth. Real gross domestic product

(GDP) growth averaged 7% per year in the 1990s and the 2000s, but from 2006 and onwards, the

country witnessed more economic volatility and GDP growth slowed to an average of just about

5% (Uganda Overview).

In 2012, Ugandas youth labour force participation rate stood at 70.4% with a higher participation for

male (74.4%) than female (67%) youth1. Of great concern is the 30% unemployed youth. Many

commentators are of the view that the rate at which Uganda is producing formal jobs is way too low

compared to the rate at which youth are joining the labour market. The implication is that we are likely

to witness a deterioration in the level of youth unemployment in the near to medium term.

There was a time when getting an education in Uganda assured one of a good livelihood because of the

skills obtained. In the last decade, school enrolment has gone up with the introduction of Universal

Primary and Secondary education; the quality of the education offered is however still wanting both at

the level of basic and higher education.

A report commissioned by the National Curriculum Development Centre stated that students in Uganda

who have completed senior four level (S4) exhibit labour market weaknesses such as inability to express

themselves in writing; inability to present numerical information; inability to tackle problems

systematically and a rudimentary ability to read, write and be numerate2. At the same time, some

highly educated youth suffer from skills mismatch in that they lack the skills demanded by the labour

market. This is a result of three possible factors, namely: a) insensitivity of training and educational

systems to labour market signals; b) trainees seeking training that is affordable instead of taking up

training that can make them employable; c) the labour market not providing any signals to job seekers3.

Ugandas financial markets, just like many others around the world, offer no options to support poorer

households to build human capital through training/education and/or entrepreneurial initiatives.

Poorer households have no financial products that can support them to fund the training and education

for household members especially beyond the levels where government offers free education. Uganda

has just introduced a students loan scheme whose scope is limited to only 1,000 university students

taking science courses.

The majority of the population and therefore the youth is rural based. Employed rural youth earn about

half as much as their urban counterparts; low earnings in the rural area coupled with limited

1Uganda Bureau of Statistics, 2012, Labour Force Survey.

2National Curriculum Development Centre, n.d.A Labour Market Survey in Uganda, Kampala: National Curriculum Development Centre.

3Jude H. Esguerra, 2009. Choosing and assessing local youth unemployment interventions, Manila: International Labour Organisation.

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opportunities for formal employment can be a strong push for rural urban migration. Employed rural

youth are more likely to be self employed (65.2%) than those in wage employment (14.6%). Rural youth

employment is highly concentrated in agriculture (71.1%) which suffers from challenges of low

productivity and low income. Additionally, the youth and more so female youth, do not own land, which

makes it difficult for those intending to engage in commercial agricultural initiatives or seeking for

financial services from Financial Institutions which require land (among other things) as collateral.

The formal sector is small and produces jobs at a much slower rate than the out turn of graduates from

universities and other higher institutions of learning. The informal sector is a realistic alternative avenue

for youth employment in both rural and urban areas. The poster activity for the informal sector in

Uganda is the boda boda industry.

An important attractiveness of the informal sector is that it provides low barriers to entering

employment for people with little formal education, little or no skills and little or no capital. The urban

informal sector is linked with the rural sector in that it allows unskilled labourers to escape from rural

poverty and underemployment.

However, it should also be noted that the informal sector is faced with constraints that impede its

performance and the welfare of workers. These constraints include a large pool of unskilled labour, high

cost of doing business, lack of capital, insufficient markets for produce, low productivity and low worker

income. Informal sector workers do not enjoy the measure of protection afforded by the formal sector

in terms of job security, health care/insurance schemes, decent working conditions and old age

pensions.

In summary the economic opportunities portrait of the Ugandan youth in the short to medium term is

sketched by the following challenges.

i.

An economic growth rate that is lagging behind the population growth rate and therefore not

producing formal jobs fast enough to absorb all the youth joining the labour market.

ii.

Low quality of basic education producing literate people with labour market skills weaknesses and

poor education choices at higher level which do not prepare youth to participate effectively in the

labour market.

iii.

The brick wall of lack of capital in the financial markets which many academically brilliant youth

coming from poor households or entrepreneurial youth with otherwise excellent business concepts

coming from similarly poor background have to contend against.

iv.

Rural youth have comparatively worse economic opportunities compared to their urban

compatriots; rural areas have less formal employment opportunities and the predominant economic

activities are in agriculture which pays very little. The dearth of youth economic opportunities in

rural areas is a major push factor for rural urban migration.

v.

While the informal sector offers the chance for youth to improve their economic opportunities as

evidenced by the growth of the boda boda industry; the sector also has a host of productivity and

employee welfare challenges which gravely undermine the chance for youth to progress

economically.


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The challenges outlined above emphasise the importance and urgency of developing and implementing

a comprehensive and coordinated plan of action for improving youth economic opportunities.

Please seehttp://parliamentwatchuganda.org/for Part 3: Does the FY 2014/15 National Budget help

to bring about the demographic dividend and provide Youth Economic Opportunities?
http://parliamentwatchuganda.org/http://parliamentwatchuganda.org/http://parliamentwatchuganda.org/http://parliamentwatchuganda.org/

Documents

The Budget and Youth Economic Opportunities - Part 2