Are cash handouts to youths in Uganda sustainable?

By Brian Sserunjogi

Over the last decade, Uganda has undergone a significant demographic structure transition. Approximately 78 per cent of the country’s population is below the age of thirty while youth aged 18 to 30 years now contribute about 23 per cent (close to eight million) of the total population. In the same light, the country’s urban population increased three-fold from 2.9 million in 2002 to 7.4 million people in 2014.

The explosive urban population has emanated out of rural-urban migration, gazetting of new urban areas as well as natural population growth. While Uganda has registered a youth population bulge in general and in urban areas in particular, the generation of employment for the surging youth population has not moved in the same direction.

Youth unemployment continues to be a challenge in Uganda. According to Uganda Bureau of Statistics, youth unemployment among 18-30 year olds increased from 12.7 per cent in FY 2012/13 to 13.3 per cent by FY 2016/17. Moreover, urban youth unemployment (9.9 per cent) among youth aged 18-30 years was higher than the national unemployment rate of 9.2 per cent by 2016/17.

Levels of underemployment, vulnerable employment are even higher than the above levels of unemployment since most youth engage in part time work even for a few hours for survival. The pace of creating new employment opportunities has lagged behind labour force growth.

Mindful of the fact that the youth comprise about 64 per cent of the total unemployed persons in the country, government embraced promotion of entrepreneurship financing and self-employment through targeted youth funds. Indeed, the current National Development Plan (NDP) and the National Youth Policy (2011) identifies entrepreneurship as a key strategy towards solving youth unemployment. As such starting with the 2011/12 national budget, government allocated Shs44.5 billion to support youth entrepreneurship promotion programmes.

In 2012/13 budget, an extra Shs3.5 billion was earmarked to support youth self-employment while in FY 2013/14, government significantly boosted youth schemes by allocating Shs265 billion over a five-year period for the Youth Livelihood programme. More recent momentum for the youth employment came in the 2018/19 budget with government committing an extra Shs66 billion for Youth Livelihood programme.

While past government structured interventions are commendable, more recent interventions in the form of ad hoc presidential financial handouts to youth groups across urban centres are likely to be unsustainable and non-transformative. As such this approach is likely to encounter the same challenges that many of its predecessors schemes met. Past evaluation of schemes such as the Uganda Youth Venture Capital Fund’s (UYVCF), Entandikwa, Prosperity for All, Youth Livelihood programme (YLP) etc reveals that these schemes faced a numerous challenges.

Key among the challenges is political influence which interfered with the operations of the scheme; corruption; inadequate implementation preparation at the local governments, poor selection of enterprises to be funded; inadequate operational funds etc; Moreover, the timing of these youth interventions has been ad hoc largely coinciding with the buildup of national general elections. As such most youth groups have viewed these schemes as political gifts exacerbating the risk of misappropriation of availed finances consequently failing the well intentioned programmes.

Besides, youth entrepreneurship schemes in Uganda have not been approached comprehensively. While successful youth schemes involve a mix of financial and non-financial support to achieve lasting impacts, youth interventions in Uganda have solely focused on financial support ignoring other non-financial support services.

A desktop scan through the operation of youth funds across other African counties reveals that Uganda has a lot to learn from other pioneer countries in youth schemes to ensure that its interventions are sustainable and transformative.

For example, the objectives of the Kenya Youth Enterprise Development Fund and Namibia Youth Credit Scheme go beyond enterprise financing to provision of business development support services (mentoring, coaching and incubation). The Umsobomvu Youth Fund in South Africa is a comprehensive program aimed at making the young people employable through vocational training and skills acquisition, enterprise finance and promotion of community service.

In contrast, the Tunisia Youth Fund was developed with the objective of linking unemployed graduates with potential employers. The major activities of the Tunisia Youth Fund are to create a database on available job opportunities and link them to unemployed youths.

I therefore envisage that although provision of adhoc financial assistance to youth groups shall continue in 2019, it is highly unlikely to be transformative. To make them transformative government needs to build strong institutional and monitoring and evaluation frameworks with measurable indicators to monitor performance of youth funds. Moreover, multiple stakeholders in form of Public Private Partnerships (PPPs) need to be brought on board to ensure greater outreach and sustainability.

Lastly, government must continually eliminate the obstacles to self-employment to spur youth entrepreneurship. Challenges like unreliable and costly power, high taxation, corruption, poor road network, inadequate markets etc make it harder for small and medium enterprises to emerge and prosper.

The writer is a research fellow at the Economic Policy Research Centre (EPRC)