In 2001, my siblings and I tested our entrepreneurial skills by making some chapatis for sale to supermarkets and restaurants in our neighborhood and for the market entrants that we were, it worked out just fine. A few years later, one of my sisters then tried her hand plying a charcoal-delivery route to markets within the Capital City and the proceeds financed another venture. This is the spirit of Entrepreneurship that was and still is at the heart of many households in Uganda. Some ideas are better than others but the principle is to be able to earn from one’s hard work. It is therefore no wonder that Uganda is ranked the most entrepreneurial country in the world with an entrepreneurial rate of 28.3%. The big question has been; why is the entrepreneurial rate not resonating with the unemployment statistics?
The 2016-2021 NRM Manifesto was themed wealth creation and all inclusive development. This was primarily because while the NRM administration sought to improve household incomes by improving all manner of Infrastructure, the result has been that the relatively more wealthy households are becoming richer while the poor households are becoming poorer. The reinforcement of the Youth Livelihood Fund by Government is a welcome intervention in tackling the issue of youth empowerment and wealth creation. With a record 105,647 beneficiaries and a total fund disbursement of Ushs. 58.4Billion so far, the Fund has no doubt enjoyed a significant penetration rate challenges notwithstanding.
Sean Walugembe’s Group (not real name), one of the Fund’s beneficiaries, acquired a facility of Ush7.5Million from the Youth Livelihood Fund to start a cattle fattening project in Wakiso District in 2014. During the first twelve months, the Group was able to payback the entire sum of money owed to the fund and had a surplus of Ush 3Million which they then divided amongst themselves and each went their way with at least Ushs 300,000/=. The decision for each to pursue their own individual dreams after the project is a demonstration of the complexity of group dynamics in Income generation and the entrepreneurial skills or the lack thereof amongst Fund recipients. With this background, how does the Youth Livelihood Fund ensure that these issues don’t crop up again thereby denying the Fund real success?
The Youth Livelihood Fund in its present format is very flexible as there is no interest charged for the first 12months but payments after the initial 12 months attract a 5% surcharge, formal registration of groups is not a precondition for access to funds, no administrative fees are levied and there is no collateral required to access the funds. However, this is likely to expose the Fund’s portfolio to a higher risk of default as the credit appraisal process as well as the supervision of beneficiaries’ projects are to be performed by non-technical staff.
In the next phase of the Fund’s disbursements there is a need to ensure that all groups that qualify for the Funds are also assisted to acquire a Tax Identification Number (TIN). In addition, beneficiaries should be equipped with basic book keeping skills and followed up on the practice. Over time this will inculcate a discipline among group members that will not only translate into real economic growth at a later stage but will also ease project monitoring both at a strategic supervision level and at the group implementation level.
Statistics from the recent disbursements show that 43.8% of the funds were channeled to Agricultural Projects, 27.8% to Trade, 11.2% to Services and the balance of the funds have financed other projects like Vocational Skills, Small scale industries, Agro-processing, Agro-forestry, ICT and the Creatives. With interdepartmental collaboration, the respective Government Departments in partnership with the Private Sector can allocate technical staff to supervise and mentor the Youth venturing in these projects to ensure higher project success and continuity.
For existing groups, expansion funding can be encouraged to allow for growth and healthy aging of projects. Under the Youth Livelihood Fund, both new and existing groups qualify for Funding. If unchecked we may find ourselves in a situation where the Fund promotes more ‘stunted’ groups through same amounts of funds than evolving groups’ capacity through incremental funding.
It is the norm in every sector world over that whenever funding is going to be given, Fund recipients undergo rigorous financial management training. However beneficial this training is, if given as a one-off; it is akin to a taking a single panadol tablet instead of a full dose to relieve a serious headache. This training must be regular in the life-cycle of these projects with key performance and measurement indicators. This is where interdepartmental technocrats can come on board to provide continuous coaching and mentoring to these young entrepreneurs.
Unlike other Youth Development Funds in New Zealand, Botswana, Kenya and South Africa, The Ugandan Youth Livelihood Fund is socialistic in its approach with its project approval structure deeply enshrined in the Local Government structures right from the sub-county level to the Ministry. A model that the Liberian Government is going great lengths to study and replicate back home. This model promotes accountability amongst community members.
After all is said and done, The Youth Livelihood Fund has registered success with at least 22 successful projects in its infancy. Taking the improvements above into consideration, It will register more successes translating into meaningful contribution to Uganda’s economy in the months and years to come.