New study supports loans for youth empowerment

YOUTH EMPOWERMENT

It is better to give youth loans as compared to cash handouts, to improve their lives, a new study has found out.

A study on the Youth Livelihood Programme (YLP), conducted by independent consultants from the University of California Los Angeles and Makerere University has revealed that the programme contributed to a 4% increase in job creation in Uganda.  

 The impact evaluation study undertaken between 2017 and 2019 in the 15 sub-regions of the country, with one district sampled from each sub-region also revealed that alcohol consumption among the youth decreased by 10%.

The report also established that the proportion of youth with businesses paying business taxes increased from 24.7% to 29%.

This according to Janat Mukwaya, the Minister for Gender, Labour and Social Development, has been made possible due to the formalization of businesses that have increased to 21.65% from 17.3%.

 "This demonstrates that targeting the un-bankable youth is a bold move by Government to ensure no-one is left behind in the country's efforts to achieve socio-economic development," Mukwaya said last week while releasing a report titled, "Do Revolving Funds Generate Self-Employment and Increase Incomes for the Poor?".      

Like most developing countries, Uganda is grappling with the challenge of unemployment for its bulging youth population. Statistics from the Gender ministry indicate that close to 65% of the total unemployed persons in Uganda are youth aged 18-30 years.

In addition, over 95% of the youth are considered un-bankable, seeing as they cannot access credit from formal financial institutions due to lack of collateral, verifiable credit history or steady employment.  

However, the new report revealed that YLP has led to the increase in the proportion of youth owning bank accounts from 21% to 24.7%, thus enhancing their access to financial services such as savings, loans, business development advice as well as banking services.

The beneficiaries of the programme, according to the report, have also been able to increase their earnings, expand and diversify their enterprises in the areas of housing, land acquisition, green energy, and transport through obtaining motorcycles and trucks for their produce.   

Speaking at the press briefing, Pius Bigirimana, the ministry's permanent secretary said there had been talk that young people are not reliable and should not be given money.

"I am happy that research has demystified that belief. Given good guidance and support, the youth can be good entrepreneurs," Bigirimana said.

LYP in Government of Uganda programme launched in 2014 to support poor and unemployed youth aged 18 to 30 years.

 It is intended to create self-employment opportunities and enhance their incomes. Under the programme, youth groups access revolving funds of up to sh25m depending on the nature of the enterprise. This is to enable them to establish income-generating activities, acquire marketable vocational skills and tool kits.

 The successes notwithstanding, Mukwaya said the programme also experienced a number of challenges, among them, drought in the Karamoja region where youth who had embarked on crop projects, suffered losses.

She said in spite of the drought, her technical officers could not conceptualize businesses in animal traction.

There were also instances where some youth groups made underestimated budget proposals especially for projects like piggery seeing as they did not factor in feeds for the piglets.

Some sub-counties according to the minister, lacked veterinary officers which did not go well for groups that embarked on animal projects.

 The ministry also discovered instances of some youth leaders who had developed ghost groups to benefit from the programme.

Although the culprits were arrested, Mukwaya said the funds they had taken shall be recovered from their salaries since they are attached to various local governments.

The minister said the second phase of the project will focus on adding value to promote import substitution.

 Bigirimana named the five best performing districts in terms of business projects and rate of recovery. These included; Sheema, Moroto, Bushenyi, Kasese and Kotido.

  Successful projects that the youth embarked on included; Bull fattening, Boda Boda transportation services, Piggery and handcrafts.

The worst districts, on the other hand, were Kapelabyong, Kasanda, Butebo, Abim, Nebbi, Apac, Luuka and Mpigi.

He attributed political interference on some of the districts that performed poorly.

 The report recommends that to reduce the proportion of youth focusing on the less profitable livelihood projects, the Government needs to make an investment in skills-based projects that are appealing to the youth.       

LYP needs to be delinked from the prevailing perception that it is an initiative for supporters of some politicians as opposed to being a Government programme for all the youth in the country.

 So far, a total of sh30.4b out of sh51b has been recovered from the groups.