Economic growth to increase jobs

By Samuel Sanya

The country needs to generate at least one million jobs each year to mitigate rising youth unemployment levels as the economy grows, according to a World Bank report.

 Racheal Sebudde, a senior World Bank Economist, noted in the second Uganda Economic Update that high fertility rates and a youthful population will see one million new workers of varying educational levels every two years over the next decade.

The country’s labour force is growing at over 4% every year.  Universities are churning out over 480,000 youth annually, with only 100,000 being absorbed into formal employment.

“Uganda has the highest fertility rate and one of the youngest populations in the world. The rapid population growth also comes with a fast increase in demand for jobs by new entrants,” she said.

The report titled “Jobs: Key to Prosperity” notes that the majority of Uganda’s workforce has not attained primary or technical education and that at current rates of improvement only half the labour force will have completed primary education in 2030.

A higher level of educational attainment increases the likelihood of getting a paying job or self-employment. Agriculture continues to employ the highest number of Ugandans at 37% in urban areas and 82% in rural areas.

Sebudde notes that the status quo is likely to remain in the next decade. She says there is need for matching grants to ensure that the most productive sectors contribute the highest percentages of employment.

“Most of the growth in Uganda has been in areas that do not significantly increase employment. Transition to the oil economy should be carefully managed starting now.

Governance should be improved and unplanned expenditures should be limited,” she said. Sebudde noted that the formal sector should spearhead innovation, while the informal sector must be supported financially to provide employment for the bulk of the population.

Prime Minister Amama Mbabazi said the Government will create a conducive business environment, roads and energy for the private sector to thrive and play a vital role in job creation.

“Small holder farmers should be supported to mechanise and be provided with storage facilities and extension services. This will aid the fight against poverty and create jobs,” he said at the Serena Hotel yesterday as he launched the report.

He noted that the country is still plagued by a large informal sector, large trade deficits and low agricultural productivity, which should be corrected to ensure that the economy grows much faster and that growth translates into job creation.

Mbabazi said the private sector credit growth is still low as many actors in the private sector are highly indebted, but added that this problem will soon subside as lending rates decline with reductions to the benchmark Central Bank Rate (CBR).

The economy grew by 5.1% last financial year and is projected to grow by 6.5% this financial year before hitting 7% in the 2014/15 financial year. Mbabazi noted that the next seven years will see the generation of over 2,083MW of electricity to boost industry and jobs after Karuma, Isimba, and Ayago hydropower dams are completed.

“Oil production has significant potential, but there is still potential in the services sector. The Ugandan economy is on a sustainable growth path to middle income status,” he said.

Maria Kiwanuka, the finance minister, noted that the public should stringently follow expenditure under the national budget to improve service delivery.