IT STARTS AND ENDS WITH JOBS

Last week the World Bank released their Jobs Report on Uganda it had some very enlightening findings, many sobering and clearly we cannot continue with business as usual given the potential crisis looming ahead.

"If the management of the economy is about improving the living standards of a population then you can’t get away from a discussion about jobs – the quantity and quality of jobs....

The current state of jobs flatters to deceive. The report says that 77% of the population aged between 15 and 64 is employed, which is high compared to the average for low income countries, which stands at about 70%.

However, the quality of jobs is falling as people are working longer hours for less pay.

This is not hard to explain as 64% of Ugandans are employed in agriculture. Our agricultural practices are rudimentary, our farm yields are among the lowest on the continent and we then lose almost half of our produce after the harvest.

To add salt to injury as an economy we are still stuck in a rut, producing raw materials for export. We not only get a fraction of the finished good but it also means we do not control the price that we sell at.

As if that is not enough we are a young population, the second youngest population in the world with a media age of 15.9 years. What this means that for the next few years or decades there will be more people joining the workforce than leaving it, which means the speed of creating jobs has to be accelerated.

According to the Jobs Report the economy must create up to thrice as many jobs than it did between 1992 and 2006 in order to keep up.

As it is now more than 500,000 people enter the job market annually and this number is expected to double again within a decade or so.

It doesn’t take a genius to work out that millions of youth without a job or incomes. will be forced into crime and other anti-social behavior, and it is not a stretch of imagination to see that national stability will come under threat.

So what to do?

The World Bank has some recommendations.

For starters they counsel that macroeconomic fundamentals have to be just right.  Galloping inflation, lack of economic growth and an exchange rate out of control will not allow for any of the initiatives needed to tackle the problem to take root....

Develop agro-processing industries and facilitate their exports, promote Foreign Direct Investment (FDI), create an environment that will encourage more investment buy big firms and support domestic firms to transition to medium and larger entities are the other suggestions. 

Given these, it makes sense that any real transformation will have to start with the agriculture value chain seeing as seven in every ten Ugandans derives a livelihood form the land. Not only should we increase farm yields, but can we also improve marketing, incentives the set up of agro processing firms and promote exports abroad.

At the bare minimum farm get prices will rise but also employment will be created when the value chains are better developed.

However, I think the real game changer would be to facilitate small companies to grow into larger entities...

The world over the biggest employers in any economy are the small and medium enterprises. 

However, the biggest case of business failure comes from these same sectors. On closer scrutiny its not that there are no markets for their products or they have run out of raw materials or the Ugandan economy is a particularly harsh environment to do business, most business failure is because the people running the business don’t have the capacity to run a business.

The promoters of these failed business, don’t know how to raise capital, don’t know how or neglect to do market research, fail to forge the relationships that will grow and sustain the business, don’t or can’t be bothered to strategise for their business.

Doing business is a skill that is learnt over time, however we can help our businessmen with training and other capacity building initiatives to help them along. We are the most entrepreneurial country in the world, which means that in our case there is a necessity for most of us to start a business. Well-tailored training will ensure we can go beyond the initial excitement for business and build bigger businesses.

Indigenous business owners are more beneficial to local economies than businesses taking orders from far off headquarters. Out of a responsibility to their local communities they are more likely to find ways to make the business work than hack the payroll and they give more back to the community in social causes.

It follows therefore that bigger indigenous concerns will magnify these benefits.

The government programs to dish out money to the youth are more a hit or miss operation, based on the flawed analysis that our entrepreneurs biggest challenge is lack of finance.

A more systematic attempt to build our entrepreneurs’ business skills, some hand holding to ensure they grow beyond he teething pains and a proactive program to create market access for them home and abroad are urgently needed.

I put little faith in the already bigger firms hiring more and more people, as our current circumstances demand. After all the bigger firms are becoming more automated and therefore not hiring as fast as we want.

The SME sector’s growth will more likely create the needed jobs.