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.
