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Job creation: Can Uganda secure the future for its youth?

When Mukisa joined the 62nd Makerere University graduating class in January 2012, he had already made up his mind to walk a very different path from those who graduated from the same Kampala university 30 years ago.

Back then, jobs were waiting for graduates, who joined formal employment that afforded them a decent living. Today, only 20% of new entrants into the Ugandan labour market find formal jobs, leaving the rest to self-employment and other informal activities.

So, Mukisa started a business in plant nurseries to tap into the demand for gardening materials for the booming construction industry in the city. He has gradually acquired the technical and entrepreneurial skills for his business, but wishes for better access to capital and land, and less harassment by local authorities, to expand his business.

According to the World Bank’s second Uganda Economic Update, titled Jobs: Key to Prosperity, Mukisa’s plight is just a tip of the iceberg for Uganda’s challenge of creating jobs.

First, even as growth created many jobs, many educated youth are increasingly finding it difficult to find jobs that match their training. Second, the majority of the labour force works in low productivity sectors that cannot drive economic transformation to prosperity, partly because the bulk of the labour force is unskilled. Third, with about 500,000 workers joining the labour market every year, the future of job prospects is even graver than it is today.

Mukisa is one of more than 2m workers in the informal sector who may be counted as being out of poverty, but producing too little to move into prosperity. Another 11m workers (73%) find themselves working in agriculture, many of them unproductively. This was underscored by Ugandan Prime Minister Amama Mbabazi when he launched the economic update on August 13 2013.

“In 2010, value added per worker in Uganda’s agriculture was US$200, in contrast to Brazil’s $4,183 per worker per year,” he said. “Yet the lack of access to modern technologies, high cost of inputs and transport, and land rights insecurity, leave most jobs in agriculture in the subsistence sector.”

For future jobs to be more rewarding, the labour force has to work in activities producing increasingly higher value. Raising productivity on the farm is the first point of action given that the bulk of the labour force will continue to work in agriculture for years to come. This is one of the five pillars for creating “good jobs” highlighted in the World Bank update.

However, labour eventually has to move off the farm, calling for attention to the growth of non-agricultural firms, formal or informal, and mainly in urban areas.

Some quick gains can be made in promoting the development of clusters and full value chains for strategic sectors, in particular light manufacturing, exportable products, building and construction, and the oil industry; industrial zoning to improve the business environments for many firms, particularly where clusters are already forming; and linking large and small (mainly informal) manufacturers to raise productivity of smaller firms while lowering input costs for the large firms, as is currently being done for scrap metal.

Rachel Sebudde is a senior economist in the World Bank’s Africa, Poverty Reduction and Economic Management unit. She has over 15 years of policy oriented economic research, policy formulation and implementation experience.

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