Investment clubs and SACCOs hold secret to empowering Ugandan youth entrepreneurs

In Summary

Uganda, uniquely due to having one of the youngest populations, has many young entrepreneurs. There is also reliable record of many business that are started every year, and similarly many others failing, in the count


I recently participated in a business coaching event, of mainly youthful entrepreneurs, and noted that one of the key challenges they face is the inability to access credit and capitalize their businesses sufficiently.

My advice to them was that youths in business should mainly look to investment clubs and SACCOs for their funding needs. This is because Uganda’s predominantly youthful population implies that many promising entrepreneurs are often unattractive for commercial banks and thus unable to obtain credit from the banks, by virtue of their young age.

Such young entrepreneurs often lack admissible collateral to secure their borrowing and also do not have the benefit of impressive banking histories to convince credit analysts in banks. Banks are actually also normally extremely averse to funding business startups, which form a big proportion of businesses that youths would be looking for capital to facilitate.

A few days after my interaction with the said young entrepreneurs, a friend and business associate of mine brought up this same matter in a brief but insightful social media commentary, indicating the high potential that these clubs and SACCOs hold to transform lives of youths. He also pointed dangers that can destroy them and I will cite those, further on.

Uganda, uniquely due to having one of the youngest populations, has many young entrepreneurs. There is also reliable record of many business that are started every year, and similarly many others failing, in the country. Among many other reasons, some of the businesses fold for lack of capital to facilitate their continued existence and growth. Even with civil society youth programs and government initiatives, it is possibly difficult to satisfy the capital needs of such an entrepreneurial mass of youths that the country has today.

Forming, joining and growing finance vehicles of investment clubs amongst peers are most impactful means of financial liberation for Uganda’s young entrepreneurs. It is no wonder that some banks, even as they may not easily lend to individual youth entrepreneurs in some instances, have singled out and promoted investment club savings groups to empower the youths, among other savers’ groups.

Although investment clubs traditionally are designed to focus on stocks, bonds and other related options, they can be diversified in purpose to avail capital to members and even their associates, through loans extended under flexible terms. In any case young entrepreneurs are often constrained by small financial needs which are within the means of such clubs. Youth SACCOs serve the same purpose, though they may come with more formalities.

These groups have the ultimate advantage that they can be ran, to a large extent, on the terms agreed by members. This creates ease of access to accompanying benefits which in turn results in enhanced impact to the members and others to whom they decide to extend these benefits. Many challenges that youths and startup businesses face from commercial banks when they need loans are therefore eliminated in the process. The groups are normally formed against mutual trust of members, unity of purpose and as they evolve they can enlist formalities which are again agreed upon by the membership. In fact, formalities evolve with the financial advancement and transformation of members which results enhanced financial strength and expansion of potential benefits to be derived from belonging. There is room for exponential growth, since cost of funds obtained from peer-owned investment clubs and SACCOs is way cheaper than bank loans while at the same time the rate of repayment default on such funds is low due to the firm social structure against which these clubs operate.

However, the strengths that these clubs and SACCOs enjoy, mainly drawn out of thin formalities around their operations, often also pose the dangers that threaten their continuity. Key ones include the tendency to compromise records keeping and therefore have no comprehensive evidence of transactions. This complicates resolution of misunderstandings between members when they arise. Lapses in transparency, principles of fairness and accountability, while they would be standalone challenges would get enhanced in an environment where off-record transactions are rife. Also, because these clubs and SACCOs are normally borne of social oneness, they normally suffer from failure to separate them out and handle them as separate entities, independent of relational sentiments. This sets the stage for tumbling down. The clubs and SACCOs grow only against periodic contributions of funds by members and yet, although agreed upon, these can hardly be enforced and some members can lapse and let down others strategically.

Investment clubs and SACCOs, especially those focused on youths, should therefore be highly promoted and encouraged and if possible members should be aided to developed sufficient skills and practices that promote business continuity.

Written By Raymond Mugisha

Raymond is a Chartered Risk Analyst and risk management consultant rmugisha@afriaccent.com

Uganda: Programme To Tackle Youth Employability Challenge Launched

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Standard Chartered Bank in partnership with Challenges Uganda has launched a 6-month youth employability programme under its Futuremakers initiative valued at Ugx 300,000,000.

The “Youth-to-Work” initiative which has been unveiled at Kampala Serena Hotel to over 100 guests will benefit 40 young and enthusiastic out of university youths with an opportunity to work with Small and Medium sized enterprises (SMEs) in Kampala.

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The objective of the Youth to Work programme is to position and equip young people with skills and opportunities to create economic and employment changes across the economy for sustainable and measurable impact.

In this regard, young people will become implementers of change, rather than standalone programme beneficiaries.

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Through a 3-month training, the youth will be able to develop & refine their skills, work with inspiring entrepreneurs, acquire a Level 5 certificate from the Chartered Management Institute and help drive business performance of an SME.

For the candidates to be eligible for the Youth-to-work programme they will be required to be graduates from any academic background, be 21-30 years or 21-35 for persons with a disability, be Ugandan nationals, attend an assessment day, have some experience, skills or aptitude for business and entrepreneurship.

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Challenges Group Director Neil Fleming said during the launch that they are taking Challenges’ considerable experience of delivering development and business-growth projects, combining it with their on-the-ground knowledge and networks in Kampala and the UK to provide an initiative that will help 40 firms and young people directly, while also acting as a catalyst for wider growth within Kampala’s business community and supporting hundreds of university students.

“Each of these young adults will also be provided additional training so they can then take their knowledge, experience and new-found expertise and share it with hundreds of other ambitious young Ugandans who will be entering the labour market in the years ahead,” said Fleming.

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Uganda, like many other African countries, is facing a crisis in regards to youth unemployment. An estimated 200 million young people are either unemployed or in vulnerable employment globally.

In Uganda, about 65% of the country’s unemployed population are aged between 18 and 30. Thankfully the global community is at last moving past the failed model of hand-outs.

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Fleming said Challenges has long understood that entrepreneurship, effective management and job creation are critical to growing prosperity of individuals and communities.

The Youth at Work pilot is about building a business ecosystem where enterprises and talented young people can thrive, and where innovation and prosperity can grow. Our expertise in delivery is critical to this.

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Vivian Achan the Challenges Uganda Business Development Manager said the programme will take 40 young adults and provide them with key management consultancy training, then position them in one of 40 small and growing businesses.

Once in post, they will provide strategic business development services, with the aim of improving performance.

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For some of the SMEs, this would enable them to become investment-ready and lead to further expansion, which in turn would better enable job creation. The programme’s activities will also reach hundreds of university students and enterprise ecosystems.

“This is a fantastic partnership with Standard Chartered that has great benefits for the successful youths and the small businesses where they will be placed over the 3 months period.

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“Some of the benefits for the 40 SMEs that will register on the Challenges Website to participate in this programme will include; Enterprises will receive on-site business development and investment readiness support, the junior associates will receive accredited business management training from the Chartered Management Institute (CMI), Enterprises will be supported to grow their peer-networks and in strengthening their ecosystem.

“Furthermore, enterprise staff skills will be enhanced through training, they will receive access to senior mentors from Uganda and the UK to provide expert input into their businesses, and lastly, enterprises will receive support to their business leaders to enable them to identify personal barriers and strengths to grow their companies and help them maintain momentum and motivation to improve. We’re all looking forward to delivering this brilliant and far-reaching project on behalf of Standard Chartered,” said Achan.

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The CEO of Standard Chartered Albert Saltson said they are very excited to launch the “Futuremakers by Standard Chartered” programme, a new initiative that will tackle inequality and promote greater economic inclusion for young people in our communities.

“The programme aims to empower the next generation to learn, earn and grow through programmes focused on three pillars – education, employability and entrepreneurship.

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“Under Futuremakers, we will expand Goal, our education programme to empower girls and young women, and develop new programmes focused on employability and entrepreneurship with a continued emphasis on financial education,” said Saltson.

This post originally appeared on Busiweek

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Uganda strives to invest in youths to tap population dividend

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By Xinhuanet.com (Ronald Ssekandi)

As the world commemorates World Population Day on Thursday, Uganda is striving to invest in its youths to explore the benefits of population dividend. The population day will be commemorated under the theme of “Renewing the promise; empowering the youth to contribute to socio-economic transformation”.

Uganda has one of the youngest and most rapidly growing populations in the world. Figures by the National Population Council (NPC), a state agency that advises the government on population issues, show that Uganda has a population growth rate of 3.3 percent per annum, making it the third fastest growing population in the world. The country’s population is projected to reach 75 million by 2040 from the current 40 million people.

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Youths below the age of 30 make up more than 78 percent of the 40 million people, according to the NPC.

More than 70 percent of the youths are unemployed and this is what the Ugandan government is striving to reverse.

Population experts argue that investing in the youth age group will guarantee a healthy and skilled human resource.

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According to the World Bank, if the increase in the number of working age individuals can be fully employed in productive activities, other things being equal, the level of average income per capita should increase as a result. The youth bulge will become a demographic dividend.

John Ssekamatte, a consultant with Uganda’s National Planning Authority, told reporters on Wednesday that for Uganda to achieve its aspiration of upper middle income status by 2040, the challenge posed by a high population growth has to be addressed.

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“For us to achieve that we must meaningfully engage the population as a productive force because if we don’t, it will be a productive liability,” he said.

Other experts have argued that if a large number of youths cannot find employment and earn satisfactory income, they are likely to become a potential source of social and political instability.

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INVESTMENT

Demographers argue that sustained economic growth is critical in creating opportunities for the youthful population that is entering the labor market. They argue that Uganda needs to invest in growth sectors like agriculture, tourism, oil and gas which can have high job multiplier effect and can spur inclusive economic growth.

The government has embarked on this by first prioritizing areas, which it argues are bottlenecks to economic development. The government is investing heavily in energy and transport infrastructure, so that if the cost of energy is low, more industries would open up and create employment. A better and efficient transport system would also reduce the cost of production since farmers or industrialists would easily transport their products to the market.

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Fred Wabwire, chairperson of the NPC, told reporters on Wednesday that the government has embarked on other measures to improve the skills of the youths to make them economically active.

Wabwire said that besides the provision of free universal primary education and free universal secondary education (USE), the government has embarked on vocational training. When the youths finish basic education, those who are unable to continue to university go to vocational training.

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“Education empowers, it provides information, and if we can keep all the boys and girls in schools up to the end of USE, that intervention scores a lot of marks,” he said.

Wabwire said youths who have completed vocational training can access funding from the government through the Youth Livelihood Program (YLP) to start up small enterprises. The YLP, which is based on three pillars of skills development, livelihood support and institutional support, targets unemployed youths, according to ministry of finance.

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United Nations Population Fund argues that the government should continue to invest in the health of the population. The population agency said that the healthiness of the country’s labor force determines the level of productivity.

It argued that for instance as children’s health and survival rates improve, family demand for more children declines. Smaller family sizes improve maternal health, which further improves child health, as well as increase women labor force participation, hence contributing to economic growth.

📷 @Myjoyonline

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Uganda: Beyond The Crowds And Youth Euphoria, Bobi Wine Needs A Program – Katikkiro

BY Softpower.ug (PAUL AMPURIRE)

The Katikkiro of Buganda, Charles Peter Mayiga has said opposition politician, Robert Kyagulanyi (Bobi Wine) must do more than pulling crowds and the euphoria that he sparks among the young people, if he is to be considered to lead Uganda.

The Katikkiro said that as much as Bobi Wine, 37, appeals to the young generation, who are the majority population, he needs to come up with a well laid-out program on what he can do for Uganda.

Mayiga was speaking Wednesday while appearing on Straight Talk Africa, a talk show on Voice of America which is hosted by Shaka Ssali.

Asked what his views are about Bobi Wine, the Katikkiro said: “Well, Bobi Wine is a darling of young people and you must realize that the current regime has been around for 33 years”.

“That’s a long time and Bobi Wine is an artiste, and to communicate to people through music is very easy”.

The Katikkiro was then asked to comment on whether he agrees with some people who say Bobi Wine’s future is way ahead of him. When talk regarding Bobi Wine being a potential candidate for Presidency, first emerged a section within the ruling NRM and the public dismissed him as not being fit to contest.

“I don’t know. It all depends on how he wraps up his program and presents it to the people. The French President is very young, there is a Chancellor in Austria who just resigned, he’s 32. He’s younger than Kyagulanyi. President Obama became President at 47. President Kennedy was 43,” Katikkiro said.

“What matters is whether he (Bobi Wine) has readied himself for the job. Beyond the euphoria of the youths. If he wants to be President, then he must have a program beyond the crowds,” he added.

On whether Bobi Wine can count on the support of Mengo, the Katikkiro said Buganda kingdom supports whoever is aligned with the kingdom’s interests.

“Buganda kingdom does not support or oppose anyone. The Buganda kingdom has its own interests. And we wrap them in five key pillars”

He said that any Presidential candidate seeking the support of Mengo “should come over and tell us they are going to support us” on the five issues.

“You respect our heritage and King, we want the federal system of government, we want to protect our land and borders, we want programs for social economic development, and we want the unity of the people, ” he said in outlining the key pillars commonly known as “ensonga ssemasonga ettano”.

“Whoever supports them, then people should vote him,” Mayiga said.

There have been claims pointing to a likelihood of Bobi Wine who is a Muganda, being backed by the establishment in Mengo.

In February this year, in a CNN interview, Bobi Wine for the first time publicly said he was considering running against President Museveni in the 2021 general elections.

The singer launched his political bid in 2017 when he ran for a Parliamentary seat in a by-election in Kyadondo East constituency near the capital, Kampala.

He won the election in a landslide victory after polling 25,659 votes (77%) out of 32,999 votes cast while his closest rival, Sitenda Sebalu of the ruling NRM party polled 4,556.

Since then, the Afro Pop singer has mounted pressure on President Yoweri Museveni’s government, rallying his followers, many of them youths to use their numbers and power change leadership.

He would later coin his ‘People Power’ slogan under which he challenges Ugandans to put an end to a status quo he says only works for a few.

He was among the legislators that challenged the controversial amendments of the Constitution which repealed the Presidential age limit in 2017.

Uganda: Are green jobs the answer to youth unemployment?

By Pmldaily.com (MAURICE MUHWEZI)

The burden of youth unemployment could be reduced by what has become to be called Green Jobs.

“If you are engaged in doing eco-stoves, recycling paper, garbage, ecotourism, planting trees, you are cleaning the environment without harming it, those jobs that reduce pollution, improve energy efficiency, respond to occupational safety, you are engaged in green jobs,” says Mr Pius Bigirimana, permanent secretary Ministry of Gender, Labor and Social Development, whose department is championing the adoption of green jobs.

The government of Uganda is pushing for green occupations because they help reduce negative environmental impact, promote safety and health conditions at work.

With support from the United Nations Development Project (UNDP), the government started implementing the Green Jobs Programme, approved by President Yoweri Museveni in 2016, by targeting both the educated and uneducated youth.

According to Mr Bigiriman, the initiative is driven by the need to enhance labour output and reduce poverty, especially among youth people.

In 2018, the State of Uganda Population report released by the National Population Council showed a spike in poverty in all regions. Across the country, poverty levels grew from 19.7 per cent to 21.7 per cent between the financial years 2012/2013 and 2016/2017.

The report notes that poverty levels are a result of inequality and economic growth that has not addressed the unemployment challenge, especially among women and youths. The youth unemployment rate, on the other hand, is reported at 6.5 per cent.

The ministry of Gender is responding to these challenges with support to businesses in the informal sector, apprenticeship at workplaces, the establishment of industrial business shelter and green incubation centres. It also speaks of promoting social safeguards at workplaces, promoting decent employment abroad and strengthening Kampala Capital City Authority and local governments’ capacity to create green jobs.

Permanent Secretary in the Ministry of Gender, Labour and Social Development, Pius Bigirimana. (PHOTO/File)

“We want to set up industrial business shelters with common user facilities, used by young people to do metal fabrication, welding, plumbing, construction, art, design, leatherwork. You will learn the skills from one place so that we have as many young people getting skills,” Mr Bigirimana says.

Besides tackling unemployment and low labour productivity, the growth of green jobs should translate into local production of goods usually imported and consequentially reduce the trade balance if exports are boosted.
On what sort of sectors are Ugandans expected to see these green jobs, Mr Bigirimana says they will be entrenched in every part of the economy but will be more prominent in agriculture, industrial production, labour, tourism, trade and education sectors.

“There will be transformation but more in agriculture because it is the biggest holder of jobs. Our economy has grown but no jobs. Our growth has tended to concentrate in those sectors that do not provide sufficient jobs,” Mr Bigirimana says, “We need to invest more in sectors that have forward and backward linkages.”

So far, government and UNDP have spent about $2m (Shs7.4bn) in the national programme that covers all districts.

As Mr Bigirimana calls for action, a lot has been done on the ground already. About 2000 Jua-kalis in greater Kampala were supported with equipment and trainings. Seven youth and women groups were supported with innovation grants worth Shs70m including Turning Trash into Treasure, Rabbit Cage Project, Bikibiro Community Development Association, Maggots and Earthworm production project and Nansana Empowered Women’s Development Initiative Project.

Skills development is urgently needed, particularly through apprenticeship and volunteering. Information from the ministry shows that the Uganda National Apprenticeship framework was formulated, training orders were drafted while the draft national green jobs strategy was put in place and over 200 technical officers from government and private sector sensitized.

Under the Uganda Green Incubation Programme, more than 100 youths and women found jobs, market and agro-forestry gardens were established, 18 fish ponds, piggery and poultry units were established among other things.
These successes are said to be sifting into the economy. Ten industrial business shelters with common user facilities are in plan and focus will be on mechanical, metal fabrication, welding, plumbing, construction, design, textiles, agro-processing and carpentry.

‘The shelters will also be equipped with utilities like water, ICT, power, stores, sanitary conveniences, restaurants, workplace health promotion areas. Each shelter will house a workplace skilling facility and master craftsperson’s or experienced trainers in different trades,” Mr Bigirimana says.

Uganda: Police to raid vuzu youths

By Nqobile Tshili/Mpumelelo Nyoni

POLICE in Bulawayo will today arrest any rowdy youths found in the central business district and have increased deployment of officers to deal with the scourge of vuzu parties.

Teenagers take drugs and often engage in risky unprotected group sex at the parties.

Police said there is a growing trend of youths causing anarchy in the city centre or organising the infamous parties on the last Saturday before schools open and first Saturday after schools close.

Schools open for the second term on Tuesday.

Bulawayo acting police spokesperson Inspector Abednico Ncube said cops would not only target the rowdy youths but also kombi crews that usually transport them to party destinations.

“On May 2 Officer Commanding Bulawayo Central District Chief Superintendent Elizabeth Phiri held a meeting with several stakeholders including social welfare, National Aids Council, Bulawayo City Council land inspection officers, Ministry of Primary and Secondary Education and two representatives from parents’ bodies,” said Insp Ncube.

“Of concern was the risky behaviour by these youths, who will be drunk, a nuisance in the city centre and making noise while riding on kombis and hanging from the windows of the cars. There is also a concern that these kids would be abusing dangerous drugs.”

He said in the meeting they resolved to arrest those youths who would be found to be disorderly, drunk and causing commotion in the city centre.

“We want to warn all the youths that we have resolved to increase police deployments in anticipation of their rowdy behaviour. We will also arrest kombi drivers who provide these teenagers transport and impound their vehicles. Therefore, we are appealing to parents to pay closer attention to their children’s activities so that they will not be found on the wrong side of the law,” he said.

Insp Ncube said they will also be conducting an anti-drugs campaign in the city centre as they worry that teens were abusing dangerous substances.

Last week on Saturday, police arrested 49 youths aged between 15 and 25 years for criminal nuisance and public drinking.

Meanwhile, parents in Bulawayo have been urged to create a culture of dialogue with their children in order to preserve the moral fabric of the city’s communities and the future of youths.

At a #AntiVuzu stakeholders’ meeting organised by the Bulawayo Progressive Residents Association (BPRA) at City Presbyterian Church yesterday, it was resolved that intensive research be undertaken to find the root cause of teenage delinquency and moral degradation, as evidenced by the rise of vuzu parties.

The meeting was attended by various youth-centred non-governmental organisations.

Speaking at the meeting, Junior Chamber International Bulawayo chapter local president Mrs Sinqobile Demadema said sexual immorality among the youth was worrying, adding that some girls as young as 13 years are selling their bodies for jiggies and recharge cards.

Thamsanqa Ndlovu, chairman of Parents Youths Association of Zimbabwe said that parents must work with the Bulawayo City Council and MPs in implementing policies that are meant to safeguard the future of the youth.

“The city council, through its housing and community services department made a policy document on February 9, 2012, named the Sustainable Economic Development Initiative and is meant to benefit youths. As parents, we need to implement the document to alleviate the scourge of drug and sexual abuse among youths.

“We need to engage the youth and find ways of modernising Youth Centres so that they meet their needs. Members of Parliament must also be put to task because the country’s constitution has provisions for reasonable measures and affirmative action that should be taken to deal with the youth,” said Ndlovu.

Ndlovu added that the generational gap between children and parents and technological advancements cannot be blamed for youths engaging in wayward behaviour as parents have a duty to engage their children on issues that affect them.

Source Chronicle