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Over the last four years, the National Resistance Movement (NRM) government has highlighted employment creation as one of its budget priorities. But lack of a cohesive plan means most of the plans are yet to be realised, writes Kasozi Nasser: -
In early 2006, just months before Finance Minister Ezra Suruma read the first budget of a fresh five-year tenure for the National Resistance Movement (NRM) government, two Makerere University students graduated with bachelors’ degrees from Makerere University. The two dreamt of finding employment in sectors where their newly acquired skills would be best utilised. They hoped to secure a future that also would include marriage and a family together.
Four years down the road, few things have gone according to plan. Daniel E. Otabong looked for a job in vain — until last year when, together with some friends, he registered a company that has dabbled with anything from printing, branding, product distribution and IT solutions to events management. The gamble has begun to pay off, with the company earning between Shs2 million and Shs15 million a month.
Mr Otabong’s wife, on the other hand, opted to pursue a masters’ degree after failing to get a job. She has completed it alright, but she remains unemployed.
The mixed fortunes of this young couple mirror those of many educated Ugandans, and provide an insight into formal employment in a country where officials say an average of 400,000 students graduate from tertiary institutions every year only to compete for just 18,000 jobs created in the same period. The inevitable result of this mismatch is that many end up joining the informal sector or having no work to do at all.
Despite the government’s pledge to emphasise programmes designed to stimulate different sectors of the economy to contribute to employment creation, income generation and growth of the economy, the ratio of people joining the labour market has widened compared to the number of jobs created. Much of the spending intended to help create jobs over the last four years has apparently not borne much fruit.
Economy at a crossroads
Today, some 14 per cent of Ugandans who are capable of working are either unemployed or under employed, according to a policy statement issued to Parliament last month by Labour State Minister, Emmanuel Otaala. Of those who have some work to do, 75 per cent are employed in the agriculture sector while 20.7 per cent are in the services sector and 4.2 per cent work in manufacturing.
But even these figures are too positive, according to Finance Minister, Syda Bbumba. Upon launching the budget strategy for 2010/11 on February 26, 2010, she said recent studies have shown that 60 per cent of the labour force perceive themselves as unemployed or under employed, largely because they practice subsistence agriculture. Other studies show that only 5 per cent of the total labour force actually have permanent jobs.
Ms Bbumba acknowledges that the government needs to greatly improve its performance.
With half of Uganda’s population aged 15 years or below, even the 390,000 jobs hitherto required annually are unlikely to be sufficient in the not-so-distant future, as more young Ugandans qualify to enter the labour market.
One of the signs that the government is at a crossroads on how to generate more jobs is a directive issued this month by President Museveni to the Ministry of Public Service to scale down the retirement age from 60 to 50 years, a move officials say would help free up 30,000 public service jobs for the youth.
The move has been interpreted in some quarters as an indication that the government is short of ideas for creating new jobs. The General Secretary of Uganda Government and Allied Workers Union, Irene Kaboole, says: “The government should create jobs, not recycle jobs. Uganda [has] a lot of potential for job creation. Maybe the planning unit has lost direction to lift Uganda up with its natural resources.”
Is agriculture neglected?
Critics believe the trouble, in part, is that the government is paying too little attention to agriculture. In 2006, the government promised that in order to create employment in the agriculture sector from 2006/07 to 2010/11, it would help farmers shift from subsistence production to producing high-value crops for the market. The plan involved identifying these high value crops, improving farming methods and seeds, providing microfinance agricultural loans payable after harvest, establishing cooperatives as marketing agencies, and developing community infrastructure.
The community infrastructure that the government planned to build includes a primary school per parish, electricity, a safe water source, road infrastructure, water for production, a health centre, a community development centre, land for urbanisation, and telecommunications infrastructure.
This plan would, according to the NRM manifesto for 2006, be capped by efforts to process farm goods in Uganda rather than simply exporting them.
“Uganda needs to consolidate private sector, export-led growth and diversification of exportable products through value addition,” the government said. “In order to take advantage of the international markets, Uganda must stop exporting raw and primary materials. Uganda should instead add value to products and export them as finished products.”
However, the ambitious plan was not backed by financial outlays needed for its implementation. An analysis of the budgets shows that rather than growing, spending on agriculture as a percentage of the budget has consistently dropped since 2006. In 2005/06, the government spent 5.7 per cent of the total budget on agriculture, but this fell to 4.1 per cent in 2007/08 and to 3.7 per cent in 2008/09.
Within the same period, the government has paid a lot of attention to the industrial sector. While reading the 2006/07 national budget, Dr Suruma announced that it was embarking on the implementation of the National Industrialisation Policy.
In 2006, government allocated Shs35 billion to the development of Namanve Industrial Park. It also has bought land and set aside billions of shillings for the construction of industrial parks in the districts of Mbarara, Arua, Lira, Gulu, Soroti, Moroto, Mbale, Tororo, Iganga, Jinja, Luwero-Nakaseke, Nakasongola, Bushenyi, Kabale, Kasese, Fort Portal, Hoima, Rakai and Mubende.
In 2007, the government also offered a series of tax incentives to investors engaged in exporting finished consumer and capital goods.
The incentives included a 10-year tax holiday to companies engaged in value-added exports, a withholding tax exemption on interest, raw materials and plant and machinery, a stamp duty exemption on increase in share capital and mortgages, and a duty and tax exemption on raw materials and plant and machinery.
Over the last four years, the government further allocated money to the Makerere University Faculty of Science and Technology, the Industrial Research Centre, and vocational institutions to enable innovate scientists develop commercial technologies. Another beneficiary is the small and medium enterprise sector that can now borrow money guaranteed by the government from the Uganda Development Bank.
In addition, the government is developing the national data transmission backbone across the country to serve telecommunications, banking and other sectors that depend heavily on information technology to thrive.
Over the last four years, the National Resistance Movement (NRM) government has highlighted employment creation as one of its budget priorities. But lack of a cohesive plan means most of the plans are yet to be realised, writes Kasozi Nasser: -
In early 2006, just months before Finance Minister Ezra Suruma read the first budget of a fresh five-year tenure for the National Resistance Movement (NRM) government, two Makerere University students graduated with bachelors’ degrees from Makerere University. The two dreamt of finding employment in sectors where their newly acquired skills would be best utilised. They hoped to secure a future that also would include marriage and a family together.
Four years down the road, few things have gone according to plan. Daniel E. Otabong looked for a job in vain — until last year when, together with some friends, he registered a company that has dabbled with anything from printing, branding, product distribution and IT solutions to events management. The gamble has begun to pay off, with the company earning between Shs2 million and Shs15 million a month.
Mr Otabong’s wife, on the other hand, opted to pursue a masters’ degree after failing to get a job. She has completed it alright, but she remains unemployed.
The mixed fortunes of this young couple mirror those of many educated Ugandans, and provide an insight into formal employment in a country where officials say an average of 400,000 students graduate from tertiary institutions every year only to compete for just 18,000 jobs created in the same period. The inevitable result of this mismatch is that many end up joining the informal sector or having no work to do at all.
Despite the government’s pledge to emphasise programmes designed to stimulate different sectors of the economy to contribute to employment creation, income generation and growth of the economy, the ratio of people joining the labour market has widened compared to the number of jobs created. Much of the spending intended to help create jobs over the last four years has apparently not borne much fruit.
Economy at a crossroads
Today, some 14 per cent of Ugandans who are capable of working are either unemployed or under employed, according to a policy statement issued to Parliament last month by Labour State Minister, Emmanuel Otaala. Of those who have some work to do, 75 per cent are employed in the agriculture sector while 20.7 per cent are in the services sector and 4.2 per cent work in manufacturing.
But even these figures are too positive, according to Finance Minister, Syda Bbumba. Upon launching the budget strategy for 2010/11 on February 26, 2010, she said recent studies have shown that 60 per cent of the labour force perceive themselves as unemployed or under employed, largely because they practice subsistence agriculture. Other studies show that only 5 per cent of the total labour force actually have permanent jobs.
Ms Bbumba acknowledges that the government needs to greatly improve its performance.
With half of Uganda’s population aged 15 years or below, even the 390,000 jobs hitherto required annually are unlikely to be sufficient in the not-so-distant future, as more young Ugandans qualify to enter the labour market.
One of the signs that the government is at a crossroads on how to generate more jobs is a directive issued this month by President Museveni to the Ministry of Public Service to scale down the retirement age from 60 to 50 years, a move officials say would help free up 30,000 public service jobs for the youth.
The move has been interpreted in some quarters as an indication that the government is short of ideas for creating new jobs. The General Secretary of Uganda Government and Allied Workers Union, Irene Kaboole, says: “The government should create jobs, not recycle jobs. Uganda [has] a lot of potential for job creation. Maybe the planning unit has lost direction to lift Uganda up with its natural resources.”
Is agriculture neglected?
Critics believe the trouble, in part, is that the government is paying too little attention to agriculture. In 2006, the government promised that in order to create employment in the agriculture sector from 2006/07 to 2010/11, it would help farmers shift from subsistence production to producing high-value crops for the market. The plan involved identifying these high value crops, improving farming methods and seeds, providing microfinance agricultural loans payable after harvest, establishing cooperatives as marketing agencies, and developing community infrastructure.
The community infrastructure that the government planned to build includes a primary school per parish, electricity, a safe water source, road infrastructure, water for production, a health centre, a community development centre, land for urbanisation, and telecommunications infrastructure.
This plan would, according to the NRM manifesto for 2006, be capped by efforts to process farm goods in Uganda rather than simply exporting them.
“Uganda needs to consolidate private sector, export-led growth and diversification of exportable products through value addition,” the government said. “In order to take advantage of the international markets, Uganda must stop exporting raw and primary materials. Uganda should instead add value to products and export them as finished products.”
However, the ambitious plan was not backed by financial outlays needed for its implementation. An analysis of the budgets shows that rather than growing, spending on agriculture as a percentage of the budget has consistently dropped since 2006. In 2005/06, the government spent 5.7 per cent of the total budget on agriculture, but this fell to 4.1 per cent in 2007/08 and to 3.7 per cent in 2008/09.
Within the same period, the government has paid a lot of attention to the industrial sector. While reading the 2006/07 national budget, Dr Suruma announced that it was embarking on the implementation of the National Industrialisation Policy.
In 2006, government allocated Shs35 billion to the development of Namanve Industrial Park. It also has bought land and set aside billions of shillings for the construction of industrial parks in the districts of Mbarara, Arua, Lira, Gulu, Soroti, Moroto, Mbale, Tororo, Iganga, Jinja, Luwero-Nakaseke, Nakasongola, Bushenyi, Kabale, Kasese, Fort Portal, Hoima, Rakai and Mubende.
In 2007, the government also offered a series of tax incentives to investors engaged in exporting finished consumer and capital goods.
The incentives included a 10-year tax holiday to companies engaged in value-added exports, a withholding tax exemption on interest, raw materials and plant and machinery, a stamp duty exemption on increase in share capital and mortgages, and a duty and tax exemption on raw materials and plant and machinery.
Over the last four years, the government further allocated money to the Makerere University Faculty of Science and Technology, the Industrial Research Centre, and vocational institutions to enable innovate scientists develop commercial technologies. Another beneficiary is the small and medium enterprise sector that can now borrow money guaranteed by the government from the Uganda Development Bank.
In addition, the government is developing the national data transmission backbone across the country to serve telecommunications, banking and other sectors that depend heavily on information technology to thrive.
