Agency For Transformation

Can we create jobs? Budget Priorities and Job creation in a competitive Regional Market

Uganda’s National Budget has been presented and explained as a statement of projected revenues and expenditure. The larger section of the citizenry understand it as a ritual of government to announce the budget every June of every year. As a young man in the early 90’s I used to see many people hurdled on radios at small trading centers listening to the budget speech. Delving deeper, their interest was and largely remains announcement of tax cuts on basic home use commodities like salt, Kerosine, soap, sugar, Kimbo (cooking oil) etc and tax cuts on tools and implements like hoes (jjembe) and pangas. For this is the true story of many Ugandans across the country. Citizens are exceedingly unaware of the role they can play in influencing budget allocations and monitoring budget implementation, yet citizens if informed and involved form the core of effective budget accountability.

What is now called the ‘budget circle consultative process’ a supposed democratic platform for citizen participation largely remains a ritual. We have participation power with out decision power. Well some private sector interests have been considered (especially manufacturing and services sectors) but how about farmers who have been crying for double digit allocation for the last 14 years! Farmers have been voicing this concern in these budget circle consultative processes; only to be slapped by 3% to 4% allocation, yet again!Even the Special support of Shillings 90 Billion, Agricultural Fund, that was provided to ensure that interest rates in the sector are not more than 10 % per annum did not impact the fortunes of farmers. There remains no transparency, no information on how this fund can be accessed. No clear and simple guidelines on how a farmer from Amudat district, Rukungiri, Kenjojo etc can access this money. All we hear is that the money was finished! Who took it? What was it used for? How many jobs were created?

Looking at the budget priorities memoranda from productive sector agencies and ministries of government, one important thing is amiss! jobs jobs. The country wants to see budget proposals from for example the Ministry of Trade and Industry that clearly state the money they need and how many jobs the Ministry will create and a projection of contribution to the GDP in a given year. Now what do we hear?we hear concerns about mismatch between budget allocations and actual release, we hear of failure by government departments and ministries to absorb budgeted and released resources; What do we see? we see services budget for and approved not reaching the people! We see tertiary institutions churning out 300,000 graduates with only 40,000 jobs available! I can tell you, this is a crisis.

2.0 Talking Jobs: What is the place of Uganda’s private sector?

Uganda’s Private Sector is fragile, largely informal and dominated by Micro, Small and Medium Scale Enterprises (MSMEs). MSMEs employ approximately 1.5 million people equivalent to 90% of total non-farm private sector workers. Annual employment growth in the sector is about 20% per annum[1]. Most of the businesses are located in Kampala (45%) and Central Uganda (21%). The rest are distributed across the other regions as follows: Western Uganda: 14%, Eastern Uganda: 13%, and Northern Uganda: 7%. Private sector businesses contribute 75% to national GDP. Agriculture, trade, construction and Manufacturing are the most important contributors to the national economy. The figure below shows GDP as a percentage share by economic activity;

Uganda a symetry of business start ups!

The private sector, (MSMEs)annual employment growth is estimated 20 percenet per annum. Yet the majority of the businesses (35 percent) are aged between 1 and 5 years and those that 25 years or more are only 4 percent. It is clear from these figures that the failure rate in business startups is high. The high mortality rate for business start-ups is explained by the burdensome regulatory environment and the rising cost of doing business on account of inadequate infrastructure, costly and unreliable electricity, rising cost of fuel, and the high cost of business finance. Other factors include corruption, bureaucracy and capacity constraints in the various public institutions[2]

Uganda a graveyard of nimble entreprenuerial ideas.

Yet in spite of businesses to failure to survive, Ugandans continue to come up with ideas. For example, over 9000 new firms are registered each year[3]. Though still a small number, this is good news, it shows the attitude for doing business, for formalizing business is taking shape. It also means survival of these firms translates into jobs. What should vastly concern us are the reasons why most of these registered start-ups never reach their 5th birthday? The death of business start ups mean death of jobs. How can these ideas be supported? How can the budget support businesses to not only to survive but to expand and transform? I therefore wish to contribute 5 points;

Though FAQ (Kase) prices have now increased to UGSHS 4500 a kilo at the farm gate in some places, we still largely export graded coffee. We export massive jobs at the level of roasting, grinding coffee, packing coffee etc. What should be noted is where as a farmer makes UGSHS 4500 from a kilo of FAQ coffee, a retailer makes UGSHS 320,000! This is the same with cotton, tea, fish, etc! To create jobs, a special Value Addition Fund (delivered at an interest rate of 5%, grace period of over one year, with clear guidelines on how to be accessed) should be provided for in the next budget.

Fierce urgency to Harvest the demographic dividend. Uganda’s population is at 33 million. With 7 children per woman (average), Uganda’s population will be over 130 million in the next fifty years. What should concern us is the quality of the population. Is our population skilled,imaginative, agile, curious, entrepreneurial, self reliant and inspired? Or rather semi skilled, subsistence, surviving and thriving, nature based (chance based),welfarelist (waiting for handouts), laid back and cynical? Our people are the only enduring wealth that this country has. We must invest in them, leaders at all levels must inspire them in words and actions and align them to a common vision. I know that Enterprise Uganda is conducting entrepreneurship training, business advisory and counseling service, information, business planning, marketing, technology, business linkages and targeting young people, women, business start-ups and middle level firms. In the 2010/2011 budget, Enterprise Uganda was allocated one billion Uganda shillings. I have not looked at their jobs report, however I think this was a good effort and if they are doing well more resources should be given to them, and others who are pursuing similar efforts. The foregoing should be suplimented by an Entrepreneurship Fund, long term and accessed at 5% interest rate. The idea of establishing a School Leavers Industrial Training Fund must be de-shelved and implemented.

Arrest Uganda’s productivity and skills deficiency: Ugandan firms have, on average, the lowest labor productivity in the EAC, even when compared to other firms within Sub-Saharan Africa, and much lower than that in China and India . Due to the low productivity, labor costs in Uganda are relatively higher. Studies indicate that Tanzania’s labor productivity is 40% higher than Uganda’s; while Kenya’s labor productivity is 60% higher, meaning that a worker from either Kenya or Tanzania has a higher job output compared to their Ugandan counterpart[1]. The 2011/2012 budget must provide money to kick start reform of BTVET (Business Technical Vocational Education and Training) from input based training to competence based education and training (CBET) through the Uganda Vocational Qualifications Framework (UVQF) will, if properly implemented, go a long way in ensuring that the quality of BTVET graduates meets the labour market demands. Outcomes emanating from a poorly managed BTVET subsector include but not limited to: high youth unemployment, low labour productivity.

3.Deepen ICT and Technology Development: Information and Communication Technologies (ICT) play a major role in upgrading the competitiveness of both domestic and export-oriented industries in Uganda. ICT tools improve operating and communication efficiency within industries and businesses. ICTs help businesses connect with customers, improve logistics flows and make distance to the market or to suppliers of raw materials irrelevant. Therefore, the 2011/2012 budget should provide for a fund to help democratize ICTs in Uganda. A phased plan to establish computer clinics in all schools and community information hubs in all parishes of Uganda should start with 2011/2012 budget.

4. Stop budget leakages and runaway public administration expenditure: UGX100 billion is lost in public procurement alone! Public administration expenditure take a whooping 23% share of the national budget, the newly created 17 districts will cost us 28 billion in the coming financial year (money equivalent to drilling of 1030 boreholes), at a population of 33 million and GDP of $16 Billion Uganda runs a parliament of 375 MPS! India with 1 billion people and a GDP of $2698 runs a parliament of 769 MPs. Norway with 4.6 million people has only 43 MPs. I think as a country we badly need to reflect on the cost of this over representation. I therefore wish to recommend that we adopt proportional/ per capita representation of 200,000 population quota. At 33 million, we will have only 165 MPs. The foregoing action will mean that as a country we will save UGX252 billion, money that can be channeled to job creating and productive sectors of the economy. The same measure should also be applied on the executive (return to the 1995 Constitutional provision of only 42 Minister). Balkanisation of Uganda into smalls districts should also be reviewed, halted, rolled back and emphasis be put on service delivery. Citizen budget monitoring efforts should be supported in the 2011/2012 budget, baraazasshould be evaluated and given more support.


Uganda is seated firmly on huge opportunities for private sector growth, job creation and transformation; These include, the proliferation of mobile phones, a young population, the discovery of oil, the end of the insurgency in Northern Uganda, the EAC regional integration process, the tripartite EAC/COMESA/SADC FTA, and the birth of a new state- Southern Sudan. The National Budget should therefore focus more on supporting Private Sector Investments, reducing costs of doing business, value addition to farm produce among others to enhance access to ready markets for their exports. Reducing the high cost of doing business through critical infrastructure development; Enhancement of human capital through critical skills development and health provision ; Increasing the disposable income by enhancing efficiency of productive sectors in order to create wealth and take advantage of opportunities available through value addition particularly, in the Agriculture, Manufacturing and Services sectors including Tourism, Preparation to exploit the Oil natural resource to provide a sustainable source of improvements of lives in the country for the current and future generations.

Morrison Rwakakamba
Chief Executive Officer
Agency for Transformation
Re-imagining agricultural and environmental policy