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Job creation: How Chamber of Commerce can help

COMMENT:

By Andrew Rugasira

The Chamber can begin my providing reliable empirical data that can better inform government policy and execution

Rugasira new

U.S. President Harry Truman famously asked to be sent a “one-armed economist” when exasperated by economists constantly proclaiming “on the one hand” and “on the other hand”.

Fortunately, such equivocation does not exist in the statistics on youth unemployment in Uganda- they are plain disheartening. According to the Uganda Bureau of Statistics, the share of youth unemployment in Uganda (18-30 years) among the total unemployed is over 64%. The African Development Bank puts its estimate higher at 83%.

Uganda has the highest number of young (under 30 years) in the world- 78% of the population. Each year, over 400,000 young people enter the job market to compete for approximately 9,000 available jobs.

With a conservative estimate of 4,000,000 unemployed and a Labour force growing at 5% per annum, ‘two-armed economists’ should be losing sleep over this trend.

Yet, hidden in plain sight is untapped private sector potential that can help address this problem. How would a business association like the Uganda National Chamber of Commerce and Industry (The Chamber) contribute to the problem of youth unemployment?

One, the Chamber can begin my providing reliable empirical data that can better inform government policy and execution. In many instances, our government makes well-meaning but misguided policy interventions because of poor quality data from the business sector. Implementation is also compromised by bureaucrats with little business sense and experience.

Two, the Chamber can strengthen communication channels and partnership frameworks between business and government. This enables trade and investment opportunities to be given sufficient technical depth and implementation support. Business etiquette and speed of execution is also a critical ingredient in successful investment outcomes.

Naive bureaucrats tend to believe that entrepreneurs invest in a country because they have had a good meeting with the President. This is only partially true. Our President is the chief executive architect of the development vision of the country, and he also guarantees the safety and security of persons and property- all these are critical in investment decisions.

However, to stretch this and burden him further with following up on all individual investment projects because they are being poorly executed by maddeningly inefficient and myopic bureaucrats is a system breakdown and a major market distortion.

Investments happen when the following questions are answered: what is the business regulatory climate like, the tax and incentive regimes, law and order and dispute resolution mechanisms, what is the structure of land ownership, the quality of labour and technology absorption and the degree to which a market exists both domestically and abroad.

Meaningful answers to these can only result from effective partnerships between strong private sector business associations like the Chamber of Commerce and government.

Three, there is no better mentoring than from one who has done it. Yet, many in Uganda believe mentoring can be done by observing from a distance combined with envy! Mentoring is best executed in a structured approach and the best way for young mentees to ‘learn the ropes’ is by hearing it from those who have walked the journey- fallen and risen up. Where do the legitimate business mentors reside if not in the Chamber of Commerces and business associations.

The U.S. Chamber of Commerce has over 3,000,000 members and collects over $200 million in annual membership fees. On their website they outline a six point program on how to create jobs in the U.S. economy. The Indian Chamber does the same, so does the Kenyan Chamber and every other effective Chamber globally.

There can be no doubt about the importance of business driving job creation; who else is better placed to speak on jobs than the job creators themselves. The role of government is to listen, provide public goods and make investments that create the enabling environment for businesses to thrive. Success is a result of a partnership of both sectors.

 

Underlying causes of unemployment

To better appreciate the opportunities for business associations in helping tackle the unemployment problem, it is helpful to remind ourselves about the underlying causes of youth joblessness.

There are three key factors that contribute to our high youth unemployment.

Inadequate Investment and Supply of Jobs

Countries like China, Japan and South Korea have demonstrated a huge policy and investment capacity to drastically reduce national poverty levels and generate significant employment outcomes.

Between 1978 and 2014, China for example, lifted 700 million rural residents out of poverty. The poverty rate in the countryside, or the proportion of poor people in the total population, dropped to 7.2 percent in 2014, down from 97.5 percent in 1978. This is stunning.

China is the modern economic expression of massive public sector investments in private sector activities as the engine for massive job and wealth creation.

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