Lack of employable skills
The second critical underlying cause of unemployment is the lack of employable skills.
Our education system is still producing graduates without the skills to match what the market wants. Whilst 76% of our youth are literate, this does not guarantee them a job or a life of dignity. Also, as counter-intuitive as it may sound, the more educated you are the more likely you are to be unemployed given that there are too many graduates chasing too few jobs.
Government has made efforts to reform the education sector by encouraging science courses and other more market-relevant courses leading to innovations like the Kira Car and a local bus prototype.
However, scaling these efforts to levels of efficiency and profitability will require significant and intensive capital investments that are not readily available.
A strong Chamber can help structure partnerships with government to make urgent and targeted investments in vocation training centers and mentoring and business incubation centers to strengthen the market relevance of the next generation of job seekers and job makers.
For example, we need more professional welders and masons than lawyers. Precision welding skills are expensive to procure, highly sought after and not locally available. It can cost up to $100,000 to bring in expat professional welders for a two-week job!
Weak private sector institutional support
The third critical cause of unemployment is the poor business environment. The operating environment in Uganda is a mixed bag of a few incentives and numerous disincentives for the business community.
Significant market failures exist. For example, when we take the capital markets, we find that only about 10% of credit flows go to the agricultural sector yet over three-quarters of the population work on the land.
The fiscal burden of sterilisation by the central bank (mopping up of excess liquidity by issuing TBs and bonds) crowds out private sector credit and is a key market distortion.
High transport and energy costs have also led to under capacity utilisation of many industrial firms in Uganda, meaning job growth from existing businesses is constrained. We also do not have an apprentice and graduate training policy to incentivise absorption of young graduates.
The environment is further distorted by different categories of businesses all operating in the same environment. For example, small businesses compete with big multinationals despite huge asymmetries in their factor endowments. This makes competition unfair and stifles sector growth given how SMEs are the real drivers of job creation.
In 2014, Uganda was number 132 out of 189 countries in the global index for Ease of Doing Business; yet the country was recognised in 2015 as the most entrepreneurial country in the world.
The Uganda Chamber of Commerce was established in 1933 to make a significant contribution in addressing the challenges facing the private sector by working in partnership with government to bring qualitative and innovative ideas and policy suggestions to the fore.
The Chamber is not fulfilling its mandate. Every day, we witness local chapters of foreign Chambers of commerce operating here with enviable vibrancy and purpose, and ably representing their national private sector interests. We need change in our Chamber.
Politicking might be a national sport in Uganda, but it will not solve our systemic problem of unemployment. It is time we asked ourselves what we can do for our country and not only what our country can do for us.
Business people are by nature problem solvers, they opportunities where others see challenges. The Chamber has an important contribution to make and it can only be made if it is institutionally organised, well led, well-funded and sincere about stepping up to its patriotic responsibility and purpose.
(Andrew Rugasira is the Chairman of Good African Coffee Ltd)