Creating Youth Employment through Entrepreneurship Financing: The Uganda Youth Venture Capital Fund

Youth unemployment continues to be a developmental challenge not only in Uganda but in several sub Saharan countries. At least 64 percent of the total unemployed persons are youth aged 18-30 years. As the government struggles to look for solutions to the unemployment challenge, one approach has been the promotion of self-employment through the establishment of National Youth Funds. Specifically, the Youth Venture Capital Fund (UYVCF) worth UGX 25bn (about US$ 10 million) was introduced in 2011 and more recently, in September 2013, government significantly boosted youth schemes by allocating UGX 265 billion (about US$ 100 million) to the Youth Livelihood Programme (YLP) over a five-year period. The major pillars of these initiatives are: enterprise development, job creation and business skills training and development. Using the UYVCF as a case study, this study examines the level and determinants of youth participation in the fund and evaluates the operations of the fund against the initial guidelines and design as stipulated in the Aide memoire1 between the Ministry of Finance Planning and Economic Development (MFPED) and the participating banks. The study majorly relied on secondary data provided by Centenary Bank, the largest commercial bank participating in the fund and was complemented by a survey of beneficiaries as well as potential beneficiaries. The data sourced from the commercial bank provides an overview of the fund beneficiaries by basic socio economic characteristics while the field survey data was used to compare the activities of beneficiaries vis a vis non-beneficiaries. Results indicate that participation in the youth fund program is positively and significantly influenced by the age cohort of the youth entrepreneur (the older youth aged 26-35 years are more likely to access the fund compared to the younger youth (18-25 years), location of the business (urban based businesses have a higher chance of accessing the fund), type of business enterprise (those in services are more likely to access the fund loan) and business maturity. Although there has been some positive effect of the fund on business expansion, we do not find significant evidence of the youth fund effect on jobs creation. It was also discovered that the major role players are not entirely fulfilling their mandates and some have sidetracked from the initial objectives. On the policy front, we propose that for the youth fund to have a lasting impact on its intended objectives, the promotion of youth entrepreneurship should be approached comprehensively (not only the credit component) and it should target productive sectors with high employment creation potential. A strong institutional framework and elimination of obstacles to self-employment are other recommendations arising out of the study.


Issue Date:
2015-05
Publication Type:
Report
PURL Identifier:
http://purl.umn.edu/206130
Total Pages:
32
Series Statement:
Research Series
122




 Record created 2017-04-01, last modified 2017-08-28

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