Tax incentives, skills fundamental for youth entrepreneurship

Written by: 
Blanshe Musinguzi

Youth unemployment in Uganda is skyrocketing but the situation is not yet worse since more people enter labour market every year.  According to provisional census results released by the Uganda Bureau of Statistics (UBOS) on 18th November, Uganda population has reached 34.9 million people.

More chilling and startling is the structure of Uganda’s population and Unemployment rates. By 2009, Uganda had world’s youngest population according to World Bank Africa Development Indicator Report. State of Uganda Population Report 2012 indicted that a total of 78% of Ugandans are below the age of 30 years and 52% below 15 years.

Youth unemployment rates are whooping! The same World Bank report estimated unemployed young people between ages 15 to 24 at 83 per cent. A survey dubbed “Lost Opportunity” released by Action Aid International Uganda (AAIU) in 2012 put youth unemployment at 62 per cent. I can’t envisage unemployment statistics in the next five or ten years.

The government is not sleeping. Since 1990s, it has introduced a number of strategies geared at curbing youth unemployment. These strategies rage from Youth Entrepreneurial Scheme (YES) designed as a loan scheme for youth who wished to venture into business to Youth Venture Capital Fund, Graduate Venture Fund and Youth Livelihood which president Museveni launched early this year. None of these programmes has yielded fruits to tame ever increasing youth unemployment.

In my view, government should think about extending tax incentives and holidays to youth venturing into the entrepreneurship. Foreign investors granted tax incentives and holidays have for years been ‘ineffective’ in creating employment. A number of foreign investors hire labour from their respective countries to do jobs which can be done by Ugandans. I can’t foresee a Ugandan investor employing a ‘Chinese’ or a ‘Briton’ as an office massager or chef even if such folks avail themselves for hiring.

Loans offered to youth to start businesses are insufficient. It is a common characteristic that immature businesses are uncertain and the costs of sustaining them are high. Government must recognize challenges that young entrepreneurs who receive start up capital face. A substantive question that policy makers behind youth unemployment interventions is; why are these programmes failing to solve the problem? The chief reason could be perils of sustaining immature business.

Dickson Malunda, a senior researcher and economist at Institute of Policy Analysis and Research (IPAR )-Rwanda last month released research findings on youth unemployment, dubbed “From School to Work.” And he noted that “Governments only focus on giving tax incentives, including tax holidays, to foreign investors yet less is done to extend such incentives to the youth.”

It is only youth with entrepreneur skills that can get better with youth livelihood funds. Government should cognise that for young entrepreneurs to succeed, they must be equipped with knowledge-enabling them to identify opportunities for personal, professional or business activities. Skills to manage proactive businesses and attitude characterise by initiative, independence and innovation in personal and entrepreneur life, as much as at work, and motivation and determination to meet objectives.

It is time for government to extend tax incentives and holidays to youth. And youth will be central in solving employment problems which they are suffering from.