Government funding is vital for young entrepreneurs because it can empower them address significant economic challenges, particularly unemployment and create job opportunities for themselves and their communities.
However, challenges such as lack of access to capital have crippled many young entrepreneurs’ ideas that could address the above challenges.
Access to capital remains a major obstacle for aspiring entrepreneurs, particularly those without established credit or collateral who believe that government funding programs will not only facilitate expansion of their businesses but also promote economic growth and innovation within the country.
Although government funding is essential for young entrepreneurs in Uganda to address unemployment, provide access to capital, drive innovation, and offer crucial support for business development, majority of young entrepreneurs do not receive any funding from government yet Uganda is one of the most innovative countries in the world.
The Global Entrepreneurship Monitor (GEM) 2022/2023 Global Report, a research initiative that measures early-stage entrepreneurial activity and the entrepreneurial ecosystem in 150 countries, shows that 38% of Ugandans aged 18 to 34 are engaged in some sort of entrepreneurial activity. This is compared to the 36% of Ugandans who are above the age of 35.
The National Female Youth MP, Phiona Nyamutooro says this is an indication that young people are more innovative than older people.
“This means that young people are more oriented to business than other older generations, and this is because the young are willing to take risks, innovate and learn,” said Nyamutooro at the commemoration of the fourth National Youth Business Forum in Kampala on Tuesday.
Uganda has one of the highest rates of early-stage entrepreneurial activity in the world. Young people in Uganda are more likely to be entrepreneurs than older people which suggests that Uganda has a vibrant and entrepreneurial youth population. This is a positive development, as entrepreneurship can play a major role in economic growth and job creation.
Despite the high rates of early-stage entrepreneurial and innovative activity among Ugandan young people, Nyamutooro said many of their startups lack funding which leads to business closure.
“62% of young business owners lack profitability, and the challenge is in gaining funds as the main reason for business closure. For us to grow an entrepreneurial culture, we need to support our young innovators to own businesses and benefit economically from them,” she said.
Research findings from the Annual State of Youth Report carried out by the Parliamentary Forum on Youth Affairs reveal that only 6% of young entrepreneurs cite financial institutions as the source of their capital.
Other sources include; family, friends and personal sources.
There are, however, some government programs such as the Youth Livelihood Program that was launched in 2013 with the objective of empowering unemployed and poor youth in the country to harness their socio-economic potential and increase self-employment opportunities and income levels.
Nyamutooro told President Museveni who was officiating at the Business Forum that majority of young people have not benefited from any of government programs initiated to help young people.
“80% of young entrepreneurs have not received support from any existing policies or schemes to help them boost their businesses. 1.8 million Ugandan youths are running businesses informally, with 80% of them admitting that their product lines have not changed over time, indicating little or no growth,” she said.
Nyamutooro asked President Museveni for a special funding scheme in the Uganda Development Bank (UDB) specifically for young business people.
“We also look forward to a special financing scheme within UDB for the young business people, and we request that a financial scheme that is youth friendly is oriented and put in place.”
In response, Museveni pledged to fund youth-led innovations in Uganda.
“I will have a meeting with your leaders so that we can discuss the funding for your innovations. Of course, there’s already money in Uganda Development Bank (UDB), we are putting that money there but why can’t the youth access it?” he noted.
Museveni affirmed government willingness to offer all the necessary support to the young innovators as long as their innovations have a clear business perspective.
He applauded the youth for “waking up” and starting to come up with ideas and solutions to Uganda’s problems.
“I’m glad that you have now woken up and you are not going to be like your ancestors who were asleep. This is the way to go, it is not always politics oyee… No, let us solve problems especially problems of poverty and lack of jobs,” he added.
Museveni advised the youth innovators and entrepreneurs that as they use science to solve the problems of the
society, they need to cluster their products and then check on their demand within Uganda, Africa and globally, before assuring them of a common market for Africa.
“We had to work from 1980 at the Lagos Conference. This had been 20 years since independence; our leaders woke up and said if we don’t create one African market, we shall never get out of poverty because you can have a continent of a lot of natural resources but if it is badly organised economically and politically, it will never get out of poverty. We started with COMESA, the East African Community and now we are talking of the African common market,” said Museveni.
The European Union Ambassador to Uganda, Jan Sadek stated that the EU recognises the importance of youth entrepreneurship and innovation and is committed to supporting the youth in Uganda towards economic empowerment.
“We believe that by empowering young people to start and grow their own businesses, we can collectively address some of the most pressing challenges facing Uganda such as unemployment and poverty and move towards sustainable economic development,” said Ambassador Sadek.
He added: “The youth are the most valuable resource of any nation since they possess a very unique capacity for fresh ideas, untamed creativity and boundless energy. This potential is the driving energy of progress and development; it is the cornerstone upon which the future of any nation is built.”
Meanwhile, the Youth Parliamentary Forum is working on a youth legislative agenda that youth MPs believe will solve the youth entrepreneurship challenges in the country.
Among the solutions included in the Youth Legislative agenda being worked on are; A Start Up Bill that will be tabled by Boniface Okot, the Youth MP representing Northern Uganda.
The youth MPs believe the Bill will enable Ugandans to not only protect the capital venture, but also look at the particular incentives that young people can be informed of, and utilize it boost their innovations and enterprises.
Youth MPs also plan to table the Graduate Scheme Bill that will enable young graduates shine their soft skills.