Youth Day: 86% of young people need capital for their business

As countries around the world mark International Youth Day, Twaweza has released new data showing that young people need help accessing finance and learning skills to start and run businesses.

Almost nine in ten young Ugandans (86%) cite start-up capital as the number one thing they would need to start or run a business.

This is followed by appropriate space to run the business (69%), financial knowledge or management skills (54%), access to inputs (37%) and affordable inputs (32%).

These conclusions were published by Twaweza on the occasion of International Youth Day in a brief titled On the move? The youth perspective on doing business in Uganda.

They are based on data from Sauti za Wananchi, the first nationally representative high-frequency mobile phone survey in Africa. The findings are based on data collected from 1,597 young people (aged 18-34) and 2,900 respondents across Uganda between January 15 and February 7, 2022.

Data shows that young Ugandans are less likely to own a business than older citizens: four in ten citizens (41%) under the age of 35 have owned a business in the previous five years, compared to five in ten (51%). Similarly, fewer young citizens (18%) than older citizens (25%) currently own a business.

Despite this, young people are confident about their financial skills.

Eight in ten young Ugandans (79%) agree or strongly agree that they can manage financial matters. Most (68%) also say they have little difficulty managing and investing their money, and half (50%) say they understand financial instruments such as bonds and contracts.

Violet Alinda, Country Manager for Uganda at Twaweza, said the data clearly shows “there is untapped potential for entrepreneurship among young Ugandans as fewer own businesses than older Ugandans. “.

Alinda said, “Young people have some of the skills and knowledge they need to manage their finances. They are aware of the major constraints in starting and running businesses as well as government and other initiatives to support start-ups. »

Deputy Speaker of Parliament Thomas Tayebwa recently said that the government and other systems in place should make deliberate efforts to create an enabling environment for young entrepreneurs to flourish.

He said many young people in the country have failed to progress in their business ventures due to bureaucracy and this is limiting many start-ups.

The Vice President also noted the challenge of lack of affordable capital with high interest rates, which prevented potential young entrepreneurs from accessing loan facilities.

Over 75% of Uganda’s population is under the age of 30, with the country having one of the highest youth unemployment rates at 13.3% – the number of young people actively seeking work as a percentage of working population – in sub-Saharan Africa. Africa.

Study results

According to Twaweza’s study, tThree in four young people (76%) regularly save money, while one in four (25%) say they spend the money they receive immediately.

The majority of young Ugandans (56%) say they follow a careful monthly budget, and the same number (56%) say they always have money available for emergencies. Only one in five (19%) say they live only for today and let tomorrow take care of itself.

Young business owners are slightly more likely than older business owners to say their business is currently growing (38% of young business owners, 35% of older business owners).

But both groups share similar views on the broader business environment, with half saying doing business in Uganda is easy or normal (51% of young business owners, 48% of older companies).

“Young people are specifically asking for help in accessing capital and developing their business skills. Given the current economic crisis, food shortages and global economic contraction, this data highlights a great opportunity,” said Alinda.

“If government can improve the design and awareness of livelihood and finance initiatives, Ugandan youth are poised to play their part in economic transformation.”

Young people are aware of the many forms of support they need to hone their entrepreneurial skills. At the top of the list is supporting the development of business ideas (57%) and helping to access finance (54%). Other popular responses include support in preparing a business plan (42%), training in marketing and communications (34%) and training in financial literacy and management (28%).

Similarly, most youth in Uganda (87%) would spend a hypothetical cash gift of UGX 3,500,000 to start a business and then invest in agricultural activities (66%).

Yet young Ugandans are aware of possible sources of funding for their businesses and point to a number of different potential sources. The most cited are savings groups and/or village savings and loan associations (VSLA; 37%) and banks (35%). Savings and credit cooperatives (SACCO; 26%), family (23%) and friends or neighbors (20%) are also widely cited.

Ugandans under 35 are also partly aware of government programs aimed at supporting youth livelihoods. Seven in ten young people (69%) are aware of the Emyooga initiative, although only two in ten (22%) can name the initiative without being asked. Three in ten (32%) are aware of the Youth Livelihoods program, including one in ten (13%) who can name the initiative spontaneously.

One in six young people (16%) say they have participated in Emyooga, with around half (7%) naming it the most helpful youth empowerment initiative. A much smaller proportion of young people have participated in the Youth Livelihoods program, but all identify it as the most useful initiative.

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