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Informal sectors creating jobs

Looking at the Ugandan economy today, you find that there have been many issues raised about unemployment and some people have resorted creating jobs in field that they did not study and these jobs are more of informal sector jobs.

In Uganda, over 50% of GDP (UBOS, 2014) is attributed to the informal sector, up from 43% in 2002. Up to 80% of the labour force works in the informal economy and most of this is essentially “underemployment” since most of the workers still don’t earn enough to escape poverty.

The report describes the informal business sector as the business establishment operating in the country may not be registered/licensed and normally has no final accounts and also employs less than 5 persons and does not pay any taxes such as Value Added Tax and Income Tax.

Nixon Nabaasa, an economist says much as businesses in the informal sectors may easily collapse or even be defrauded and nothing is done about it, it has created more jobs for the unemployed youths in the country.

He says in the informal sector, jobs and business activities are not registered or protected by the State which means the owners do not have social benefits and often have no titled or registered assets. With all these, the business is left vulnerable to any thing that may come its way.

Some youths have run away from the informal sector because they think it is for the illiterate but later returned to be employed by the same people they were running away from.

Leslie Mutumba, Investment Executive (SME Division), Uganda Investment Authority says in order for them to promote job creation, the have decided to train the youths.

“Uganda Investment Authority has an entrepreneurship Training Program whose main objective is to enable entrepreneurs to access and utilize appropriate business skills, information and services aimed at achieving a sustainable and competitive private sector in the long run,” says Matumba.

He notes that with this program, the entrepreneurs are taken through key aspects of successfully starting, running and sustaining an enterprise. The program mainly targets those intending to start business, businesses in the early stages, businesses interested in expanding and, Small and Medium Enterprises (SMEs).

Apart from that, they also have a technical Skills Training program which aims at building capacities of MSMEs so that they may acquire the necessary basic skills to produce improved and high quality products that fetch high monetary values thus improving house hold income and promoting industrialization.

“Training areas include; dairy (processing and packaging of dairy products), textile design (tie and dye), motor cycle repair and servicing, bakery technology, wine making, charcoal briquettes making and packaging, fruit juice processing, soap manufacture, value addition on oyster mushrooms among,” names Mutumba.

David Rupiny, Media Relations Officers, Uganda Investment Authority says although the true extent of business informality in Uganda is not known, the key issue is how to formalize the informal sector because it is only then that it can be structured to create not just jobs, but quality jobs.

“Considering inadequacies of capital, the informal sector is a softer starting point for young people. Going forward, there is a need for formalisation in order to attract benefits like cheap credit and business support services. Of essence is the urgent need by both government and private sector players to put in place mechanisms that boost the growth of young people engaged in micro businesses,” says Rupiny.

He says the best way the government can support the informal sector is by creating a promotion and transition mechanism for players in the sector to grow and formalize. This is because the biggest challenge of startups is how to scale up. While they can easily start businesses, scaling up is usually a big challenge.

Mutumba says apart from initiatives from Uganda Investment Authority, the government too has taken an initiative to make sure they promote the job creation sector in several ways.

He says they carry out publicity campaign on the benefits of formalising their businesses which not only benefits the job creators but also this makes it easier for them to access credit from financial institutions.

More to that, he says the government offers trainings in business skills, business incubation and SME workspaces something that helps both start-ups and existing small businesses to grow sustainably, hence lowering the mortality rate through the use of good businesses practices and appropriate technology.

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