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03.10.2019 - Article

Uganda's biggest challenge - and how Germany is trying to help

Uganda is an extremely young, highly dynamic and wonderfully optimistic country. Germany, her long-time friend and partner, wants her to succeed.

The enormous potential of the new generations needs to be tapped and channeled in a promising direction. But the challenge is huge: 30.000 babies are born in this country every week, and up to 700.000 youths are entering the job market every year.

While GDP has been growing steadily in Uganda, the employment rate has gone down. The country is facing  ‘jobless growth’. This needs to be addressed.

Seventy percent of all jobs are still in agriculture, the sector with the lowest labour productivity level. Higher productivity and value addition require better technical skills. Far too many Ugandans have either no formal or only primary education. Less than 5% of the total student population between 15 and 24 are enrolled in institutions of technical or vocational education and training – too few for the labour markets needs.

The private sector is vast but mostly informal. Small and medium-sized businesses contribute to the GDP with 20%, and are producing 80% of Uganda’s manufactured output. The potential for increased productivity is huge, and largely untapped.

 

How does Germany help?

Job creation is the underlying cross-cutting task for all sectors of German assistance to Uganda. We are working on both the supply and demand side. We want to see employment boosted at all levels, be it in the urban or rural areas, be it formal or informal, be it for Ugandans or refugees, be it through vocational training or academic scholarships and exchange, be it in cooperation with government agencies or the private sector.

Across the country, but with particular emphasis on Karamoja, Acholi, Lango, Teso and West Nile we are supporting economic development in the rural areas,  helping the rural people to move away from subsistence towards more productive, market-oriented farming activities. In particular, we are trying to attract young farmers through training, capacity-building and investments in rural infrastructure, such as off-grid access to electricity, valley dams and earth dams, secondary roads and markets.

Access to finance is a major bottleneck. Despite their significant contribution to the GDP, less than 40 % of small and medium-sized enterprises (SME) have access to bank loans. Germany has set up programs with local financial institutions enabling them to improve and increase their lending to SME in rural areas. As a result, an additional 5,000 jobs have been created so far.

Germany supports start-ups in rural areas and helps farmers to increase their productivity and sales through training programs, access to finance and to markets. 500 SME are part of this program and 36.000 farmers have been able to increase their incomes. In West Nile, both refugees and host populations are benefiting from it. SME are being advised on how to strengthen value chains and market linkages. Simultaneously,  we are promoting demand-driven, market-oriented vocational. Ultimately,  this should enable 9.000 people to improve their incomes.

Germany also works on creating jobs in the energy sector. We support 100 SMEs through strengthening their business and marketing skills, energy management and access to finance. We make them aware of investment opportunities in low carbon climate resilient technologies. Again, we are putting the emphasis on training, to enable students to become employable. With the Nakawa Vocational Training Institute (NVTI), we have established a Renewable Energy Training Centre (RETC), and so far trained 230 solar technicians.

In the water sector, we have trained 280 professional NWSC staff in customer services, well as plumbing, welding and electro-mechanical expertise, among others.

Aid cannot create jobs, only private enterprises can. They will mostly be Ugandan, but should be complemented by foreign investment. A number of German businesses have been engaged in training Ugandans and employing them for many years, be it in the coffee and wider agricultural sector, in construction or engineering. Recently, a highly innovative social enterprise has been launched in Nwoya District. IBS Foundation has started production of building materials made of natural waste, according to a revolutionary technology well adapted to Uganda’s needs. Up to 900 jobs are likely to be created by IBSF in the near future.

There is considerable potential for employment in the emerging oil and gas sector. Foreign investment alone will not necessarily bring jobs for the local population. It is necessary  to up-skill Ugandan youth and local companies to the high standards requested by the oil industry. To this end, Germany has launched the “Employment and Skills for Eastern Africa (E4D/SOGA)” initiative, co-funded by the UK (DFID) Norway (NORAD) and Shell. Together with industry partners, E4D/SOGA has already trained over 19,000 people, supported more than 250 SMEs, brought 5,500 people into jobs and increased incomes for 32,600 people.

We will continue to work with the Government of Uganda in marketing this country as an attractive business destination, which it is. Germany is a free country, and the government cannot instruct private companies to go to a particular country and build a factory. German investors need to be attracted to examine opportunities in Uganda. More could be done to make this country better known in Germany. What about a well calibrated marketing and branding effort next year in Hamburg, Düsseldorf, Stuttgart, Munich and other major centers of German business? A Ugandan road show in Germany could have a very positive effect on potential investors.

There is no reason why we shouldn’t succeed. Tourism is an excellent example: Uganda has managed to establish a solid reputation for high end wildlife tourism in Germany. In terms of numbers, Germans, over the past years, have often taken first place among foreign tourists visiting the Pearl of Africa. Tourism has created many jobs already, and is likely to create more. Let us emulate this success with regard to German investment.

Trust and friendship between our two nations have grown over decades. We can build on solid ground. If we work together well, the result will be jobs, jobs, jobs for many more young Ugandans. I can see no other task as noble as this one for Ugandan-German cooperation.

by German Ambassador Dr. Albrecht Conze

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