About 80 per cent of East Africa’s population is producing less than half of the GDP, and economists say region’s governments need to devise more innovative ways of providing employment for the youth.

Agriculture remains the biggest employer in the region, but it does not contribute much to GDP — 44 per cent in Tanzania and Burundi while in Uganda and Kenya it is 26 and 24 per cent respectively.

Dr Patrick Birungi, director for development planning at Uganda’s National Planning Authority, said the region will have to ensure that the majority of the population who are still tilling the land are removed to allow for mechanisation. These people can then be trained in skills to provide services or work in industries.

A study done by the Centre for Basic Research and Makerere University’s School of Economics titled “Is Uganda’s growth profile jobless?” shows that a 36 per cent GDP growth over the years was recorded alongside a decline in the employment rate.

According to the study, agriculture was the biggest culprit, contributing a negative 6.5 per cent of the employment in Uganda. Agriculture also contributed to perpetuating poverty as the sector contributed 31 per cent to the decline in per capita GDP, the study adds.

Manufacturing contributed an 8 per cent increase in GDP per capita, although its effect on the total employment rate was negative at 0.2 per cent.

The study concludes that service and industry are the best sectors to develop, as they have been found to contribute positively to both per capita GDP and the total employment rate.

Edward Bbaale, a researcher at the Centre for Basic Research said that a large proportion of the population holding low paying jobs in agriculture has a negative effect on the region’s prospects for overcoming poverty. He added that some prefer to stay unemployed rather than take up low paying jobs in agriculture.

The existence of these low-paying jobs affects innovation by governments and there is limited job creation. This especially affects the youth who are less likely to take up low paying jobs in agriculture, something that could reverse the gains in poverty reduction achieved over the past three decades.

READ: Region falls short in creation of jobs for youth, MDG report says

Mr Bbaale said that it would be beneficial if governments in the region focused on growing the services and industrial sectors, as these contribute positively to the increase in employment and GDP per capita.

However, Prof Augustus Nuwagaba, a lecturer at Makerere University, while agreeing that agriculture is contributing little to per capita GDP growth, he argues against focusing on the services and industry sectors while ignoring the sector that employs most of the population.

“Agriculture’s contribution to growth is low but saying let’s not invest in it is equivalent to throwing out the baby with the bathwater,” he said.    

He said governments should invest in an agriculture bank to provide low interest capital for the sector. He recommends 4 and 8 per cent interest rates. This would provide the capital that the youth need to invest in this sector.

Streamlining markets and land tenure systems to allow for large-scale farming that can allow for mechanisation would also attract more youth to the sector.
Prof Nuwagaba said this is the only way the region can quickly create jobs for the youth.

According to experts, the current youth unemployment rates are a threat to stability and future growth. “If East African governments are to cope with the pace at which young entrants will come into the job market in the next decade, there is an urgent need for innovative approaches to accommodate this youth bulge,” said Eugenia Kayitesi, executive director of the Institute of Policy Analysis and Research (IPAR-Rwanda).

Governments should also ensure that investments in the information technology sector are delivering results. In 2011, the Uganda government invested in the training of 500 graduates to start working in business process outsourcing (BPO).

President Yoweri Museveni promised at the time to invest in BPO, so that Uganda could compete with the likes of India in this area. Since then, the only action taken to actualise this promise is the launch of an incubation centre that has the capacity to host just 240 people. 

Without opportunities in highly productive service sectors like ICT, Mr Bbaale said the youth have resorted to hawking, boda boda business and running small hotels.

In an IPAR-Rwanda study on innovative approaches to incorporating youth into the labour markets in East Africa, Mr Bbaale found that at least 25 per cent of the region’s youth could not find suitable work, while 64 per cent were discouraged from looking for work because they thought that a job search would be futile. Another 9 per cent did not know where to seek work. 

For those who managed to get employment, 52 per cent did not have a contract with the employer: they had an oral agreement with an unlimited duration. Some youth were self-employed and most of them raised their own start-up capital. 

Most youth’s reason for remaining self-employed is because they have a desire to be independent with more flexible hours of work.