16 April 2013

Uganda: Feature - Where Is the Graduate Venture Capital Fund?

Robert Komakech, a university graduate, has been trying to access the youth venture capital fund for over a year now, without much success. Despite being a graduate, Komakech, a resident of Gulu municipality in Gulu district, is one of thousands of unemployed graduates, trying to start his own enterprise.

"I have got business ideas but I can't make them real because I don't have capital," he said.

Aware of the challenges in accessing the highly sought-after youth fund, the government, in this financial year 2012/2013 introduced a separate "graduate venture capital fund", to specifically help graduates like Komakech access startup capital.

Finance Minister Maria Kiwanuka allocated Shs16 bn to the fund, which was later approved by Parliament. Just like the youth fund, the graduate venture capital fund is a joint partnership between the government, with support from the German Development Agency (Kfw), and the participating banks - Dfcu, Stanbic and Centenary.

Kiwanuka explained in her budget speech that the fund is meant to facilitate graduates to develop bankable project proposals and create or expand enterprises for self-employment —thus scale down unemployment among graduates.

However, Komakech is not aware the graduate fund exists. Norbert Kafuuma, another university graduate, also says he only knows about the youth fund. Kafuuma and Komakech represent majority of the graduates who are ignorant about the fund.

If there was any doubt that the graduate fund is all but nonexistent, it was erased when senior Finance ministry officials claimed they were unaware of it. One even tried to correct this writer, suggesting that The Observer meant the better-known youth fund.

Emmanuel Kitamirike, the Executive Director of Uganda Youth Network (UYONET), also notes that indeed, majority of the graduates are unaware of the fund, which he blames on the government,

"Government has not done enough to popularize the fund apart from the budget pronouncement," he said.

No guidelines:

In addition to the graduates' ignorance of the fund, The Observer has also established that the fund has failed to takeoff, nearly a year after it was announced. MP Gerald Karuhanga (Youth Western) says no single graduate has got a loan from the fund.

"If you find a graduate who has got a loan from the graduate fund, I double the money he will have got and give it to you," Karuhanga says. "The financial year is coming to an end and yet the money has not been utilized, so where is this money?" the fiery MP asks.

Karuhanga warns that if graduates don't stand up and demand accountability, the graduate venture capital fund may turn out to be a lie to the graduates.

"We don't know where this money is? We have rumours that it is in Bank of Uganda but doing what?" Karuhanga wondered.

Karuhanga is also troubled that since the announcement of the fund, the Finance ministry has not issued any progress report to Parliament. Karuhanga says he has been consulting graduates and has given Finance Minister Kiwanuka two weeks to explain where the money is and why the government is taking too long to roll it out.

"If she fails to do so in two weeks, we shall mobilize unemployed graduates to storm her office and demand [the] whereabouts of the money," he stressed. But MP Patrick Nakabale (Youth Central) says there is no cause for alarm. "Government is still consulting on the operational framework and harmonization. Let the graduates wait for the guidelines soon," he said.

Diana Kahunde, the Corporate Communications Manager at dfcu bank, one of the participating institutions, acknowledges that banks are yet to receive guidelines and operational procedures to follow.

"The fund is still a work in progress and the details plus mechanics have not been shared by government."

But Kitamirike faults the government for the delay.

"Why is government working in reverse gear; it made an announcement and allocated the money in the budget without the operational framework," he told The Observer recently.

He says as the government works out the guidelines of the fund, the graduates should first be sensitized on entrepreneurship, since most prefer white-collar to blue-collar jobs.

Kitamirike believes that owing to the ill-preparedness of graduates for blue-collar jobs, the fund might not be used to enhance their entrepreneurship and create more jobs for the graduates.


"We need to first reorient graduates to shift their mindset from white-collar to blue-collar job, if this is to generate more jobs," he said.

Currently, he says, most graduates can't be absorbed in the industry, service and agriculture sectors since they have no entrepreneurship skills to initiate their own productive businesses. Experience shows that graduates tend to shun the informal sector. The problem of graduate unemployment is not likely to be impacted by this fund.

Kitamirike says that UYONET has already tabled its proposals to government on how the fund should be streamlined and managed. One of the proposals, he says, is to ensure that the graduate fund at least benefits half of the unemployed graduates if it is to create an impact.

"If at the end only a few graduates access the fund's loan facility, it will be a drop in the ocean considering the thousands of youth who are churned out of universities annually," he said.

As graduates wait for the funds, Kitamirike counsels they should begin identifying innovative business ideas that can attract funding, create jobs and spur the country's social-economic growth.

For now, though, the graduate youth fund seems to be going down the road walked by many policy statements in Uganda - sounding impressive to the ear, but failing to translate into meaningful action.

This Observer feature is published in partnership with Panos Eastern Africa, with funding from the European Union's Media for Democratic Governance and Accountability Project.

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