At the floor of Parliament, to the Right Honorable Speaker;
Uganda has a high burden of youth unemployment at a record of 64%—the greatest of all times. A 2016 Youth Survey conducted by the Aga Khan University revealed that about 48% of youth aspire to own businesses. Youth’s desire to engage in entrepreneurship provides a clear path towards achieving United Nations Sustainable Development Goals and Uganda’s National Development Plan of ending poverty and improving the quality of life for Ugandans. The World Bank’s “voices of the poor” reported that over 60,000 poor people rose above poverty through personal businesses or gainful employment. In Uganda, small businesses are prone to early deaths not seeing their 5th birthday due to limited access to limited or no access to financial capital, poor working capital management, poor financial literacy, unstable markets unfavorable borrowing, lending and tax policies.
Far from it, the Ugandan economy is digitalized day by day, with limited capital to rest workspaces or hire human resource; young among many others have entrepreneurs have utilized online on social media platforms to run their business. Using Instagram, craft artists, fashionista and traders have marketed their products. Through Facebook, young entrepreneurs have built the business brands, run virtual offices and addresses hence legitimizing their existence on the digital market spaces and through Twitter, young people have pushed content to promote their products at the lowest bundle cost of 250 UGX since they have no capital. On average, on every sale made, with less capital of 265,000; a young person would sale a shirt he bought at 8500 at 10,000 and earn a profit of 1000-1500 ugx, in a month, maybe make sales of his about 30 shirts in stock using social media marketing a cost of 8,000 ugx a month on the social bundle. At the end of the month, she usually would have a profit of approximately 30,000-40,000 ugx. As we know any laws of business grows, this money would enable this young person increase their capital in terms of goods for sales, hence 30 shirts from the initial investment 3 shirts at 25,500 ugx leaving a balance of 7,500 ugx profit after they have paid their social media bundle. As the reports above show, you will discover that this young person will need to eat food and rest. However, they bring together their small incomes, rent a small room at less than 50,000 ugx, walk long distances to make their sales or even cater for their needs. Rt. Hon, with the recent social media tax, that means she has to use 6,000 ugx extra of her 7,500 ugx profit leaving her with 1,500. Right Hon and fellow Members of the house, how will this young person service let alone her business thrive if she lacked shelter, food or even her little access to some sort of income?
The same plight affects young people with legally registered business most of us in the house. You start a small business in Safaris, make headways and by the end of the year earn a small profit ‘if you a lucky’ that would have helped re-invest and solidify the business. However, Rt. Hon, before you even start, one will be required to register the company (with legal help) at least most 350,000 ugx, get an operation license from UTB at 500,000 ugx and pay a City/Town council trading license of approximately 300,000 ugx. Hence before you even think of doing business you need about 1,200,000 ugx. When running the business, URA will estimate a tax figure in this case about 6,000,000 ugx just right after 12 months not forgetting other costs of actually running the business. This has scared young men and women away from becoming entrepreneurs hence the failure of the would-be sustainable businesses.
Small Scale Businesses
According to the income tax act (1997), small-scale businesses are those with growth turnover of less than 50 million shillings per annum. Hence, with reference to the above case studies, let us assume a small scale business as one with the following features;
A business which employees 1-50 people.
Ii. Has a capital investment of less than shillings 40 million.
Iii. Has average annual revenue/sales of less than shillings 50 million.
Please note, the majority of small-scale business have a less than 2,000,000 investment if it’s to be registered. With the inflation of market prices in everything, it’s a harsh wolf for the survival of such entities.
We, therefore, argue that the government considers youths’ financial inclusion in the economic tool by gently lessening the tax pressure from youth enterprises and on social media. This will easily translate sustainable businesses with young people holding assets, and more asset accumulation, which is linked to a stronger strategy for reaching a middle-income economy. Financial inclusion is a powerful tool towards supporting young entrepreneurs, families, and societies. With tax holidays for youth business start-ups, the credit gap will close for small businesses hence a good first step towards increasing economic growth and per capita incomes hence boosting more sustainable cash flow revenue for the nation as well.
Our request to the government, let’s make new policies and plan identified: Note that “Let’s review and amend weak legislation and institutional frameworks aimed at supporting the improvement of youth employment, the limited effectiveness of education and skills development, poor sustainability of youth economic enterprises and limited effectiveness of programs supporting youth employment in the country.”
For God and My Country