24/05/2026
Why entrepreneurship is the main path out of Uganda’s youth underemployment
By Kasolo Okocha
Uganda has one of the youngest populations in the world. 78% are under 30, and 22 million are aged 18-35. Every year ∼400,000 youth enter the job market. The formal sector creates maybe 30,000-50,000 jobs annually.
That gap is why “underemployment” is the real problem: graduates driving boda bodas, degree holders doing casual work, people working 20 hours a week when they want 40. Government jobs and large firms can’t absorb this number. Entrepreneurship is the only route that can scale fast enough.
Here’s why:
The formal job market is too small
Uganda’s economy is 80% informal. Big companies, NGOs, and government can’t hire millions. The public sector is capped by the wage bill. Manufacturing and services are growing, but slowly.
Entrepreneurship flips the model: instead of waiting for a job, youth create micro-businesses, SMEs, and digital ventures that employ themselves and others. One boda boda owner with 3 bikes becomes an employer. One agro-processor with a small mill hires 5 people.
Uganda has low barriers to start small
You don’t need millions to start in Uganda.
Mobile money and MTN/Airtel mobile money APIs let you run a business from a phone.
Agriculture, retail, food processing, repair services, and digital gigs have low entry costs.
Social media and WhatsApp cut marketing costs to near zero.
This matters because most youth don’t have capital for big ventures, but they can start small and reinvest.
Demography + tech = opportunity
Uganda’s youth are digital natives. Mobile pe*******on is 75%, internet pe*******on 45% and rising. That opens doors for:
Agri-tech: selling produce via apps, cold chain rentals, small-scale irrigation.
Digital services: graphic design, video editing, data entry for global clients.
Local services: laundry, food delivery, event decoration, repair work.
These jobs don’t exist in government hiring plans, but they exist in the market if someone creates them.
Policy is finally catching up
The government has rolled out programs aimed directly at youth-led business:
Parish Development Model (PDM): 100m UGX per parish per year, channeled to SACCOs for youth and women groups.
Emyooga: seed capital for sector-specific SACCOs like welders, tailors, market vendors.
Youth Livelihood Programme: loans for group enterprises.
None of these are perfect - corruption and late disbursement are real issues. But the shift is clear: the state is betting on self-employment, not mass public hiring.
It builds resilience against shocks
When COVID hit, formal jobs collapsed. But youth running small shops, mobile money agencies, and online reselling kept cash flowing. Entrepreneurship diversifies income streams. A graduate with a small poultry unit + freelance design work is less vulnerable than one waiting for a single job offer.
It changes the mindset problem
The biggest bottleneck isn’t capital. It’s the expectation that “a job” means a government or NGO contract. Entrepreneurship forces youth to identify problems around them and solve them for profit. That shift - from job seeker to problem solver - is what creates long-term employment.
The catch: entrepreneurship alone isn’t magic
For it to work, 3 things need fixing:
Skills: Most youth leave school without practical business or technical skills. TVET and hands-on training matter more than more theory.
Access to affordable capital: 18-24% interest from banks kills small business. PDM and Emyooga help, but scale is still low.
Market access: Youth can produce, but linking to buyers, export markets, and formal contracts is hard.
Where those 3 align, you see real movement. Places like Gulu, Mbale, and parts of Kampala have youth running profitable agri-businesses, welding shops, and digital hubs because they got training + startup capital + a market link.
Thd bottom line is, Uganda can’t employ 400,000 youth a year through government hiring. It can if 10% of those youth start businesses that employ 2-3 others each. That’s how entrepreneurship solves underemployment - not by replacing formal jobs, but by creating thousands of small engines of employment the formal sector never will.
Want me to break down 3 sectors in Uganda right now where a youth with 500k UGX can realistically start and make profit in 6 months?
End
Jinja City Mayor Kasolo ,
The London School of Economics and Political Science - LSE