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The East African : Jan 26th 2015
34 The EastAfrican OUTLOOK JANUARY 24-30,2015 D E VE LO PME N T EA govts urged to devise new ways of getting youth Without oppo≥tunities in the highly p≥oductive se≥vice secto≥s like ICT, youth have ≥eso≥ted to hawking and boda boda By DICTA ASIIMWE Special correspondent A bout 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 big- gest 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, direc- tor 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, agri- culture 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 serv- ice 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 500 IPAR STUDY The number of Ugandans trained in business procurement in 2011 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. Mr Bbaale said that it would be beneficial if governments in the region focused on growing Working on a vegetable farm. Youth feel manual agriculture is hard work and less paying. Picture: File the services and industrial sectors, as these contribute positively to the increase in employment and GDP per capita. However, Prof Augustus Nu- wagaba, 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 According to an IPAR study in Rwanda At least 25 per cent of the region’s youth could not find suitable work, but 64 per cent were discouraged from looking for work because they thought that a job search would be futile. Nine per cent did not know where to seek work. Some 52 per of those employed can’t 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 startup capital. 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. Kenya’s top ea≥ne≥s fail to ≥ake in enough cash as shilling continues BY ALLAN OLINGO The EastAfrican KENYA’S EXPORT earnings from top cash crops plummeted last year as the country’s currency continued to perform dismally against the dollar. The drop in the performance of top for- eign exchange earners was blamed on erratic weather patterns and suppressed external demand, which led to reduced exports especially in horticulture. Kenya has projected a 10 per cent drop in earnings from its flower exports in 2014 attributed to the European Union’s decision to impose an 8.5 per cent tax on the exports pending its reinstatement on the list of those eligible for duty-free access to the EU market. Kenya also lost its number one position as the world’s largest horticulture exporter to Europe due to tougher food safety measures and its high cost of production, which saw flower importers looking to India and Ethiopia for cheaper flowers. The European market accounts for 40 per cent of Kenya’s horticulture exports. “The drop in horticultural earnings has significantly slashed farmers’ incomes and put thousands of jobs on the line. The stalemate with the European Unioncontributed to the drop in trading volumes in the horticultural sector, we now hope that with the signing of the agreement that the tariffs will be eased,” said CEO Kenya Flower Council, Jane Ngige. “We lobbied tirelessly for the reinstate- ment of Kenya to Market Access Regulation and we believe that in 2015, the industry will now enjoy a timely reinstatement even as exporters warm-up for Valentine’s Day 2015, the flower industry’s peak season,” Ms Ngige added. In 2015, the industry will be looking at growth and expansion. “We can now concentrate on production; with the reduction in fuel prices, we expect our cost of production to come down, especially on air and road transportation, which we rely on to reach our markets,” Ms. Ngige said “This year, we also expect the government to complete the northern and southern bypasses that will ensure easy access to the airport, which will make our product delivery timely and efficient. It will be a big plus for the industry,” Only coffee saw an improvement in 2014 with earnings from exports rising 17 per cent to $254.2 million due to improved production and higher prices, earning the farmers an average of $212 per 50kg bag. At the close of the 2013 coffee year, the total coffee sold both directly and at the auction was 41,876 metric tons which earned farmers $145 million at an average price of $176 per 50 kilogramme bag. “We managed to secure four new export markets in the 2013/14 season. Besides our traditional European and USA markets, we expanded to Turkey, Bulgaria, Seychelles and Zambia. We expect to produce 45,000 tonnes of coffee in 2014/15, fetching $150 million from an estimated average price of $200 per bag,” the Coffee Board of Kenya said in a statement. Tea prices have been under pressure globally as other countries have increased output and exports. Top grade Kenyan tea, which fetched a maximum price of $4.45 per kg in 2013, was fetching an average of $3.40 as at December 2014. Data from the Kenya National Bureau of Statistics showed that as at May last year,earnings from tea had dropped 17.6 per cent to $421.2 million while those from horticulture fell from $393.6 million to $383.6 million. In 2014, fruit exports grew by 38.7 per cent in value compared with the same period in 2013 to rake in $46.2 million. Vegetable farmers experienced a 10 per cent decline in sales, with the tonnage dropping from 57,000to 51,351 as the EU implemented tough standards. Fresh Produce Exporters Association chief The drop in horticultural earnings has significantly slashed farmers’ incomes and put thousands of jobs on the line.” CEO Kenya Flower Council, Jane Ngige executive Stephen Mbithi said the outlook for the industry in 2015 is positive especially after the EU agreement. “We are looking at a favourable weather forcast that should see us maximise on production. The reduction in fuel prices is also positive for us because it will greatly reduce transportation costs. Our members have also familiarised themselves with the EU regulations, so we don’t expect a lot of penalties and issues this year,” Mr Mbithi said.
Jan 19th 2015
Feb 2nd 2015