According to the Uganda Bureau of Statistics (UBOS), the employment rate in Uganda decreased to 47.80% in 2012 and this has seen a downward spiral to date. Just last month, Makerere University held it’s 69th graduation that saw over 13,000 students graduate (not including all the other universities and higher learning institutions that had their graduations at the end of last year). Again, according to UBOS, almost 60,000 graduates flood the job market annually although only 8,000 jobs are available. Putting all this into consideration, the challenge of unemployment kicks in.
In order to combat this challenge, I suggest that starting up new companies is the way to go. Let me explain why.
Consider the UK. According to business statistics from the Parliament of the UK, there are about 5.7 million SMEs (companies that employ around 1-200 people). Now, an average of 20 people multiplied by 5.7 million is about 114 million people. This means that these companies actually have to outsource employees since the UK has about 66 million people according to World Bank statistics. These companies do all sorts of service delivery and production bringing a lot of revenue for their home country and ultimately, the global economy. The US, on the hand, has over 30 million SMEs.
In Uganda, there were only 20800 registered companies by 2012 according to UBOS. This is very meager, considering Uganda has about 45 million people as of September 2018 and a fertility rate of 5.8 according to the World Bank. With over 75% of the young population having passed through school, at least to some level, we have a population that has the basic skills required in literacy and numeracy (basic reading, writing, and counting). These skills are enough for a group of young brilliant minds to start a company.
Let's look at statistics on how starting companies would impact Uganda. Let’s say 10,000 companies were started this year alone, each employing 100 people who are also shareholders in the company, that would be a million people off the streets (by people I mean youths mostly). If this kind of start-ups continue at that rate of expansion (10000 companies per year, each employing the same number of people), we would be outsourcing employees in ten years. Basically, this means that in the next ten years, by 2029, we would be at full employment. Of course, this is hypothetical but demonstrates the potential of this idea.
So what is a company and how does one register it?
First of all, a company is a legal entity made up of an association of people, be they natural, legal, or a mixture of both, for carrying out commercial or industrial enterprise for profit (dividends). In order to start a company in Uganda, you’ve to search for a business name which costs around Ugshs 2000, and then reserve it at Ugshs 20000. Then, you’ll need to obtain a Certificate of Incorporation, Investment License and a Taxpayer Identification Number (TIN), all of which are free. After that, you’ll need to register with the National Social Security Fund (NSSF) which costs between Ugshs 70,000-500,000 depending on the type of business you’re starting. Lastly, you’ll need to make a company seal and this will cost you up to Ugshs 225000. With that you’ve a registered company. The information here can be found on the Uganda Registration Services Bureau (URSB) site or with the Registrar of Companies. URSB is under the Uganda Registration Services Bureau Act Cap 210 mandated/ responsible for registration of public and private companies in Uganda.
One may wonder why it is important to open up a company when they can as well do business without ever being a registered company. Well, let’s just say that having one gives you many advantages.
For example, given the nature of a company, it is a separate entity from its owners. Essentially, it can be sued, or it itself can sue others and this doesn’t necessarily involve the owners. How this is important is that when the companies goes under, the owners’ property cannot be attached to the company to pay the losses made.
Again, when one opens a company, they can easily get funding from several institutions or individuals if their company has a sound proposal and business ideas. Investors love putting their money in companies and not investing in an individual as such. This is because individuals can misappropriate the capital whereas it is rather hard for a company to just vanish, among other reasons.
Another advantage of starting a company is that with pulling resources from all the shareholders, it becomes possible for them collectively to begin a business that would otherwise have been impossible to do so individually.
It also helps in creating jobs. With time, as the companies grow, so does the demand for employees. With the calculations earlier given, even full employment in Uganda can be achieved if this is done right and with the right supervision from government and nurturing from the old timers.
Having companies in the country also helps the government to track taxpayers and hence collect more revenue through this. As it is, most taxes are collected from a small number of operating companies in Uganda like MTN, private banks like Stanbic Bank among other companies.
A lot of our raw materials are exported in their raw form, with start-ups, this can be remedied as all these companies, and especially the production companies would need them. Considering Uganda is an agricultural nation, agro-based companies would help provide farmers with the market and a whole chain of production would be created here. All these and other advantages like the fact that companies survive even after the death of the founders give a glimpse of what can be achieved with starting companies.
In conclusion, it should be noted that the government of Uganda has made it even simpler to register a company as this can all be done at the Uganda Registration Services Bureau (URSB) and at a generally low fee, around Ugshs1million, one can register a company. So what are you waiting for?