Youth enterprise growth: Evidence from youth forward in Uganda

Banga, Karishma; Njambi-Szlapka, Susan; Phiona, Sanyu Research Report Youth enterprise growth: Evidence from youth forward in Uganda ODI Report Provided in Cooperation with: ODI Global, London Suggested Citation: Banga, Karishma; Njambi-Szlapka, Susan; Phiona, Sanyu (2021) : Youth enterprise growth: Evidence from youth forward in Uganda, ODI Report, Overseas Development Institute (ODI), London This Version is available at: https://hdl.handle.net/10419/251127 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by-nc-nd/4.0/ Report Youth enterprise growth Evidence from Youth Forward in Uganda Karishma Banga, Susan Njambi-Szlapka and Sanyu Phiona June 2021 Readers are encouraged to reproduce material for their own publications, as long as they are not being sold commercially. ODI requests due acknowledgement and a copy of the publication. Foronline use, we ask readers to link to the original resource on the ODI website. The views presented in this paper are those of the authors and do not necessarily represent the views of ODI or our partners. This work is licensed under CC BY-NC-ND 4.0. How to cite: Banga, K., Njambi-Szlapka, S. and Phiona, S. (2021) Youth enterprise growth: evidence from Youth Forward in Uganda. Report. London: ODI (https://odi.org/en/publications/youthenterprise-growth-evidence-from-youth-forward-in-uganda). Cover photo: Farmers use bikes and boda boda transport to reach the banana market and sell their produce in Uganda, 2019. Photo credit: MehmetO / Shutterstock.com Acknowledgements The authors are grateful to all the communities who took part in this research, without which this report would not have been possible. We are particularly grateful to the young people and their parents from Masindi, Dokolo, Kiryandongo and Kole who generously shared their insights and experiences. We thank the Youth Forward Initiative partner Youth Empowerment Through Agriculture (YETA) and Development Research and Training (DRT) in Uganda for their collaboration and support. We would like to extend our gratitude to Daphine Akampurira for facilitating fieldwork data collection and coordination of the field logistics, and to the Research Assistants, including. Lilian Kugonza, Omara Isaac, Felix Walter Opio, Olet Alex, Omongo Innocent, Ronald Odwongo, Opio Jamol, Gloria Abongo, Enyabu Absolom Anthony, Enyonu Ephraim, Obok Joseph, Christine Kimuli, Ramathan Atuhura, Kusemererwa Gladys, Julius Anguzu, Mwesigwa Martin, Betty Achan Charlene, Atim Kellin, Ayot Nacny Racheal, Mugisa Martin and Francis Otit-Viu. We also thank Allan Dickson Otim for supporting the quantitative data collection tool automation, training and supervision of enumerators across the four districts. We would also like to thank Linda Calabrese (ODI) and Aruna Bolaky (United Nations Economic Commission for Africa) for their comments as peer reviewers, as well as the Mastercard Foundation for providing comments on a draft version of the report. We appreciate the feedback received from Melanie Pinet and Louise Shaxson on the concept note for this research, and their comments on the final report. Thank you to Sarah Turner and Elaine Antwi for project management, and to Emilie Tant, Aaron Bailey-Athias and John Maher for publication and editorial support. All views and opinions expressed in this report are those of the authors, who took the final decision on content, and do not necessarily represent the position or policy of the Mastercard Foundation or its partners. Contents Acknowledgements / i Display items / iv Acronyms / vi Executive summary / 1 Key messages and findings / 1 1 Introduction / 5 2 Drivers of enterprise growth / 8 2.1 Youth aspirations and enterprise growth / 8 2.2 Role of ICT and digital platforms / 10 2.3 Business and skills development / 13 2.4 Access to financial and non-financial resources / 15 3 Policy context: interventions for youth enterprise growth in Uganda / 18 3.1 Promoting youth entrepreneurship in Uganda / 18 3.2 Interventions on financial inclusion and youth enterprise development / 20 3.3 Designing multifaceted design programmes / 21 4 Methodology and data / 24 4.1 About Youth Empowerment Through Agriculture (YETA) / 24 4.2 Data collection and selection of research participants / 25 5 Six key findings on current youth business practices and challenges in Uganda / 27 5.1 Most young entrepreneurs own more than one business / 27 5.2 Entrepreneurs with more than one business are doing better / 28 5.3 Young entrepreneurs are not formally registering their businesses / 29 5.4 Most of the youth run microenterprises / 30 5.5 Young people use multiple methods to sell their products / 30 5.6 Most young entrepreneurs receive information on business growth and practices via radio, and then youth groups / 33 5.7 Covid-19: challenges to youth businesses / 34 6 The role of youth aspirations and business growth / 39 6.1 Scaling primary business / 39 6.2 Expanding into new businesses / 40 7 Technology, digital platforms and enterprise growth / 44 7.1 Access to mobile phones / 44 7.2 Use of digital platforms in agriculture / 48 8 Trainings, skills development and enterprise growth / 60 8.1 The role of training in enterprise growth / 60 8.2 Which trainings are benefiting young people’s business growth? / 61 8.3 Training and young people’s business aspirations / 63 9 Investments and resources for business growth / 65 9.1 Sources of investment capital / 65 9.2 Types of investment / 66 10 Gender perspectives for youth enterprise growth / 72 11 Recommendations / 75 Bibliography / 78 Appendix / 88 Display items Boxes Box 1 Defining micro, small and medium-sized enterprises / 5 Box 2 The social media tax in Uganda and influence on usage / 13 Box 3 Summary of findings from UNCTAD’s The Least Developed Countries Report 2018 / 17 Box 4 Group-based interventions / 19 Box 5 The Youth Livelihood Programme (YLP) / 21 Box 6 The YETA group model / 25 Tables Table 1 Digital solutions to youth agribusiness constraints / 10 Table 2 Types of digital platform / 11 Table 3 Barriers to youth access to financial services / 16 Table 4 Distribution of respondents by district / 26 Table 5 Share of respondents by number of businesses owned / 27 Table 6 Revenue and profit (primary business) / 28 Table 7 Formal registration of businesses / 29 Table 8 Aspirations for primary business, across sectors (percentage of total enterprises) / 40 Table 9 Access to information for non-platform users / 56 Figures Figure 1 Role of youth aspiration in business growth / 9 Figure 2 Designing multifaceted programmes for youth enterprise development / 23 Figure 3 Number of young people mobilised / 24 Figure 4 Distribution of respondents by gender / 26 Figure 5 Respondents by primary and secondary businesses / 27 Figure 6 Diversification by number of businesses owned by a youth entrepreneur / 28 Figure 7 Distribution of respondents by enterprise size / 30 Figure 8 Source of information / 33 Figure 9 Main aspiration for primary business (percentage of respondents) / 39 Figure 10 Access to and ownership of a mobile phone by gender / 44 Figure 11 Mobile phone ownership by business and size / 44 Figure 12 Operation model of platforms (percentage of platform users) / 49 Figure 13 Support in using the ag-platform (percentage of users) / 50 Figure 14 Participation in business group / 51 Figure 15 Benefits of ag-platforms / 53 Figure 16 Diversification by respondents (number of platform users) / 54 Figure 17 Access to information and services / 54 Figure 18 Types of training undertaken / 56 Figure 19 Reasons for not using ag-platforms / 58 Figure 20 Access to training according to enterprise size (percentage of respondents) / 60 Figure 21 Sources of investment according to gender / 65 Figure 22 Share of youth with multiple businesses by primary business size / 69 Figure 23 Pathways to MSME growth / 71 Acronyms AfCFTA African Continental Free Trade Area ASSP Agricultural Sector Strategic Plan BMAU Budget Monitoring and Accountability Unit CURAD Consortium for enhancing University Responsiveness to Agribusiness Development Limited DRT Development Research and Training DYNAMIC Driving Youth-led New Agribusiness and Microenterprise EAYIP East Africa Youth Inclusion Programme FAO Food and Agriculture Organization of the United Nations FDI foreign direct investment FGD focus group discussion GDP gross domestic product ICT information and communications technology ILO International Labour Organization KII key informant interview LDC least developed country LMIC low- and middle-income country MAAIF Ministry of Agriculture, Animal Industry and Fisheries MB megabytes MSEs micro and small enterprises MSMEs micro, small and medium enterprises NCBACLUSA National Cooperative Business Association CLUSA International NDP National Development Plan NGO non-governmental organisation OECD Organisation for Economic Co-operation and Development OTT over the top tax (social media tax in Uganda) SACCOs Savings and Credit Cooperatives SMEs small and medium enterprises SMS short message service STRYDE Strengthening Youth Development through Enterprise 6ODI Report In this research, definitions for enterprise size are as follows: • Microenterprises have between 0 and 4 employees. • Small enterprises have between 5 and 19 employees. • Medium-sized enterprises have between 20 and 99 employees. Inconsistencies are also reflected in the literature. For example, the International Finance Corporation differentiates firm size by number of employees, with microenterprises having 2–9 employees, small enterprises 10–49, and medium-sized enterprises 50–299. The ILO uses this same definition but without an upper bound for medium-sized enterprises (ILO, 2019). In contrast, the 2018 United Nations Conference on Trade and Development (UNCTAD) report defines microenterprises as those with fewer than 5 employees and small enterprises as those with 5–9 employees, with the rest being classified as medium-sized enterprises. With few opportunities for formal and salaried employment, microenterprises are emerging as a key pathway to addressing unemployment; microenterprises make up 90% of private sector production and employ 2.5 million people in Uganda (Fiala, 2018). While many employment policies and programmes see these enterprises as avenues for creating employment opportunities and economic development, only 1–4% of the microenterprises in lower-income countries graduate to medium size (Berner et al., 2012). Many of these microenterprises operate in uncertain environments characterised by unreliable institutions, predatory or negligent government agents, overcrowded markets, multiple volatile sources of household income and exploitative buyers, suppliers and credit providers (ibid.). In 2020, microenterprises in Uganda were hit hard by Covid-19, particularly in the agricultural sector (Lakuma et al., 2020). Due to lockdown rules and a ban on weekly markets, these microfirms were unable to access inputs. Demand for fresh agricultural products decreased significantly as people switched to dry rations, leading to falling prices. At the same time, there were increases in transport costs due to reduced occupancy per vehicle (in line with government Covid-19 measures), reductions in household income, and decreases in informal cross-border trade (World Bank, 2020b). Loss in income forced every fifth household to borrow in order to manage the Covid-19 crisis, with the majority of households borrowing due to reduced sales or an inability to sell produce, or having to close their business (ibid.). In May 2020, the majority of micro and small businesses in Uganda expected to exit business within one to three months if the situation persisted and if they continued to face constraints on access to input and output markets and demand, or due to Covid-19 preventive measures such as provision of hand sanitisers or handwashing facilities (Lakuma et al., 2020). To cope with the loss in income, young people in developing countries are drawing on their savings (as opposed to borrowing) which they soon expect to run out the longer lockdown measures continue (ibid.). Under these heightened challenges to youth enterprises, it is more important than ever to understand the challenges to youth enterprise resilience and growth, and the 7ODI Report effectiveness of the approaches that have been implemented. Given the context, this report examines youth enterprise development in the agricultural sector in Uganda, with the aim of informing the Mastercard Foundation’s current and future programming for boosting job creation in the country. This research aims to determine which interventions have been most effective in helping youth entrepreneurs in the Ugandan agricultural sector. It uses primary data collected from a survey of 367 youth entrepreneurs in the Youth Empowerment Through Agriculture (YETA) programme, complemented with detailed semistructured interviews. It determines the factors enabling enterprise development – both business growth, and expansion into new businesses – and sets out the type of support a youth entrepreneurship programme should be offering. Section 2 of the report presents a review of literature on different drivers of youth entrepreneurship, with a focus on Uganda. Section 3 discusses the data and methodology used in this study. Section 4 presents analysis using the data on the current landscape of business practices followed by young Ugandan entrepreneurs, and Section 5 presents six key headline findings on current youth business practices and challenges. Sections 6–9 delve deeper into the data, analysing the drivers of business growth for young people under four broad categories: youth business aspirations; technology and digital platforms; training and skills development; and investment and resources. Finally, Section 10 discusses the gender differentiated experiences of youth enterprise growth and Section 11 provides core recommendations to improve programmes and policy that direct support to youth enterprises and aim to enhance livelihoods. 8ODI Report 2 Drivers of enterprise growth 1 ‘Least developed countries’ (LDCs) is a category used across the UN system and in much development literature: www.un.org/development/desa/dpad/least-developed-country-category.html. In this report, the authors would like to acknowledge current debates which question the use of this terminology, seeking to challenge the power relationships and assumptions inherent in ideas about progress and development. Although in this instance we employ the term ‘LDCs’ to situate this report within the current literature, we will continue interrogating the appropriateness of the term and working with our partners to develop more appropriate language and terminology. This section outlines the current literature on drivers of enterprise growth in the Ugandan agricultural sector. In doing so, it seeks to develop a conceptual framework for understanding factors affecting entrepreneurship in the sector, which informed the design of the questionnaire for the survey. It begins by outlining the concept of entrepreneurship in low-income countries like Uganda, before discussing four drivers of growth as outlined in the literature. While traditional occupational definitions conceptualise entrepreneurship as an individual’s choice between waged employment and selfemployment, in ‘least developed countries’ 1 (LDCs) self-employment is often the result of labour market conditions and the lack of alternatives (UNCTAD, 2018). These so-called ‘survivalist’ entrepreneurs typically operate in lowproductivity and low value-added activities where they produce traditional goods and services with established rather than innovative technologies (ibid.). As a result, their growth potential is limited and they typically remain as microenterprises, with little evidence of graduation to small or medium-sized enterprises. Most rural enterprises combine agricultural production and non-farm activities to increase and diversify income and mitigate risks of seasonality. Microenterprises dominate much of the informal sector in LDCs (74% of enterprises), while small enterprises make up 20%. In rural areas microenterprises make up 95% of firms, typically smallholding and family farms. There are high entry and exit rates among these enterprises as survival is hampered by seasonality and low productivity. 2.1 Youth aspirations and enterprise growth Individual characteristics, particularly aspirations, motivation and orientation towards the future, are associated with growth (Sutter et al., 2019). The goal or aspiration of subsistence is to provide household welfare rather than grow a business (ibid.). While growth-oriented enterprises show a capacity to accumulate capital to reinvest, the majority – so-called ‘survival enterprises’ or subsistence businesses – prioritise risk diversification by creating new enterprises rather than growing existing ones (ibid.). This horizonal growth model is even more common among women, as their household duties and childrearing responsibilities mean they require a steady income source, and having multiple businesses allows them to account for different seasonal markets and cash flow requirements (Richardson et al., 2004). Forming effective aspirations is an important enabler for young people’s business growth. Effective aspirations exist when the gap between a young person’s current living situation and their imagined future is big enough to incentivise them 9ODI Report to invest in their future and forego immediate benefits, but not so big as to be unrealistic (Löwe et al., 2019). When young people form effective aspirations, they are more likely to make longer-term investments that will increase their business productivity. As they save towards these longer-term goals, they also tend to forego spending on consumption for instant gratification. Internalised ideas of what is appropriate work and perceptions of what is accessible to them can create a psychological trap that makes it harder for young people to use the opportunities available to them (ibid.; Boateng and Löwe, 2018). This can present challenges for young people’s business growth. These aspirations develop through a combination of lived experiences (such as family, structural or community constraints) and social messaging (see Figure 1). Structural constraints include the economic environment, which limits the types of opportunities young people can pursue and the perception of what opportunities are available to them, where local labour market conditions influence the range of realistic aspirations. This perception is also influenced by what others in the community say and do (social messaging) (Gardiner and Goedhuys, 2020), and is itself influenced by the economic environment. In rural Ghana, for instance, cocoa farmers are well respected in the community as cocoa farming provides a stable income for individuals and also plays a key role in generating foreign exchange, which contributes to young Ghanaian’s aspirations to work in the sector (ibid.). In urban areas, however, young people aspire to white-collar jobs and view farming as a failure. Figure 1 Role of youth aspiration in business growth Family • Parental education • Wealth • Family enterprise Community Messages • Church • School • Media • Youth Forward Developing aspirations Structural constraints • Land • Finance • Schooling Lived experience • Diversity of professional experience • Respected professions • Community values Achieving aspirations I n d i v i d u a l a s p i r a t i o n s I n d i v i d u a l a s p i r a t i o n s Social messages and beliefs High-value goals and high-cost investments Low-value goals and low-cost investments Inability to invest Investment not worthwhile Realistic aspirations Skill sets • Finding ‘routes to success’ • Resilience • Agency thinking Success How aspirations are developed and achieved Source: Boateng and Löwe (2018). 10 ODI Report To grow a business, young people with limited resources must make financial sacrifices. Therefore, for young people to aspire towards business growth and forego immediate consumption to make necessary investments, they must perceive business growth to be a realistic, affordable aspiration and the sacrifices worthwhile. Furthermore, attainment and formation of aspirations are mutually reinforcing (Leavy and Smith, 2010). This suggests that, as young people achieve smaller milestones towards their larger aspirations as a result of their current investments, they are more likely to continue investing. Gender also plays a key role in forming aspirations as societal messages about what is appropriate and achievable for young women limit the spectrum of aspirations that young women can form. Much has been written about young people aspiring to move away from agriculture in rural Uganda, and other rural areas in Africa, due to their negative perceptions of agriculture and their aspiration to escape farming life (Leavy and Smith, 2010). Young people’s willingness to aspire to grow an agricultural business is therefore also likely to be influenced by their perception of agriculture. Messaging around agriculture as a viable business with potential for success is also likely to be key. As digital technology brings other messages from outside young people’s immediate social circle, they are likely to aspire towards less traditional businesses. 2.2 Role of ICT and digital platforms In constrained business environments like those in Uganda, ICT – including digital platforms – can help businesses overcome important barriers and grow. ICT fosters the growth of microenterprises by improving efficiency, coverage, reach and flexibility (Tang and Konde, 2020). As shown in Table 1, digital technology can help young people in agriculture by enhancing their access to finance, access to inputs and equipment, access to markets and capacity development (World Bank, 2021). ICTs can promote business growth by increasing efficiency and productivity through: • reduced needs for physical journeys to clients and customers (Foster et al., 2018). ICT enables information flows for enterprises and thus better management and monitoring of assets and workers (ibid.). Agri-wallets, for instance allow farmers to borrow and spend Table 1 Digital solutions to youth agribusiness constraints Challenge Traditional solutions Examples of digital solutions Access to finance Family, friends, money lenders Digital agri-wallets; smallholder credit and alternate credit scoring, crowd funding platforms Access to inputs and equipment Manual or animal aided Digitally enabled equipment sharing Access to markets Farmer cooperatives, intermediaries Market information systems, digital platforms for finding buyers Capacity development Producer organisations, extension agents Advisory services through videos and platforms, real-time alerts for weather or pests, digital farmer extension services Source: Adapted from World Bank (2021). 11 ODI Report money digitally, saving on transport costs while improving security and efficiency (World Bank, 2021). Alternate credit scoring, where agricultural entrepreneurs can record financial transactions and performance data, can allow young people to build credit profiles without need for collateral (ibid.). Crowdfunding can also provide alternative sources of finance through connecting young business owners with potential investors. • greater access to resources and knowledge, including awareness of government support, tools and customer knowledge, which improves market participation. For example, platforms like Hello Tractor enable young people to hire tractors and other agricultural services such as ploughing, planting or harvesting (ibid.). • building stronger networks between firms, enabling creative and innovative activities between them. • improving firms’ interaction with the market by enhancing access, efficiency and coordination. Mobile phone use provides both access to market and information, enabling enterprises to select new markets, find customer bases and integrate business on online platforms. Real-time information on market prices allows business owners to make informed decisions about when to sell, limiting their risk of selling produce under value (ibid.). Financial technologies like mobile money enhance these transactions by removing physical barriers such as distance. • enabling microenterprises to connect with customers and coordinate value-chain activities, as well as improve operational efficiency in businesses and promote development of cost-effective business models (Foster et al., 2018; Ilavarasan and Otieno, 2018). • behavioural changes and aspirational changes among microentrepreneurs. ICT use can lead to a shift away from reactive, short-sighted and lowlevel aspirations about growing their business towards more information-based decisionmaking, planned coordination, skills learning with strategic thinking, and business management and expansion (Tang and Konde, 2020). Digital platforms, in particular, remove previous gatekeepers and enable new types of businesses and innovations to form (World Bank, 2016; Foster et al., 2018). The use of such platforms can improve access to resources, such as the leasing of equipment which young people cannot afford to buy, while also providing alternatives to credit scoring and facilitating access to better loan products for young people. The types of digital platforms are set out in Table 2. The level of disruption through digital technologies and platforms, for traditional agricultural and other businesses, depends to a large extent on mobile access and level of internet penetration (World Bank, 2021). Table 2 Types of digital platform Types of digital platforms Broadcast media (TV and radio) • Distribution of information, storytelling • Access: low cost, requires broadcast signal Feature phones • Two-way communication, access to information, digital finance (i.e. mobile money) • Access: low cost, requires 2G cellular signal, mediated use through agents and brand ambassadors Internetenabled devices • Business tool, social media, sales system, interactive education • Access: higher cost, requires 3G cellular service, available in urban and peri-urban areas with higher literacy, mediated use through brand ambassadors and agents and extension officers Source: authors, adapted from Mercy Corps and Mastercard Foundation (2019). 12 ODI Report Although there are several pathways through which ICT and digital platforms can enable enterprise growth, there is no consensus on the true impact of ICT use on micro and small enterprises (MSEs) in Africa; methods for evaluating impact are often not rigorous, relying on self-reporting and often ill-defined concepts. This is in part due to the lack of clarity across ICT studies on what type of specific technologies are being referred to (i.e. mobile phones, computers, internet or SMS), as well as which types of businesses. The systematic review from Ilavarasan (2017) suggests a positive impact on business growth as measured by market share, profits, profitability and increase in customer base in MSEs in low- and middle-income countries. Mwangi and Acosta (2013) find that in Kenya and Tanzania microentrepreneurs with fewer than five employees who used ICT saw profitability and customer base increase as a result of mobile phone usage. Similarly, Frederick (2014) finds that among enterprises in Zambia with fewer than five employees the use of mobile phones and mobile money, in particular, was associated with increases in profits, controlling for income, level of education and access to financial services. Mobile money users report saving more money for business purposes, as this was a safe and easy way to save. Yet, especially in Africa, ICT use among microenterprises remains low and is limited to basic day-to-day telephony and communication purposes, including real-time information search, contacting customers or suppliers and basic marketing activities (Donner and Escobari, 2010; Foster et al., 2018; Tang and Konde, 2020). There are cases of more integrated and advanced uses of ICT among microenterprises, including digitalising transactions and operation systems, managing customer and partner relations, coordinating valuechain activities and supporting administration, but these cases remain rare (Donner and Escobari, 2010; Tang and Konde, 2020). In the agricultural sector in Africa much of the ICT technology is focused on text- and voice-based services using mobile phones to communicate agricultural information to rural farmers. Radios are also a common means for communicating this information. Computers, on the other hand, are rare (Donner and Escobari, 2010; Ayim et al., forthcoming). The adoption of more advanced ICT is constrained by poor technological infrastructure, inappropriate ICT policies and low capacity to use these technologies among users, especially farmers (Ayim et al., 2020). This is because most farmers in Africa live in rural areas characterised by poor road networks, no access to electricity and poor network connectivity (ibid.). Low literacy rates affect farmers’ ability to use ICT tools, while the costs of servicing mobile phones further limit farmers’ access to them. Women face additional challenges due to their comparatively lower education and lower income. While there is agreement in the literature that mobile phone usage accelerates the flow of information, there are disagreements as to whether this translates into new customers and suppliers. Mobile phones are used to keep in contact with existing customers rather than to find new ones (Esselaar et al., 2007; Tang and Kode, 2020). There is little evidence that mobile phones help users in low- and middle-income countries (LMICs) start new businesses. Nor is there evidence that mobile phones were used to bypass middlemen. In practice, mobile phones transformed the relationship with middlemen, wholesalers and traders, helping them to perform their roles more effectively (Donner and Escobari, 2010). Although over half the Ugandan population has access to mobile services, only a sixth has access to the internet. Coverage and reach of broadband in Uganda is also poor, with 65% of the population covered by 3G and only 17% by LTE/4G networks (Gillwald et al., 2019). Currently, 13 ODI Report the low penetration of ICT and the limited ICT infrastructure means that there is little incentive for businesses to use ICT (Deen-Swarray et al., 2013; Obiri-Yeboah et al., 2013; Tang and Kode, 2020). Challenges to businesses include also limited availability of network, high costs, poor service quality and access to electricity, which all affect value for money for ICT, especially for resource-constrained microenterprises (Donner and Maunder, 2014; Kabanda and Brown, 2017; Tang and Kode, 2020). These challenges are compounded by the government’s tax on social media, which increases the costs for already resource-constrained young people (see Box 2). 2.3 Business and skills development Another pathway to foster business growth is through training. Typically, training is intended to provide young entrepreneurs with the skills to start or improve business performance. A systematic review focusing on skills training for increasing youth engagement in agricultural employment finds that the types of trainings provided range from agriculture-related courses, on-the-job training, technical or vocational training and agricultural training to general skills training on entrepreneurship, financial literacy, and also life skills for engagement in agriculture (Maïga et al., 2020). The study finds that skills training in agriculture encourages youth engagement and self-employment in agriculture and also leads to increased profits/income, with some evidence of increased productivity (including increased yields). While interventions are sometimes tailored to a particular business, they are often generic trainings, typically lasting for less than a year. Most studies measuring the impact of training for MSMEs focus on training areas around business management, accounting, financial literary or vocational skills development, and look at the impact of these on entrepreneurial skills and Box 2 The social media tax in Uganda and influence on usage The introduction of a social media tax led to a significant decrease in use of internet in Uganda (Pollicy, 2019). The ‘over the top’ (OTT) excise duty is a 1% tariff on all mobile money transactions and a daily tax of 200 Ugandan shillings (about $0.05) that was introduced by the Government of Uganda in 2018. It is mandatory for accessing any of more than 60 social media platforms, including Facebook and WhatsApp. According to the government, the tax was introduced to generate revenue that would help turn Uganda into a middle-income country by 2020 (Akumu, 2018). However, the OTT led to a drop in internet users from 18.5 million to 13.5 million in the first six months following its introduction (Rukundo, 2020). The Pollicy (2019) report also found that the OTT led to significant decreases in income among those who were using social media for business, as well as a 50% decrease in mobile money transactions just one month after it was introduced. Of their 976 research respondents, 87% indicated that the mobile money tax had resulted in reduced income and businesses growth (ibid.), and many switched to banks or in-person transactions. However, a large number also revealed that they were using virtual private network (VPN) connections to avoid paying this tax. 14 ODI Report improvements in business performance. These studies find significant improvements in business skills and behavioural skills, plus higher motivation and optimism (i.e. aspirations). However, this does not imply that business skills are sufficiently developed to run or expand businesses (Cho et al., 2015); most studies on business skills training find no impact on profit or sales (ibid.; Berge et al., 2012; Blattman et al., 2014). Some studies looking at the impact of training on investment also find no significant impact. Only when investment is a core component of the training is the training likely to show an impact on business investment (Bruhn and Zia, 2011). Overall, training seems to have less impact on business expansion but seems to be more helpful for business start-up, especially when combined with financial assistance. Vocational and skills training works better than financial training in improving business performance and elicits even better results when combined with financial support and counselling (Cho and Honorati, 2013). There is some consensus that the combination of training with financial assistance provides better results than either of those in isolation (Fiala, 2014; Grimm and Paffhausen, 2015). Gender is a key determinant of the success of these programmes – typically, the effect of training is greater for male participants than females. One study found that vocational skills training, combined with microloans for small-scale income-generating activities and together with life-skills training (such as family planning), can help improve labour force participation for women, which is often stifled by childbearing and early marriage (Bandiera et al., 2015; and Bandiera et al., 2018). As technology is increasingly embedded in business operations, new skills are becoming important for employability. Banga and te Velde (2018) highlight three categories of skills that are emerging as critical in the digital age: basic to intermediate job-neutral digital skills, such as accessing the internet, digital advertising and data analysis; job-specific digital skills, such as computer programming and web-app development; and soft skills such as communication, management and critical thinking. Lack of basic digital skills or digital literacy, especially among the elderly and rural dwellers, is one of the biggest barriers to mobile internet adoption in Uganda (Krishnan et al., 2020). Young people, in particular, face the double challenge of poor infrastructure and lack of affordability to access digital technology (Pinet et al., 2021). While expanding coverage of a mobile broadband network can increase access, there is a clear usage gap (GSMA, 2020) largely explained by affordability, with many citing the high costs of internet and data bundles, which especially affect people in lower-income households (Pinet et al., 2021). Around 43% of respondents in the latest Uganda Bureau of Statistics household survey cited lack of confidence, knowledge or skills as a major reason for not using the internet (GSMA, 2019). A survey of over 800 farmers in Uganda on ag-platform use revealed the critical need for increasing skills development and training for the youth; only 35.44% of young platform users were found to have high digital skills, i.e. skills for using mobile phones to access digital apps, browse the web or for mobile money (Krishnan et al., 2020). Targeted initiatives are therefore needed to increase access for young farmers to digital and soft skills training. Providing digital skills requires both supply-side interventions, such as formal education and informal technical and vocational training, along with demand-side input such as training from employers and coordination between the supply of and demand for these skills (ibid.; Banga and te Velde, 2018). Young farmers are more likely to benefit from mobile phones, for instance, when they are better educated and have more assets 15 ODI Report (Krishnan et al., 2020). Young women also require more support as they are less likely to benefit from digital technology and mobile phones. 2.4 Access to financial and nonfinancial resources Young people’s business growth is intricately linked to productivity and income limitations. Young people in Uganda face significant challenges in accumulating the resources they need, such as farming inputs and tools/technology, to increase their productivity and grow their businesses (Löwe and Phiona, 2017). Resource constraints that young people face include access to financial resources that can enable young people to move beyond subsistence farming, and access to non-financial resources such as markets, input and technology, in addition to social capital and networks. In terms of financial constraints, young entrepreneurs in Uganda face the double challenge of having microenterprises and being young. Smaller firms are more likely to experience constraints to access finance than larger firms. As firms grow, the less likely they are to perceive access to finance as their primary obstacle (Haider, 2018). However, the costs of credit remain very high even for larger firms in Uganda, with interest rates often over 30% (Mugume and Rubatsimbira, 2019). The probability of small businesses accessing a bank loan is less than half that of medium-sized businesses in low-income countries (Haider, 2018). There are different reasons for this in individual countries, but some of the most significant overarching factors include the following: • Capital constraints in Africa decrease as firm size increases (Fowowe, 2017). As a result, small firms are more likely to finance their growth through informal sources (Haider, 2018). • Small firms face unfavourable collateral requirements and interest rates. This challenge is even more acute for small firms in the agricultural sector, given that credit repayment deadlines rarely coincide with agricultural seasons. • Proving creditworthiness is more difficult for smaller firms (ibid.). • Small firms are less likely to keep and show information about their business (past performance and current operations) and so are perceived as riskier by lenders. It is also more costly for small firms to meet information requirements from lenders than for bigger firms that keep this information as part of their routine business operations (Onubedo and Yusuf, 2018; Ndiaye et al., 2018). For young people in Uganda, the capital constraints and limited access to finance for small businesses and microenterprises are compounded by the fact they are young. As youth, they face greater barriers to accessing financial services than older adults (Demirgüç- Kunt et al., 2015), with common barriers including regulatory requirements (such as minimum age), lack of identification documents (ID), the costs associated with opening and maintaining an account and the lack of financial literacy (see Table 3). Young people’s business growth is further constrained by the lack of a range of financial and non-financial resources. Use of improved inputs like seeds, fertiliser, agricultural chemicals and veterinary drugs is significantly lower in youth-headed households, as they tend to lack the knowledge and financial resources to afford these high-cost inputs (Ahaibwe et al., 2013). Additionally, challenges faced by young entrepreneurs are often similar to those faced by small businesses more generally. 22 ODI Report While conceived as a multifaceted programme, much of the implementation of the YLP focused on disbursing and recovering loans, while business-support activities, such as building the capacity of youth and guiding and nurturing their investments, were given much less emphasis (Bukenya et al., 2019). Young people expressed the need for training in marketing, adding value, price determination, financial management, bookkeeping and post-harvest handling (ibid.). These findings support Blattman et al. (2018), who find that providing funds alone is not enough to help enterprise growth. Young people were diverting the funds they received to consumption and basic necessities like health and education. Young people who were engaged in agribusiness also suffered losses due to prolonged dry weather, pests and diseases, as well as price fluctuations (ibid.). There were reports of mismanagement of funds by the group leaders and diversion of funds to other, non-business-related expenses, such as health and education expenses. Another study on the Youth Venture Capital Intervention also found no significant impact on enterprise growth for rural youth, as most beneficiaries were urban youth who were older (aged 26–35) and working in the service sector with a mature business (Ahaibwe and Kasirye, 2015). This highlights the need for more comprehensive programming that not only looks to provide young people with funds for their businesses and training, but also facilitates their access to markets with the provision of market intelligence, access to technology, standards compliance support, plus longer-term guidance and nurturing to make productive investments. Value-chain and more comprehensive approaches, like one-stop shops, seek to address longer-term business success by enabling youth to access the wider support they need. Examples of the value-chain approach to promoting enterprise growth include the Afribanana intervention (which focuses on the banana value chain) and CURAD (an incubator which focuses on the coffee value chain) (FAO, 2017). The one-stop shop or hub concept delivers a comprehensive range of business support services to youth enterprises in one centre or location, along with closer supervision and guidance for their development. Providers include Enterprise Uganda, the Uganda Industrial Research Institute (UIRI), Afribanana, Strengthening Youth Development Through Enterprise (STRYDE), CURAD and the East Africa Youth Inclusion Program (EAYIP). Yet, while they show promising results, one-stop shops are costly to establish and manage. On the demand side, there is a need for ventures that are high impact and profitable so that the businesses survive and grow. For this, targeted interventions towards relieving supply constraints for youth entrepreneurs need to be complemented with macro-level interventions by the government to create productive investment opportunities in the agriculture sector, raise its productivity, attract investment – including FDI – and link youth entrepreneurs to larger-scale investors and turn them into suppliers in value chains. The African Continental Free Trade Area (AfCFTA) can play an important role here, creating opportunities for youth entrepreneurs to connect to regional value chains and regional markets. 23 ODI Report Figure 2 Designing multifaceted programmes for youth enterprise development Skills Problem: Youth lack skills Solution: • business management, financial management, managerial skills and vocational trainings • digital literacy and skills training Problem: Youth lack access to financial services Solution: • loans, cash and payment in-kind • banks, savings groups • financial literacy and education Problem: Lack of access to markets and knowledge/skills Solution: • mentoring advisory services • coaching • support networks • incubators Problem: Ease of doing business Solution: • standards compliance support • simpler and incentivised formal registration for businesses Financial resources Regulatory framework/ policy environment Business support Source: authors, based on literature review findings. 24 ODI Report 4 Methodology and data Using a mixed-methods approach, this research aims to determine which interventions have been most effective in enabling youth enterprise development in the Ugandan agricultural sector. The study determines the factors that can enable entrepreneurs to build resilience and grow their businesses, specifically identifying the type of support a youth entrepreneurship programme should be offering. We also attempt to unpack the role of technology as a new driver of business growth. 4.1 About Youth Empowerment Through Agriculture (YETA) The target group for this study was participants in the YETA programme (see Box 6), part of the Youth Forward Initiative in partnership with the Mastercard Foundation, ODI, Global Communities, Solidaridad, NCBA CLUSA and GOAL. This programme was implemented in the Northern and Midwestern areas of Uganda in the districts of Dokolo, Kole, Masindi and Kiryandongo, in a consortium led by NCBA CLUSA. To empower young people through agriculture, YETA participants mobilised and organised into groups to receive a series of trainings. The training package included governance, financial literacy and agroentrepreneurial skills, as well as foundational skills. During their engagement in agriculture, youth were supported and mentored by parent mentors, peer educators and leaders, thereby building and enhancing their capacities to build sustainable enterprises. YETA programme participants were recruited in cohorts from which baseline and follow-up data were collected. A follow-up survey occurred one year after the end date of their mentoring period and data were collected from a representative sample of selected participants. Figure 3 Number of young people mobilised 2,225 5,824 10,820 15,391 1,780 4,005 10,282 16,644 27,130 4,458 5,824 11,739 5,000 0 10,000 15,000 20,000 25,000 30,000 Cohort 1 Cohort 2 Cohort 3 Cohort 4 Male Female Source: Löwe et al. (2019). 25 ODI Report Box 6 The YETA group model A key component of the YETA project was the support for young people to organise themselves into groups in order to facilitate access to markets, inputs and affordable finance. Organising themselves into groups increased young people’s social capital, which crucially allowed them to access resources they were not able to access as individuals. Young people who formed Village Savings and Loans Associations were able to pool their funds by saving small amounts regularly as a group and lending to group members for business investments. Membership in VSLAs also facilitated member and group access to formal financial services through banks. In addition to gaining access to finance through VSLAs, young people also pooled their resources through cooperatives and associations. In these groups, youth members pooled their produce which allowed them to sell in bulk and negotiate better prices on the market for their produce, as well as access cheaper inputs such as seeds (Löwe et al., 2019). By saving in groups, young people increased their access to capital for investing in land, equipment and inputs like seeds and fertilisers. Accessing savings and loans also allowed young people to rent bigger plots of land. YETA also put young people in touch with financial service providers like PostBank, encouraging them to open a bank account while collaboratively designing loan products with PostBank that would meet young people’s needs, such as mobile phone services for savings and loans (ibid.). Through their experience in the VSLAs, young YETA participants also gained access to government funds via the Youth Livelihood Programme, as government officials had more confidence in the groups’ capacity to manage and repay loans. 4.2 Data collection and selection of research participants Data on Cohort 2 programme participants were collected in four phases. Phase 1 involved designing a survey questionnaire, in collaboration with Development Research and Training researchers, on youth business enterprise development in Ugandan agricultural value chains. This questionnaire (see Appendix 1) included questions on the business profile of enterprises (number of enterprises run by a youth, type of enterprises, yearly profits and revenue, etc.) and on the use of digital platforms, resources and trainings. In Phase 2, the survey questionnaire was pre-tested on five YETA programme participants in June 2020. This contributed to redesigning the survey and adding clarifications and definitions to important categories, such as digital platforms and secondary businesses. In Phase 3, the automated survey questionnaire was rolled out to 367 youth entrepreneurs in Kiryandongo, Kole, Dokolo and Masindi to help understand business growth and its driving factors, including youth aspirations, technology and access to capital. Data collection was completed in August 2020. One limitation of the study was that not all the participants responded to all questions, which resulted in some variation in number of respondents. In some questions, therefore, the sample size is smaller than 367. 26 ODI Report Figure 4 shows that, of the young entrepreneurs who responded, 61.7% were male and 38.3% female. Table 4 further shows the distribution of respondents by district for both the target number and those followed. Figure 4 Distribution of respondents by gender Male Female 61.7% 38.3% Table 4 Distribution of respondents by district District Target number Respondents Balance Dokolo 97 82 15 Kiryandongo 102 81 21 Kole 145 145 0 Masindi 73 59 14 Total sample (N=367). In Phase 4, to triangulate and complement data from the quantitative survey, qualitative data were collected using in-depth semi-structured interview questionnaires (60 respondents) and FGDs (4 groups). Young people were purposively selected in Kole and Kiryandongo districts according to their gender, types of business, whether they had indicated they were growing one business or diversifying into multiple businesses, whether they were running multiple businesses or one business, the level of success of their business measured by income, the number of businesses they were running, whether they were employers, and business survival rates (how long their business had been operational). Respondents were also selected according to whether they had indicated in the survey that they used ag-platforms or not, and had access to mobile phones (personal or shared). This aimed at collecting a diverse range of different types of business and individual characteristics and levels of business success or failure. In addition, small FGDs were conducted consisting of only young women entrepreneurs, only young men entrepreneurs, and mixed young women and men entrepreneurs. To further triangulate the results from the in-depth semi-structured interviews and FGDs with young entrepreneurs, two FGDs were also held with parent mentors who provided business mentorship and advice to young people under the YETA programme. To gain a policy perspective, KIIs (6 respondents) were conducted with selected district level officials. 27 ODI Report 5 Six key findings on current youth business practices and challenges in Uganda Different indicators can be used to understand youth enterprise development. These include growth of the business through increases in productivity, expansion into new businesses, formal registration of businesses, turnover and profits, as well as increases in the number of employees. Below, we highlight six key findings on current business practices and challenges to enterprise growth from the survey and interviews. 5.1 Most young entrepreneurs own more than one business Roughly 60% of youth entrepreneurs in the sample own more than one business (Table 5), while it is further observed that of those who own multiple businesses, 61% are male. We also find that, on average, 68% of the total income is derived from the primary business. Most of the primary businesses are concentrated in farming; 65% of primary businesses are classified under farming whereas this is the case for only 25% of secondary businesses (Figure 5). Examples of those who responded “other” include tailoring, bread making, hairdressing/running a hair salon and bricklaying. Roughly 15% of secondary businesses in the sample are classified under trading food and produce, and another 15% are in livestock. On average, primary businesses are four years old and secondary enterprises are three years old. Table 5 Share of respondents by number of businesses owned No. of businesses Frequency Percentage 1141 39.83 2174 49.15 333 9.32 4 6 1.69 Total sample (N=367). Figure 5 Respondents by primary and secondary businesses Farming Primary business Secondary business Livestock Other, please specify Retail Teacher/health/ social services Trading (other) Trading food or produce Transport Farming Hospitality Construction Livestock Other, please specify Retail Teacher/health/ social services Trading (other) Trading food or produce Transport 28 ODI Report 5.2 Entrepreneurs with more than one business are doing better Youth with only one business are not doing as well as entrepreneurs with more than one enterprise – especially if they have diversified into new valueadded activities and markets, with non-farming businesses earning on average higher revenue and profit in a year. In terms of diversification, 48% of entrepreneurs in the sample who own multiple businesses have diversified into new markets and 45% into higher value-added activities, compared to a lower 43% and 31% of entrepreneurs with a single business, respectively. This will be explored in more detail in Section 6. Table 6 shows that the average annual revenue (in US dollars) in farming businesses (primary business) is $339, which is almost half the average revenue in transport businesses in the agricultural value chain. Figure 6 Diversification by number of businesses owned by a youth entrepreneur 010 20 30 40 50 60 Diversified into new products Diversified into new markets Diversified into higher value-added activities Share of respondents (%) Multiple businesses Single business Table 6 Revenue and profit (primary business) Average revenue ($ per year) No. of businesses reporting yearly revenue Average profit ($ per year) No. of businesses reporting yearly profit Farming 338.93 155 222.51 156 Livestock 457.02 15 262.67 14 Other, please specify 422.60 25 220.82 28 Teacher/health/social services 958.50 3756.00 3 Trading (other) 798.75 6378.00 6 Trading food or produce 391.29 13 231.78 13 Transport 671.63 4383.40 5 Average 386.41 221 243.69 226 29 ODI Report 5.3 Young entrepreneurs are not formally registering their businesses Formalisation of businesses is often correlated with business growth, but causality goes both ways (Merotto, 2020). Formalised firms are more likely to grow, become more productive and create jobs. Formalised firms are also more likely to access credit and business support (ibid.). At the same time, those that do not formalise often identify a lack of resources as the reason for not formalising. Microenterprises can often only access government support for their business if that business is registered with a local authority. However, the costs and the lengthy process of registering businesses in Uganda are deterrents for many. A large majority of enterprises remain informal for reasons such as the costs (financial and non-financial) of the business registration process, lack of information on the process and the uncertainty about the benefits of registration compared to costs (UNCTAD, 2018). Some enterprises choose to remain informal due to their uncertainty about the viability of their business model and a consequent reluctance to incur the costs of registration. SME owners often do not see the benefits of formalising their business which, combined with the added costs of registering and the tax obligations they incur on formalising, deters them from doing so (ibid.). Evidence from government interventions to encourage business registration has shown these to be unpopular (Lince, 2011). Particularly for women, keeping their businesses ‘invisible’ can be an important way to protect themselves against their husbands or male relatives taking their resources and earnings. It is unsurprising, then, that almost 89% of the youth enterprises are not formally registered (see Table 7). Only 25 of the 367 youth entrepreneurs have registered their primary business; 13 have registered their secondary business and only 3 (less than 1%) have both primary and secondary businesses registered formally. While 15% of the male entrepreneurs in the sample have at least one business registered, this falls to 5% in the case of female entrepreneurs. Kole and Kiryandongo had the most registered businesses (17 each), while Masindi and Dokolo had the least, with 3 and 4 youth entrepreneurs registering their businesses, respectively. Table 7 Formal registration of businesses Business – formal registration Frequency Percentage Dokolo Kiryandongo Kole Masindi Total None is registered 78 64 128 56 326 88.83 Both primary and secondary business are formally registered 1 1 1 – 3 0.82 Primary business 312 8 2 25 6.81 Secondary business 4 8 1 13 3.54 Total 82 81 145 59 367 100 30 ODI Report Some of the reasons presented among those who registered include: I registered my boda boda [motorcycle transport services] business so that I can get more customers and I can also be trusted since I am attached to a stage where customers find me. (FGD with young male business owners, Kiryandongo). It is a government demand and it also helps me to benefit from government projects. (Young male business owner, Kiryandongo). Others included: I was motivated by fellow business colleagues. To acquire loans and trading licences. To evaluate the business progress. To sell to the company. (Survey responses from young business owners in Kiryandongo and Kole). It was also acknowledged in Kole during the validation meetings with district officials that formal registration for youth enterprises could be challenging. This may be because, as youth diversify their enterprises, it is difficult for the young entrepreneurs to get motivated to register a business they are still exploring. Generally, youth microenterprises remain informal, employing family and operating in fear of being subjected to tax. 5.4 Most of the youth run microenterprises Of the young entrepreneurs in the sample, almost 56% have a primary business employing between 1 and 4 people, 25.1% of the sample have a primary Figure 7 Distribution of respondents by enterprise size 12.4% 6.3% 55.9% 25.1% Selfemployed Micro Small Medium N= 363. business employing between 5 and 19 people (with employment both being seasonal and based on a verbal contract), and 12.4% are self-employed (see Figure 7). The average number of employees in single-business enterprise is 3, while in multiple businesses enterprises it is 5. 5.5 Young people use multiple methods to sell their products Some young people sell directly from their homes, while others sell to passers-by from roadside stalls near their home. For those who had a goods store or brewery, customers would come and buy directly from there. Many youth sell their products through middlemen or agents, or through a market or trading centre. Only a few young people mentioned selling services such as boda boda or casual labour as a source of income. Transport is a key facilitator for accessing customers when young people are not selling from home or are not located near a place where they can sell (e.g. near a market or a main road). For young people selling from their home to 31 ODI Report A young male farmer checks his phone for updates on seed prices. Photo credit: Courage007 / Shutterstock.com customers, they relied on transport like boda boda or their own bicycle to deliver their produce to their customers. So, I can access customers at any time, in farming business, I would hire a vehicle and ferry it to town direct but in goats rearing and piggery I use boda boda or sometimes I use bicycle to reach them, and they will also do the same. (Young male business owner, Kole). Having their own means of transport, such as owning a bicycle, provides flexibility to young people, allowing them to reach their customers at any time. When they do not have that flexibility, it appears to be easier to sell at a marketplace. This is likely to be because youth can reach more people there at a lower cost and more quickly than having to pay for and wait for transport each time they want to reach individual customers at their homes. When they struggled to sell enough of their stock, being able to access their own means of transport provided them with the flexibility to go and sell their stock at a nearby market. This is probably due in part to young people having to weigh up the costs of public transport and the potential risk of not selling any or enough of their products after paying for that transport. I used to sell cassava as my secondary business, but my bicycle which I was using to carry cassava was stolen. Now I sell directly at a marketplace. (Young female business owner, Kole). 38 ODI Report in the cooperative … you go to the cooperative and VSLA but there is no money there. People are not saving because they are not working. (Young male business owner, Kole). To cope with these challenges, young people typically stopped running multiple businesses and started focusing on the farming business, as the quotes above illustrate. Others reported using mobile phones and digital technology to stay in touch with customers and organise deliveries to their customers, as well deliveries from suppliers. The use of technology allowed young people to continue running their business from home. I make sure that I am always in contact with my customers. We normally communicate to make sure that our relationship is still okay, even if the virus is still here. (Young female business owner, Kole). During Covid they chased us from the market at around 6 p.m. so myself and others would inform our customers that they should come and find us at home. I would put my sack in front of my door and assemble my products for sale just outside my home. (Young female business owner, Kiryandogo). I used to spend much of my time in the garden and sometimes when I come back, I would put some of my products at home, then use the phone to alert customers to come and buy from my home. When they come I observe standard operating systems like keeping distance, washing hands frequently and wearing a mask. (Young female business owner, Kole). Since I deal in this business of cabbage, onions, green peppers that can easily be destroyed at any time, it was very hard for me but I tried to overcome the problem by calling other people within this area – those who are willing to come and buy at a cheaper price then they sell it later. (Young male business owner, Kole). Several young people pointed out that having a bicycle would have been helpful as they could have delivered their produce to customers without relying on public transport. Some were selling to customers on credit and are still waiting to be paid back. Those selling crops who had access to storage facilities decided to store their crops until market prices improved. Those who were able to do so put safety measures in place, such as hand-washing facilities and social distancing measures, that would allow them to continue with their business activities. A few young people also reported borrowing from their VSLAs. Overall, Section 5 has provided important insights into current business practices and challenges faced by young entrepreneurs in Uganda. This has helped to depict a landscape of how business models are shaping up for the youth involved in businesses across the agricultural value chains. The following sections of the report present findings on the key drivers and enablers of enterprise growth, touching on youth aspirations, technology and digital platforms, skills development and training in business practices, and investment and access to finance and resources, which are explored in Sections 6, 7, 8 and 9, respectively. 39 ODI Report 6 The role of youth aspirations and business growth Young people were asked about their business aspirations to understand whether they were planning to grow (i.e. scale) an existing business or expand into new businesses. By scaling we mean selling more of the same product within the same line of business by increasing yield through improved technology, greater labour efficiency, buying more land, or adding value. As interviews were only conducted during Covid-19 rather than before and after Covid-19 hit, it is not possible to assess the true extent to which aspirations changed as a result of the pandemic. 6.1 Scaling primary business For 56% of respondents the main aspiration for the primary business was to expand into more businesses to reduce risk, while 31% of the sample wanted to invest and grow one business (see Figure 9). Figure 9 Main aspiration for primary business (percentage of respondents) Expand into more businesses to reduce risk Invest and grow one business Other, please specify 31% 56% 13% The young people that were looking to grow their current businesses mostly aspired to do so through purchasing more land and improved technology. While some were choosing to grow one business, others wanted to grow two or more of their current businesses simultaneously. The former were typically using one of their businesses to generate the capital to grow the other business. Investment or plans to invest in mechanisation and technology emerged as an important pathway for youth to grow and scale their businesses, as well as to gain access to land and inputs. My aspirations for my farming business are expanding it and mechanising it … I always farm using a hand hoe but at least if I save money … I can buy an oxen plough and also increase on acreage. (Young female business owner, Kole). I want to work hard and buy the equipment that I use in brewing because currently I just hire that equipment. (Young female business owner, Kole). As discussed in Section 5, entrepreneurs are hiring their own family members as labourers due to trust and the added cost of hiring non-family labour. Young people who employed the help of unpaid labour, e.g. family members or through the exchange of labour (reciprocal employment relations), reported the most benefits to their growth. When young people employed family members or peers, or engaged in a reciprocal labour exchange, this was free labour. This allowed them to increase productivity by helping them to do the work faster, reduce waste, achieve 40 ODI Report better quality and thus increase their yield, while saving money which was then used towards business investments. I used to get low yield because of weeds … But when I started hiring labour, they would clear all the piece of land, and now I get a higher yield. (Young male business owner, Kole). Hiring people has helped me a lot in expanding and growing my business. (Young male business owner, Kole). This was particularly important in the farming business where young people were renting land for a limited time. Because of this, they had to prepare the land quickly to ensure they could leave enough time for the crops to mature by the time their lease expired. The time they saved by hiring help, and the increased income, encouraged young people to rent more land to grow their farming business or start a new business. It ensures time saving … we would weed the whole garden in one day giving time to do other things … Hiring of labour has improved my income through getting higher level of yield from the garden and hence getting some money so I am now preparing to start another business of small retail shop. (Young male business owner, Kole). 6.2 Expanding into new businesses Most young people are aspiring to grow as well as expand one of multiple businesses, or start a new one, and this is true across different sub-sectors of agricultural value chains (see Table 8). Expanding into more than one business also emerges as the primary goal for both young men and women. Many are using their farming business as a springboard to start or grow a secondary nonfarm business, using the profits earned from selling their produce. Below, we discuss some of the key factors motivating youth to expand into new businesses, particularly those who are engaged in farming. Table 8 Aspirations for primary business, across sectors (percentage of total enterprises) Invest in one business and scale that Expand into a new business to reduce risks Other reasons Total enterprises in the sample Farming 35.15 51.46 13.39 239 Livestock 16.67 70.83 12.50 24 Other, please specify 20.75 62.26 16.98 53 Retail 25.00 75.00 0.00 4 Teacher/health/social 0.00 100.00 0.00 5 Trading (other) 58.33 41.67 0.00 12 Trading food or produce 23.81 66.67 9.52 21 Transport 22.22 77.78 0.00 9 41 ODI Report 6.2.1 Coping with seasonality and risks of farming As most young people started with a farming business, they were familiar with the risk factors associated with farming or agricultural business more widely, including weather conditions, pests or diseases and limited access to land, which meant they could not always rely on their farm to bring them a steady income. The seasonality of farming, and the fact that they have to wait several months to reap the benefits of their harvest, meant some sought to generate more income to supplement their farming income lest the harvest not generate enough. Farming as a business requires time, and benefits are only accrued at harvest time. Even after harvesting, young people might choose to wait for market prices to improve before selling their produce. This means that young people have to find ways to earn income during the months when they are waiting for the harvesting period or waiting to sell. Because there are other changes, including seasonal changes that may affect my farming business, I decided to start a poultry business to supplement my farming business so that in case I fail in farming business, I can get money through poultry. (Young female business owner, Kole). I realised that the primary business its income always take long and it is seasonal so I decided to start a small business to supplement it or to support it. So that when I wait for the season, I will be getting some small thing for my wellbeing. (Young female business owner, Kole). Weather conditions can significantly reduce the yield, sometimes to the extent that young people may only be left with enough for their own subsistence. In addition, diseases and pests might also pose significant threats to the crops, further increasing the risk of not having enough yield for a farming business. A second or third business provided security by diversifying both sources of income and risks in case the first business failed to bring in enough income. In some instances, young people were expecting that one business/farming would not bring in enough income and they were running a second or even a third business to supplement that income. Weather sometimes disturbed us in farming and pests can also destroy our crops. Sometimes I may end up even failing in this primary business; that is the reason why I decided to start the secondary business since it is profitable and it is not seasonal. (Young female business owner, Kole). Expanding to new businesses is therefore an essential coping mechanism to face the risk of running a farming business and to guarantee income during times in which young people cannot earn from their farming business. 6.2.2 Using non-farming business income to grow farming enterprises Others were using their non-farming business to generate capital for growing their farming business, e.g. allowing them to rent or buy more land or fuel the growth of their farming business. The challenge of not being able to earn enough income through farming was in part the result of young people not having enough land. This limited their yield and therefore the amount of income they could make from their farming business. As a result, for many young people who engaged in farming as their primary business, the secondary 42 ODI Report business served to bring in the additional income to rent or buy more land, or hire labour to help, and be able to grow their farming business. The secondary business was therefore a strategy to supplement their farming income such that they could scale their farming enterprise. The challenge with farming, I never had enough land where I would cultivate my crops that’s why I decided to start up general merchandise shop. (Young female business owner, Kole). The money I get from this business I put it back to the farming business to help me hire people to help me in the garden when I’m engaged in other things. (Young female business owner, Kole). I decided to start a business which cuts across all seasons to supplement this primary business so that in case I fail in this primary business, the money I will raise from the secondary business which is cutting of timber will help me to hire a piece of land to expand my business. (Young male business owner, Kole). Despite its risks, young people were aspiring to grow their farming business. Their reasons included that farming was easier and more accessible to them than other businesses, it provided food security and there was always a demand for agricultural produce. Among some youth there was the perception that farming was the only business option available to them. Others chose to grow the farming business because, out of all their businesses, this was the one that was generating the most income for them. I’ve been able to earn more income from farming than the kiosk business, that’s why I would like to expand it further. (Young male business owner, Kiryandongo). 6.2.2.1 ‘Farming is the backbone’ Some wanted to grow their farming business because it provided food security, seemed easy to them to run as a business, or because they saw this as their only option for earning income. For others it was more opportunistic, meaning that this is where they saw the most demand. Because farming is the backbone and I can even pay my school fees using farming … it is the only source of money I can get for my own living. (Young female business owner, Kole). I would like to expand my farming business, because from farming I can get food for domestic use and I can also earn some income from the yields of the crops. (Young male business owner, Kiryandongo). There is money in this business and also it is easy to access. (Young female business owner, Kole). During Covid-19 some young people reported closing down other businesses to concentrate on running their farming business, seeing this as a way to ensure their food security, and others said there was always going to be demand for food. It is also likely, however, that this was because the government only allowed people to sell food and not any other goods during lockdown. 43 ODI Report 6.2.3 Transitioning towards another business Others were seeking to transition to other businesses altogether. Some would carry on farming to supply their food security needs or to supply the capital to grow the new business. For others, the idea of expanding into businesses beyond farming continued to appeal. My aspiration for my tailoring business is to save some money so that I can open up a tailoring school. Because if you have a tailoring school and you have very many students, you get a lot of income from it. (Young female business owner, Kole). My plan is that after getting money from these two businesses, especially farming which generates a lot of income, I use that money to start a small-scale retail shop. (Young female business owner, Kole). I’m growing my crops such that in the next few years I may be in position to earn enough money to invest in a hair salon business. (Young female business owner, Kiryandongo). 44 ODI Report 7 Technology, digital platforms and enterprise growth 7.1 Access to mobile phones Access to mobile phones helps young people’s business growth by reducing the cost of transactions such as connecting with customers, sellers and buyers; it also reduced the costs of logistics, most notably transport and helping young people access information around market prices and other market information. Overall, 61% of respondents reported owning a mobile phone, 32% reported access but not ownership, and only 5% reported no access to a mobile phone (this was the same percentage for both males and females). As per Figure 10, 72% of male entrepreneurs own a mobile phone, as compared to only 45% of female entrepreneurs. We further note that, of the 343 young entrepreneurs reporting access to mobile phones, only 7% have access to smartphones. Predominantly, young entrepreneurs use feature phones. Roughly 71% of youth entrepreneurs with multiple businesses owned a mobile phone, as compared to 46% of youth with only one business (see Figure 11). Similarly, a larger Figure 10 Access to and ownership of a mobile phone by gender 010 20 30 40 Percentage of respondents (%) 50 60 70 80 Has access to a mobile phone Owns a mobile phone Male Female Figure 11 Mobile phone ownership by business and size 0 Percentage of respondents (%) Percentage of respondents (%) 20 40 60 80 No access Access to mobile phone but not ownership Ownership of a mobile phone Multiple-businesses Single business 020 40 60 80 No access Access to mobile phone but not ownership Ownership of a mobile phone Medium Small Micro Self-employed 45 ODI Report share (68%) of medium-sized enterprises reported ownership of a mobile phone compared to microenterprises and self-employed youth (60%). This suggests that there is a positive association between mobile phone access or ownership and business development – both in terms of business expansion and, to a lesser extent, in terms of business size. The bigger difference in mobile phone access between those who own multiple businesses compared to those with one business could suggest that access to a mobile phone makes it easier to run multiple businesses. On the other hand, it might simply indicate that individuals with multiple businesses are better able to afford mobile phones. Interviews revealed that many young people were accessing other people’s phones – those of their parents, relatives, spouses, neighbours, friends, or a local mobile agent – to use for running their business. All young people stated that they thought it was important for their business to have access to a mobile phone. While several of those who did not own a phone said they aspired to acquire/purchase one, acquiring a phone is challenging for young women. Some young women reported that their husbands would not allow them to have their own phone as they feared this would lead to infidelity. When you are someone’s wife and you keep on talking on the phone, your husband will feel that you’re talking to your ex which brings problems. That is a main challenge these girls are facing. (FGD with YETA parent mentors). My husband does not accept me having a phone because he says phones spoil women. (Young female business owner, Kole). 7.1.1 Reducing transaction costs through mobile phones Among young men and women, mobile phones are a key way to access customers or buyers and sellers. Typically, young people are using mobile phones to find information about market prices and to negotiate with buyers. The use of this smartphone helped me so much that, when my crops are ready and harvested, if I need to sell them, I would send messages to some of my friends to ask about the prices. (Young female business owner, Kole). This is particularly important for young people who live far away from a marketplace or where marketplaces are not easily accessible. While the agents and buyers determine the price at which they buy the produce, young people communicate with them via mobile phone to find out the current price and decide for themselves whether to sell immediately or wait. In addition to deciding when to sell their produce, young people can also increase their income by choosing who to sell their produce to, depending on the prices they are offered. This seemed to be related to social capital, including whether young people had contact/relationships with people who have information about market prices, as well as the number of buyers they could access. I mostly sell to buyers who come with a better price. I use my phone to get information from my friends. They always give me information of the prices prevailing for the price of commodities. (Young male business owner, Kiryandongo). 46 ODI Report A mobile phone also helps me in consulting how different places are selling or buying their produce so if I want to buy these produce I first consult people in different areas and buy from the cheapest. (Young female business onwner, Kole). A mobile phone is also key for young business owners who run their business from home (especially during the Covid-19 lockdown). Due to the costs and time saved by reducing the need for transport, a mobile phone also enables young people to run multiple businesses. But several interviewees reported that, due to fluctuation of market prices or buyers’ dishonesty, the price offered by buyers can often change by the time they deliver the product. Sometimes the buyer lies to you and doesn’t meet the terms you have agreed with him or her to buy the commodities, so I feel that is a challenge. (Young male business owner, Kiryandongo). Young people who were not communicating with buyers and agents through a mobile phone were typically waiting for agents or buyers to go around the villages to collect their produce. In this case, it is more likely that young people will agree to the price the agent sets, as they have fewer options for finding alternative buyers with better prices. 7.1.2 Reduced cost of logistics and transport Mobile phones not only facilitate communication and relationships with clients/buyers/customers, they also allow young people to keep records of business transactions, which in turn gives them greater control over their finances. For informal businesses, where record-keeping is typically poor, mobile money enabled young businesses to keep a record of their finances. Young people also report that mobile money helps them with their savings, especially for those who do not have access to a bank account. It is perceived to be a safer way of saving money than saving cash in a physical place. When I receive money, I save it in my mobile money … by keeping money in my mobile money, I can plan and avoid unnecessary spending. (Young male business owner, Kiryandongo). If I have a phone and registered with mobile money, I will just put the money on my mobile money account and save it there so that in case I’m moving anywhere, I will be moving with my money with me and I can withdraw it at any time I feel like. (Young male business owner, Kole). The use of mobile phones for saving money was, however, reported much more among young men than young women, as more young males owned a mobile phone and ownership guarantees access and use of a cellular line, which is linked to one’s mobile money account. When young women use their husband’s mobile phone to do business, it is likely to be very difficult for them to save money or more generally use mobile money to grow their savings and their business (Ansar et al., 2021). Other challenges beside ownership of mobile money devices and accounts include lack of information about mobile money among young women in Uganda as well as lower appetite among young women for mobile money financial transactions (Chamboko et al., 2018). Mobile phones also help young people to save on transport costs, as they allow them to find out information on prices, and thereby avoid unnecessary journeys and save on transport costs. Young entrepreneurs also save on transport costs by sending produce for delivery via motorcycle. 47 ODI Report When they do need to travel to deliver the product in person, young people also receive upfront mobile money payment from their clients/ customers to pay for the transport. This also puts them in a better negotiating position as, after travelling long distances, they might otherwise be forced to accept lower prices to make up for the sunk travel costs, whereas the mobile phone allows them flexibility to call different people at different times to get the best price. These advantages apply both to when young people are selling produce and when they are buying inputs for their business. The phone is important when I’m doing business, for example if I want stock from town and I don’t have transport, I can call my supplier to put stock on the boda boda or a taxi and I pick it from the shop. (Young female business owner, Kole). Having a phone in running a business is very important. One, you can just call to your supplier and they deliver what you need in your shop. Two, if you want to go and buy produce from somewhere, you will first call and confirm whether that good is there or not. So, you avoid losses of moving for no reason. (Young female business owner, Kole). The communication with customers and buyers on the phone was particularly important during the Covid-19 crisis. Being able to communicate to customers when products are ready the price of products, for example, can be key to maintaining customer relationships and a stable income. For many, this constant communication and effective customer relations provided a way to ensure business continuity and trust. By reducing the costs and time for transport and logistics, mobile phones allow young people to run multiple businesses. As they spend less time travelling to access markets, they save the time they would otherwise spend on moving around. It is important that that it make communication very easy unlike using boda boda, using mobile phones means because you just sit at home, you make call and the customer comes. (Young male business owner, Kole). Therefore, mobile phones are used in all parts of running the business: buying inputs, selling produce, money transactions and receiving and giving information about produce, as well as market information such as prices. Combined with access to transport like the boda boda, a mobile phone is a key enabler of running and growing a business, especially for those young business owners who do not live near a marketplace. I use phone to call customers and customers call me to find out if products are ready. When my products are ready, I will just call them. I use a boda boda to deliver my products to them. Then they just put money through my mobile money. (Young female business owner, Kole). In line with the literature, young people were using mobile phones to communicate with existing customers, buyers and sellers. None of young people interviewed (without access to ag-platforms) reported using mobile phones to find new clients. Interviews did reveal some instances of young women using mobile phones to do market surveys, which could perhaps be a pathway towards finding new customers. 54 ODI Report Figure 16 Diversification by respondents (number of platform users) 0 2 4 6 8 10 12 14 Diversified products Number of platform users Diversified into new markets/buyers Diversified into value-added activities Other Figure 17 Access to information and services 0 2 4 6 8 10 12 14 16 Testing water and soil services Training in other skills Leasing and farm-sharing equipment Digital skills training Information on weather Input use Pest and disease control information Information on input or product prices Information of govt. extension and legal services Information on buyers and sellers Number of platform users Interviews revealed how ag-platforms provide information on inputs, weather and buyers and sellers, facilitating access to new markets and new products. At the same time they also revealed concerns about the lack of real-time information on farming and weather due to poor network coverage in their villages. I use the Enterprise Uganda online app to learn about the weather; when the rains are going to start and when I should plant. I have also learnt the application of fertilisers and planting of seeds, in addition to finding out information and accessing improved seeds, such as the Maksoy 6N and Chromatin sorghum that has good market with Uganda Breweries. (Young male business owner, Kole). I used the app to find out more information on the sign and symptoms of crop diseases and pests, and how to control them. You can search signs and symptoms of crop diseases and the app tells you whether it is disease or a pest and how you can control it. (Young male business owner, Kole). 55 ODI Report I live in Kole, and I have a platform with people in Oyam, in Lira. If there is an outbreak of a pest in Oyam, but the pest has not yet reach here, then from the platform you know what the pest look like and so on, by the time the pest reaches here you are already informed, you know what to do. We get advice from experts on the platform of pest control. (Young male business owner, Kole). The app informed me that soy-bean has a market in Lira district, the rate at which it was selling, location and contact details of the dealer. It also provides us information on which crop does better in the market. For example, we found out that the DK [DEKALB®] variety of maize, when you grind it, gives you less flour compared to other varieties like ‘bazooka’, so we have switched to the latter. (Young male business owner, Kole). On value addition, the general perception was that it is expensive, and young people do not have the resources or knowledge to do it. Value-addition mechanisms, some of them are expensive. You may find a maize mill costing UGX 50 million which they may not have. Secondly, we don’t have power distribution. You don’t find distributed power to support because value addition, especially milling, requires power which is not there. (KII with local government official). Platforms help address this challenge by providing important information on value addition to their users. Young entrepreneurs demonstrated how they made more profit by adding value through upgrading products and undertaking post-harvesting activities, such as packaging and processing. I get information on how to pack and process honey from the platform. It provided us with information on maize storage; after drying maize, I need to sort it, then pack it properly in clean bags and store. If you are storing, you don’t put down on the cement, you put on top of racks so that the moisture from the cement does not go into our maize and it ends up getting spoiled. So, that is how ag-platforms have helped. (Young male business owner, Kole). My participation in a cooperative has helped through using the platform. When I sell on platform, I get more money than local buyers. With this money, I go and add value on other products that I’ve harvested. Last year, I decided to process maize and pack it and kept it for some short time when the price went up, I sold it at a higher price as Posho [maize flour] not as maize. (Young male business owner, Kole). You learn many skills from those platforms, more especially about post-harvest handling and value addition. I learnt the use of tarpaulins during harvest handling, which helped me to increase the quality of our produce and reduce the aflatoxins in our produce. (Young male business owner, Kole). Non-platform users have also experienced diversification in production but, while most platform users have diversified into value-added functions, diversification in non-platform users is predominantly into new markets and products. Only 38.5% of non-platform users reporting diversification have done so through entry into new value-added functions. Of 348 non-platform users, 179 have diversified production (85 into new markets, 82 into new products, 69 into value addition). Over 50% of non-platform users have access to information on input and product prices, input use, buyers and 56 ODI Report sellers and on pest control (see Table 9), but the main source of information is radio, followed by information exchange among friends. Interviews reveal a key difference between the information received via radio (by non-platform users) and that received through mobile phones (including platform users). The information young people received via radio is more directed at longterm business practices and growth, such as how to increase yield through planting and growing in Table 9 Access to information for non-platform users Access to info % of sample Real-time information on inputs and product prices 57.18 Government services 33.91 Input use 50.86 Weather information 47.41 Testing soil and water 4.59 Access to digital skills training 5.46 Other skills training 8.05 Information on buyers and sellers 74.7 Information on pest control 55.75 Information on leasing and farm-sharing equipment 10.06 certain periods, while the information received through mobile phones is more real-time information that helps young entrepreneurs in their day-to-day business operations. 7.2.3.3 Training and business management support Platforms have also emerged as important gateways for trainings and skills development, particularly for financial and business management for youth. Of the 18 platform users in the survey, 17 are undertaking some form of training. Traditional training is mostly through NGOs and farmers groups, while ICT training is provided by platforms (see Figure 18). I was taught how to use the app from Enterprise Uganda, who took me through a training workshop. That facilitator has been helping us, even up to now he helps us. But I wish for more capacity building or more training on how to use such apps. (Young male business owner, Kole). We also learn to be trainers or teachers to people in our community, or consultants, such as in the case of apiary or bee-keeping, or crops we usually grow, such as maize and soy-bean. I have also accessed some trainings from the platforms; we connected with Lango food security organisation Figure 18 Types of training undertaken 0 2 4 6 8 10 12 14 16 Eletrical training Agri training Chemical use training Safety training Reproductive training Other health training Business management training ICT skills training Soft skills training Number of platform users 57 ODI Report – Lango Food Cluster – and went through training of gender balance roles and vision road journey. It also served as a linkage between me and my friend for training on how to make improved charcoal stoves – energy saving charcoal stoves (Young male business owner, Kole). If there is any organisation that is giving support to cooperatives or groups, we always get them on these agri-platforms. (Young male business owner, Kole). Using agri-platforms has helped us in financial management that end up boosting our production and our businesses. For instance, if I am planting an acre, it will show me the quantity of seeds and herbicides needed. So, there is that component of financial literacy in using these agri-platforms that help us. (Young male business owner, Kole). Agri-platforms have helped me in building my capacity or skills in a way that it takes you through a process. So, I got more knowledge and skills, especially on keeping animals and planting crops through agri-platforms. (Young male business owner, Kole). 7.2.3.3 Reduced cost of logistics and communication Not only have ag-platforms reduced transaction costs (cost of searching, connecting and coordinating) but, for some businesses, engagement with ag-platforms has reduced the cost of transport. There was also a general sense that access to platforms helps to connect with people outside their immediate village and talk to people who are further away. The exposure to people outside the immediate vicinity appears to be associated with access to a wider market, better information on how to grow a business and better communication with customers, as well as an overall shift in business aspirations. I feel like the digital should come in, so that’s how these people are exposed because if you are confined in one place, it is not good, you think that you are doing a good business yet you find that you are not doing anything. You can be in that same business for very many years you think that you are making profit while you are just keeping that capital. (KII with local government official). I pray that I will come to know about this. I know very well that it will help me to be known to other people, to some of my partners who are doing the same business as well as it make easy communication between me and other clients. But not only that; it will help even get advice on how to plant, on how to spray crops, how to harvest and all those things related to that. (Young female business owner, Kole). So long as you bulk your things together, buyers on agricultural platforms give you transport that is calculated on their own, not cutting from what you are selling. (Young male business owner, Kole). Some non-platform users reported interest in and plans to join ag-platforms in the future, primarily to gain access to up-to-date information on prices and information on better agricultural practices to increase their yield, and to save on travel costs through direct access to information and customers. Some sought to interact with friends, while others wanted to gain easier access to markets. 58 ODI Report It would make my work easy. Whenever I need to get market from somewhere far, I would just take a picture of my product, then use WhatsApp to send it to the client or to customers to see how valuable my products are and thereby raise interest. It will act like an advert to my business. (Young male business owner, Kole). 7.2.4 Challenges to accessing and using ag-platforms in Uganda While digital platforms can address some of the challenges to business growth discussed above, young people’s access to these technologies in Uganda is limited. Our survey revealed that awareness among youth regarding digital platforms is the key challenge to expanding adoption. Over 70% of the non-users of ag-platforms are not aware of such platforms, and over 20% of the sample reported the high costs of using platforms and lack of support as reasons (see Figure 19). For women in particular, awareness of these platforms emerged as a key problem during interviews. While over 60% of non-platform users do have access to mobile phones, during interviews access to smartphones emerged as a commonly mentioned reason for not using the platforms. Some youth talked about the costs of using a phone, including airtime, electricity and the OTT tax, as well as internet access, as being among the main challenges to accessing ag-platforms. Some also mentioned that even if they had a smartphone, they would not know how to use it. One person had a phone and gave it away because they did not know how to use it. Illiteracy was another challenge when it came to using agplatforms and smartphones more generally. My challenge is the phone. I have an ordinary phone. If I had a smartphone maybe I would try and register. (Young male business owner, Kole) Connection is very important. If you are not connected it is very hard for you to go for it. The other thing is, when using these digital apps, you need at least a smartphone. I still don’t have one, though am planning to acquire one. (Young male business owner, Kole) Figure 19 Reasons for not using ag-platforms 0 10 20 30 40 50 60 70 80 Percentage of non-users (%) Not aware High costs No support Complicated to use Lack of literacy Lack of skills No time Poor internet Other reasons 59 ODI Report There is also a problem of poor network and charging because we don’t have electricity. I will be required to move up to the centre to charge the phone. I decided to invest in solar charging, although it is expensive. Another problem is that of OTT tax and the MBs. (Young male business owner, Kole). I lack skills on how to participate in the group. And not only that; I don’t have even a smartphone that can support me in browsing … to access apps like WhatsApp, Facebook, Twitter or Instagram, which are normally used to create those groups. (Young female business owner, Kole). The perceptions and attitudes towards ICT use in microenterprises are important (Bharadwaj and Soni, 2007; Chew et al., 2013; Tang and Konde, 2020 citing Bengtsson et al., 2007). Microenterprises aspiring to expand their business beyond their immediate local nexus have greater information needs and can benefit from ICT to communicate with geographically dispersed customers, suppliers and business partners (Tang and Konde, 2020). At the same time, investing in ICT can be risky for resource-constrained microenterprises if they are uncertain about the returns. Direct and indirect costs can be substantial, including investment in acquiring equipment, capacity to operate, manage, maintain and upgrade technologies, as well as the potential risk of online fraud. One challenge faced by those using platforms in our survey was lack of trust and the fear of being ‘conned’. The perception is that people on the platforms are spreading lies. For some, this is based on past experiences where something had been agreed online through a platform, such as the delivery of products, but the person on the other end did not deliver, leading to disillusionment. For others, however, this fear is not based on their past experiences. The absence of trust in the platforms and their users is a barrier to platform use. Interviews with ag-platform users also revealed further challenges to the use and uptake of these platforms, including access to smartphones, payment for internet bundles, poor network availability hindering access to real-time information, poor data connection, unreliable access to electricity to charge phones, lack of online selling due to payment issues, higher standards and rates of rejection on platforms, and low online trust of consumers. The problem that we have seen with online selling is that the payment period takes long; people come and collect the items they have purchased but we get the money later, this is particularly difficult in a cooperative when there are lots of people. (Young male business owner, Kole). Buyers on ag-platforms are very strict on their standards. For example, they come and measure the moisture content for example in soya and when you are drying or the way you stored your things, if they happen to absorb water and they find that the moisture content is higher compared to the normal one that then is accepted as one of the standards, they always chop off your money. (Young male business owner, Kole). People don’t trust online selling. If I tell them I have 10 tonnes of maize, they will first come to see if the maize is truly there before they come to buy. There are many delays. (Young male business owner, Kole). 60 ODI Report 8 Trainings, skills development and enterprise growth 8.1 The role of training in enterprise growth Human capital is an important enabler of business growth. While much of the evidence suggests that training alone is not associated with microenterprise growth, experimental evidence from Uganda suggests that, among young men, training in business skills when coupled with funding support increases business profits (Fiala, 2013). Training helps to ensure that the immediate impact of loans for microentrepreneurs goes on to have a lasting effect. One such programme is the YETA programme, which developed financial literacy and encouraged young people to form VSLAs to save to increase their access to capital for investment through loans. In addition, a group incubation kit was also provided, as a group demonstration of how to enhance youth skills in a particular enterprise. Not only do skills help entrepreneurs run their businesses more effectively, there are often skills like managerial skills or financial literacy skills that are a prerequisite for accessing other resources, such as financial services. To grow a business, young people need the know-how and technical skills that can increase their productivity as well as more standard business skills around business management, financial management and marketing that can help increase their sales and grow their capital and improve overall performance. A higher share of young entrepreneurs, across firm size, report access to agricultural training, reproductive health training and business management training (see Figure 20). However, ICT Figure 20 Access to training according to enterprise size 0 10 20 30 40 50 60 70 80 90 100 Electrical training Agricultural training Chemical use training Safety training Reproductive health training Soft skills training ICT skills training Business management training Self-employed Micro Percentage of respondents (%) Small Medium 61 ODI Report skills training and soft skills training, in particular, are lagging behind. In certain types of training, firm size also appears to be relevant. Roughly 78% of SMEs have access to business management training, as compared to only 58% of microentrepreneurs. Larger firms are also doing better in terms of access to soft skills training and safety training. Friends or family appear to be the main source of electrical training, while NGOs are the main source of training on chemical use, agricultural practices, safety, and on reproductive health and soft skills. For business management training, the main source is NGOs, followed by farmer groups. The main source for ICT trainings (reported by only 7 respondents) is ag-platforms. 8.2 Which trainings are benefiting young people’s business growth? The training that young people felt had most influenced their business growth and aspirations were the agronomy, business management and financial management trainings. After undergoing training, young people changed their agribusiness practices as well as practices in other businesses, and they also changed their postharvest practices. While most reported receiving this training through YETA, which was led by NCBA CLUSA, some young people talked about learning these practices informally; for instance by observing family or members of their community to learn from their agricultural practices. Some learnt how to use a phone from community members or family. Parent mentors in the YETA programme also played a key role in solidifying the skills young people gained and guiding them through how to address challenges such as coping with diseases in their livestock and resolving conflicts within their groups (Löwe et al., 2019). 8.2.1 Agronomy training Those who underwent the agronomy training reported changes to the way they do farming, i.e. being more methodical when it came to planting in rows, spraying their crops, using fertiliser, using improved technology such as an ox plough, or giving medicine to their animals. As a result, they were seeing greater yield as well as increased profit, allowing them to start new businesses or reinvest in growing their current business. The training has helped me a lot because after putting it into practice I am now getting a higher yield. Not only that, we receive general knowledge in different aspects like even how to rear poultry, how to rear goats. I put it into practice and that is one of the factors why am planning to start up another business of produce. (Young female business owner, Kole). Before CLUSA trainings, we were growing crops like maize without fertilisers, but after we got trainings from CLUSA I’m now growing maize while applying fertilisers so this makes the yields grow much better that before. (Young female business owner Kiryandongo). The training in agribusiness helped change some young people’s attitude to farming. Where they were previously farming for consumption, young people are now seeing it as a business in which they can invest and witness growth. Training that I really saw that was key to these boys and girls was the training on agriculture as a business not on a small scale for consumption. (FGD with YETA parent mentors Kole). 62 ODI Report As a mentor, I have seen in this community of ours, people always do farming just for home consumption but the training and package of agriculture that they were given really taught them farming can be done as a business … most of them they would get money from farming, they put it back in farming and part of it they use it for saving. (FGD with YETA parent mentors Kole). Young people also changed their post-harvest practices, including seeking information about market prices before selling and getting better prices by selling during off-season, as well as bulking and selling through their cooperatives to increase their negotiating power for better prices. 8.2.2 Financial and business management training The financial management and financial literacy training was found to be particularly helpful by young people. Under the YETA programme, the VSLA model was a component of the financial literacy training. Young people learnt how to save money in a VSLA and how to use the savings or loans from the VSLA to invest and grow their business. Young people were saving towards a business purpose, i.e. saving towards an investment in their business such as inputs. When they were borrowing, they were doing so for business investments rather than for consumption. Young people spoke about borrowing and saving towards starting a new business. When I joined the CLUSA programme they trained us in saving skills so we started saving as a group. That is where I got my money to start my personal business and up to now I still save. At the end of the year after distributing the money I get the money and invest in my business. (Young male business owner, Kiryandongo). The training, especially on VSLA, has helped me in a way that when you don’t have money but you want to expand your garden, you can get money from the VSLA, then use it in the garden and when you get money, you pay back with some little profit, thus helping you to go on expanding your business. (Young female business owner, Kole). As a result of their VSLA saving, young people were making significant investments, such as building a storage space and a shop. From the trainings we got from YETA, the youths in my community were able to involve themselves in VSLA. Last year they saved a total of UGX 6 million. When we distributed that UGX 6 million in the VSLA the youths were able to get land, they made bricks, and they are trying to construct a building where they will store and bulk their maize and start a retail shop. (FGD with YETA parent mentors Kiryandongo). The training on savings also helped young people learn how to continue earning money and make a profit even when market conditions were unfavourable, and how to deal with emergency situations. This would help smooth consumption and protect their business against emergencies. I had a weakness in the sense that when the season for selling is not good, I would just sleep. The way we were trained that you have to be in at least a saving group whereby when your sales are low or when you don’t have money, you can go to the group to borrow and you put the loan in your business and stand strong. (Young female business owner, Kole). 63 ODI Report Even if someone has an emergency, at least he has a source whereby he can go and borrow some money and solve that problem since he or she has been saving. So, that is the most important training that I’ve seen. (FGD with YETA parent mentors, Kole). Moreover, following the training, young people started keeping records and calculating their profit and loss in a more systematic and regular way. Prior to the training they were not calculating profit and loss. They also reported changing their spending behaviour and being more purposeful about saving towards the growth and expansion of their business, seeking out information about market prices, calculating profit and loss and generally having a better overview of their finances, including where they had debts. Young people reported changing their business practices, in particular being more systematic in their farming business. Overall, they felt they had more agency about their business. They actively went out and sought information about market prices before deciding whether to sell their produce/products immediately or to wait until market prices improved. They diversified their business to ensure a steady income even during the off-season. The training I received through YETA on financial management and business skills training, as well as VSLA training, helped me in a way that whenever I go anywhere with all the money in my pocket, I would have in mind that this one I am going to use for this one specifically, for this one, this one, I’m going to save and then go back home with it. (Young male business owner, Kole). I learnt how to calculate profits and losses and it has also made me know how to identify challenges. I’m seeing the income and profits that I’m getting on a weekly basis, which shows me that my business will grow bigger than before. (Young male business owner, Kiryandongo). When they see they are making a loss, they change their business practices to increase profits and cut losses. It is helping me for example if I have skills of business management and I see that what I have sold have not brought for me the profits, instead has made me to get losses. I have to change immediately and I see the tactics of how to mitigate losses next time. (Young female business owner, Kole). 8.3 Training and young people’s business aspirations When asked how the training changed their aspirations, the majority referred to how it had helped them start a new business rather than how it had helped them grow an existing one. Overall, young people felt that the training made the aspirations of starting a new business or growing current businesses seem more achievable. Some young people began to consider starting businesses that they would have not otherwise have considered. I had nothing to do. I had never thought of doing anything or venturing into any sort of business, but after the training I decided to carry out farming as a business, and after I also ventured into this business of making timber which is still helping me. I now generally know what I’m doing. (Young male business owner, Kole). This training changed how I was feeling about businesses generally because I was just thinking 70 ODI Report The people I employ are in a group. In this community, people dig communally, so whenever you need their services they come as a community, they come and help. So, mostly they weed the crops. Since they are many, they can weed very fast. (Young male business owner, Kiryandongo). For the brewing business, why I use my sisters to support me in the business is because sometimes when you use other people, they don’t return or they don’t give you back the money from the sales. (Young female business Kiryandongo). Several young people also reported engaging in reciprocal employment relations where they would help other young people in their farming business, often by weeding or harvesting, in return for the same or similar assistance in their business. These employment relations were not based on payment and appeared to be ad hoc rather than long-term arrangements. These reciprocal relations helped young people increase their productivity while saving money towards business investment and growth. I always do exchange of responsibility … some of our family members would come and help me today, then tomorrow we would go together and help this one, then the next day also like that. We keep on exchanging them. We don’t pay money for it. (Young male business owner, Kole). Exchange of labour has helped me to save some money and put back into business, making it expand. Instead of paying it to other people outside, we would just exchange it and save some part of money to do other things mostly this business. (Young male business owner, Kole). Employing labour helped young people grow their business by increasing productivity and income, which in turn provided them with additional business capital to invest and grow or expand their business. This was more so for young people who benefited from the increased productivity without paying for the labour. Employing labour seemed to influence young people’s business aspirations, with most planning to invest the increased productivity and income in growth or expansion. Young people who were employing someone seemed to see labour as part of their growth strategy. However, young people who were not employing any labour or receiving support (from family, friends or elsewhere) did not see employing labour as part of their business growth strategy or as helping towards realising their business aspirations. The most common reasons for not employing someone were affordability and need. In farming businesses, the need aspect was typically due to the small size of the land, and young people who aspired to get more land and grow their farm envisaged employing labour once their business had grown. What I get out of farming is too little, so I cannot afford employing someone. (Young male business owner, Kole). Since I only farm a quarter an acre of the land that one is manageable by myself, so I don’t need to get more people to assist. (Young male business owner, Kiryandongo). 71 ODI Report After acquiring more land I would like to hire more people because managing a very big portion of land alone will be difficult, so I will have to hire other labourers to assist in farming. (Young male business owner, Kiryandongo). The cost and affordability reasons for not employing anyone suggest that these young people enjoyed less support from their families compared to those who were benefiting from the free labour of their family members. It is also indicative of their social capital more generally, as they were also unable to take advantage of reciprocal labour arrangements, unlike their counterparts who were exchanging labour. Due to their age, lack of experience and confidence, some young people may have less social capital (Löwe et al., 2019) and may therefore be less embedded locally, which is a key aspect of enterprise development (Tunberg, 2014). Figure 23 Enablers of MSME growth Access to markets Enablers of MSME growth Typical growth strategy Aspirations Secondary business Invest in existing secondary business Start new non-framing business Policy environment Aspirations to grow Access to land Selling produce Business investment Training (e.g. through YETA) and messaging Access to finance (through VSLAs) Saving 1 Assets like livestock 2 VSLA Mobile phone Feature phone: Maintain existing customer base Ease business transactions Ag-platform: Access information, training Transportation e.g. motorcycle or bicycle Source: authors’ own elaboration. 72 ODI Report 10 Gender perspectives for youth enterprise growth In Uganda, women-owned businesses are 30% less profitable than male-owned businesses. Within the agricultural sector women tend to cultivate crops that are less profitable, such as beans or cassava, because they contribute to household food security, while men cultivate more profitable cash crops such as coffee (Mugabi, 2014 ; Nakafeero et al., 2021). Women are also less likely to command labour in Uganda, with evidence showing that men were more likely than women to hire unpaid family labour through siblings or children (Kabeer, 2018). In addition to being more likely to enter into businesses that are less profitable, female business owners are often also obliged to make different business decisions than their male counterparts due to endowment challenges (e.g. lower access to assets and finance and education), contextual factors (e.g. social norms, legal discrimination) and household constraints (e.g. time and care constraints) (World Bank, 2019a). This was confirmed in our interviews. Women reported having less time for business activities due to the burden of domestic chores (as found in Leon-Himmelstine et al., 2021). Women also face more difficulties when it comes to accessing markets as they are often unable to move about freely – mostly they are at home and often have to stay put due to restrictive gender norms that limit their mobility, further compounded by childcare and domestic responsibilities. Therefore, women often choose to engage in business activities that will allow them to balance their business with childcare, such as tailoring and shopkeeping, or activities they can do within their homestead while balancing domestic work with business activities (ibid.). These constraints were highlighted particularly by women who were married. Men mostly do farming because, after farming, they take most of their time doing farming and the ladies in most cases they are at home and they don’t move a lot. So, because of that, that’s why women tend to do a lot of selling small commodities in the market than the men because the men are fond of moving a lot after doing the farm work. So, they cannot be part of the maybe selling commodities in one place. (FGD with YETA parent mentors Kiryandongo). The ability to move freely gives young men an advantage in that they are not only able to reach more markets physically but can also extend their networks, which can further contribute to improving their access to new customers and markets generally. Because men they are free to do anything they wish and they can move anywhere. They can move like in the centre like in the evening. They would go there, they get advice from friends, they share their business idea in any way and sometimes they can make positive decision, sometimes negative decision. (Young female business owner, Kole). As shown in Section 7 on technology, the proportion of women entrepreneurs owning a mobile phone is significantly lower than for male entrepreneurs. Accessing a mobile phone is also more difficult for young women, especially for 73 ODI Report married women. Young women reported that they do not own a mobile phone as their husband would not allow them to own a phone out of fear of infidelity (they might use it to communicate with other men). Young women were therefore also less likely to be using mobile money, as this requires having their own phone. I really want to be with a phone but my husband does not accept me having a phone. My husband does not accept me having a phone because he gives a reason that phones spoil women. The reason he gives is that the moment a woman gets a phone, she gets spoiled … she might end up being taken up by other men. (Young female business owner, Kole). On access to land, some young people inherited land from their parents (customary land) but, due to prevailing gender norms and patrilineal custom practices in Uganda, land is usually inherited by young men. Given that one of the most common challenges of access to capital is access to land, young women are at a disadvantage. Young men can use the yield from their inherited land to rent more land, while it is more difficult for young women to find capital to rent land (Leon-Himmelstine et al., 2021). Because of their limited capital, young women tend to rent small plots of land which limits their yield significantly, thus creating a vicious cycle. This is compounded by existing gender norms on land purchase; young women often cannot purchase land themselves and need a male to accompany them even if they have the money to rent the land themselves. Evidence also suggests that women are less likely than their male counterparts to hire labour. Men hire more of their family members, including siblings and children, to work on the farm, while women are often unable to do so. We do not find systematic differences in this, but there is some indication that young women draw more on the exchange of labour, i.e. providing labour to their peers in return for this being corresponded in turn. Gender norms around marriage and childbearing shape young women’s aspirations and mediate the growth and sustainability of their business (ibid.). With the average number of children per woman being six in Uganda, the challenges of running a business, including farming, are heightened for young women (AFIDEP, 2018). Most young women in Northern Uganda marry before they are 18 years old. Boys, on the other hand, are not expected to marry early, which means they are less limited in their educational achievement and economic opportunities than their female counterparts (ibid.). Our interviews showed that young women who start a business while they are living with their parents often have to abandon their business when they leave their parents’ house to get married. Some of these young girls start their businesses when they are still at their parents’ home. When time for marriage comes, this lady can abandon the business from here and go and get married in another place, so, by doing so, you find she cannot go with the business to the other side and it ends up collapsing. (FGD with YETA parent mentors Kiryandongo). It is also more difficult for young women to run multiple businesses. This is due to their household duties, and also because some professions are deemed inappropriate for young women. This means that during the off-season or when young women do not have access to rented land, they have fewer opportunities to cope with seasonal income losses. Young women are also often discouraged by repeated setbacks to their businesses. Some women-led businesses, such as hairdressers, were also hit harder by Covid-19, as they require more customer contact. 74 ODI Report In my area, the coming of Covid affected mostly women because like those ones who have the sewing machines, people were not allowed to come nearer to one another, so the sewing machines were packed inside and business closed, so, I feel the women were more affected than the men. (FGD with YETA parent mentors, Kiryandongo). I feel women were more affected, like in my area those ones who are doing hairdressing or having hair salons could not come closer to one another, so, business of hairdressing had to close. So, it affected that kind of business. (FGD with YETA parent mentors, Kiryandongo). Finally, young women face particular challenges in registering their businesses, as keeping their business ‘invisible’ can be an important way to protect themselves against their husbands or male relatives taking charge of their earnings and resources. 75 ODI Report 11 Recommendations 1. Designing multifaceted programmes. This can address the multitude of challenges young people face in growing and expanding their businesses, and respond more adequately to their needs. Often, the challenges are exacerbated by their age, which means they suffer from exclusion due to lack of access to social capital. This highlights the need for more comprehensive programming that facilitates their access to markets and provides longerterm support and nurtures to help them make productive investments. Value-chain approaches, and other more comprehensive approaches like one-stop shops, may be more effective. Youth need to be consulted in the design stages of youth-centric programmes; there appears to be a gap in terms of what youth need and the aims of some youth programmes. ICT cannot bring benefits unless it is supported by a range of complementary policies, such as support to young entrepreneurs regarding product standards. A mix of micro-level support to youth entrepreneurs alongside meso- and macro-level support policies targeting internet reliability, digital literacy and business running costs are required for addressing young people’s challenges to entrepreneurship. 2. Targeted and longer-term programmes for training and skills development. Business size appears to be positively linked to training; roughly 78% of SMEs had access to business management training, compared to only 58% of microentrepreneurs. Larger enterprises are also doing better in terms of access to soft skills training and safety training. There is a need for targeted training: first, in ICT skills and soft skills across firm sizes; and second, in trainings geared towards microentrepreneurs. These trainings and mentorship programmes need to be longer term as youth reported having forgotten their trainings or lacking the confidence to apply them. Some also expressed a desire for training in how use a smartphone to be able to sell on Facebook or WhatsApp. Such training also needs to be gender focused to ensure that programmes do not end up exacerbating the existing digital skills divide across young male and female entrepreneurs. 3. Altering trainings with messaging on viable businesses to boost youth aspirations of business growth and diversification. Of the 367 youth surveyed, 56% of respondents reported that the main aspiration from their primary business – mostly farming – is to expand into more businesses to reduce risks, while 31% of the sample wanted to invest in and grow one business. Messaging around agriculture as a viable business is therefore important for agri-entrepreneurs. Young people reported that trainings in agribusiness have helped change their attitude towards farming, from viewing it as a source for consumption to viewing it as a business in which they can invest and grow. Trainings also enabled them to change their post-harvest practices. 4. Improving the enabling environment of doing agribusiness, particularly reducing the cost, time and extent of the process of registering businesses. Uganda’s score on starting and formally registering a business in the World Bank’s Ease of Doing Business rankings 2020 is 71.4, below the regional average in sub-Saharan Africa (which stands at 80.1) (World Bank, 2020c). Unsurprisingly, then, 89% of the youth enterprises in the survey have not 76 ODI Report formally registered any of their businesses, with 15% of the male entrepreneurs in the sample having at least one business registered and just 5% of female entrepreneurs. The costs of registering appear to be high, and the benefits of registering are not always apparent to young entrepreneurs. Often, registering a business does not appear an attractive option, especially for women who might have an interest in keeping their income ‘invisible’ so as not to risk losing it to their husband or a male relative. There is a need for policies to target ease of conducting business, including through online business registration and increasing incentives for registering, as well as making young people more aware of the benefits of registering their businesses. 5. Supporting women to move beyond access to mobile phones to ownership. Access and ownership of mobile phones appears to enable enterprise development, both in terms of growth of an existing business and expansion into new businesses, but there is a significant gendered digital divide; 72% of male entrepreneurs own a mobile phone, compared to only 45% of female entrepreneurs. Several young women reported that their husbands do not allow them to own a phone. There is a need to support women to move beyond merely accessing mobile phones towards ownership of mobile phones, possibly through innovative finance schemes to help spread the cost of ownership over time (GSMA, 2019). Genderfocused trainings in skills development may also help address the gender gap in digital skills. A gender transformative approach also requires educating and socialising young men in the benefits of providing their wives with access to mobile phones and ICT generally. 6. Addressing supply-side and demand-side challenges faced by young entrepreneurs in accessing and adopting digital platforms. Digital platforms have immense potential to enable entrepreneurs to diversify into new markets and value-added activities. Supply-side constraints to adoption and uptake of agplatforms can be addressed through policies targeting digital infrastructure development in rural areas, such as mobile towers, to increase access to real-time information, as well as setting up digital centres to cover a cluster of villages; subsidising internet bundles and increasing access to good quality and reliable internet; and targeted investments in digital apps that provide horizontal support (broad-ranging support rather than product-specific support) across the value chain. The Ministry of Agriculture, Uganda National Bureau of Standards, and the Federation of Small and Medium-sized Enterprises in Uganda can work with agplatforms to develop local food standards and quality benchmarks, and provide effective monitoring during the grading and aggregation of products post-harvest to minimise rejection on platforms. Demand-side constraints can be met through increasing awareness of agplatforms among youth, as well as ways of accessing them and sources of support. Here, farmers’ groups and cooperatives can play a critical role. We find that the main sources of support for using platforms include farmers’ group leaders and cooperatives (29% of users), followed by extension officers (24%) and the platform itself (24%); 94% of platform users are part of some form of business group. 7. Improving the effectiveness of farmers’ groups. The lack of logistical support to farmers, and the insufficient capacity of the 77 ODI Report Ugandan Warehousing Authority to store farmer produce or provide commodity receipts, are critical challenges young entrepreneurs face. The provision of logistical and storage facilities has been shown to improve the incomes of farmers in other parts of Africa. The formation of youth groups/associations and cooperatives can be one way of improving entrepreneurs’ access to market and to services such as storage and transport, as well as their bargaining power, while reducing exploitation by middlemen. But there is evidence of power asymmetries between members of farmers’ groups, leading to the formation of an elite group who capture access to information and receive most of the benefits, while others in the group are excluded. Such challenges also persist for Ugandan farmers’ groups, indicating the need to improve their effectiveness, particularly through facilitating access to ICT and internet-enabled devices (such as smartphones). 8. Improving young entrepreneurs’ access to resources, especially capital. The loans young people receive from their VSLA depend on how much they have saved, meaning that those who are struggling the most with their business are also benefiting the least from VSLAs, creating a vicious cycle for those at the bottom of the business profit pyramid. This suggests that providing additional support to help young people sell their produce is key. Cooperatives that support young people with access to markets and improved prices for their produce and inputs can play a key role here. Access to working capital loans needs to be increased for young entrepreneurs, particularly women, who lag behind in access to capital. New models of expanding financial access need to be explored, including digital financial inclusion through platforms. Facilitating the development of social capital for productivity-enhancing labour arrangements is also critical; investment in labour emerged as an important factor for enterprise development, particularly for business expansion. Overall, 77% of youth with a small primary business employing between 5 and 19 people had a secondary business, compared to 61.8% of youth microentrepreneurs with 1 to 4 employees in their primary business; and only 46% of self-employed youth had a second business. Entrepreneurs with farming businesses mostly employ seasonal and casual labourers, who typically are either members of their group (VSLA), family members (including their spouses, children and parents), peers or so-called ‘digging groups’, suggesting the importance of ‘social capital’ and ‘local embeddedness’ for enterprise development. 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Proceedings of the SIGCHI Conference on Human Factors in Computing Systems, 27 April–2 May 2013. Paris (https://doi.org/10.1145/2470654.2481391). Appendix QUESTIONNAIRE – Youth entrepreneurs and ag-platforms Date: 24.07.2020 Name of investigator Youth ID District Sub-County Village Section 0: Business profile *Primary business refers to the business from which you derive majority of your income. 1. How many businesses do you have? ____ 2. What percentage of your annual income is derived from the primary business? 3. What is the type of your primary business (tick all that apply): (1. Farming; 2. Livestock; 3. Transportation; 4.Construction; 5. Trading food or produce; 6. Trading (other); 7. Hospitality; 8. Retail; 9. Teacher/health/social services; 10. Other, please specify ____) 3.1 How many years has this business been in operation? ____ 3.2 What is your main aspiration from the business? (1. Invest and grow one business; 2. Expand into more businesses to reduce risk; 3. Other, please specify ____) 3.3 In the last year, how much money was received from the sales of goods and services by this business per year? ____ (Report monthly if less than a year) ____ 3.4 In the last year, what was the annual profit of this business? (Report monthly if less than a year) ____ 3.5 How many people usually assist in this business/enterprise? 4. What is the type of your secondary business (tick all that apply): (1. Farming; 2. Livestock; 3. Transportation; 4.Construction; 5. Trading food or produce; 6. Trading (other); 7. Hospitality; 8. Retail; 9. Teacher/health/social services; 10. Other, please specify ____) 4.1 How many years has this business been in operation? 4.2 What is your main aspiration from the business? (1. Invest and grow one business; 2. Expand into more businesses to reduce risk; 3. Other, please specify ____) 4.3 In the last year, how much money was received from the sales of goods and services by this business per year? (Report monthly if less than a year) 4.4 In the last year, what was the annual profit of this business? (Report monthly if less than a year) 4.5 How many people usually assist in this business/enterprise? 89 ODI Report Section 1: Use of ag-platforms 1.1 Did you register on an agriculture platform, anytime in the past 12 months? * Agricultural platforms are apps or services accessed through mobile phones, including through SMS, USSD, social media apps, e-commerce apps and other apps for finding information on weather, land use, seeds, buyers and sellers etc. • Yes, I am registered on one ag-platform • Yes, I am registered on more than one ag-platform • No, I am not registered on any ag-platform List all platforms you are registered on: ________ IF YES to 1.1: 1.1.1 What is the main reason for registering on the platforms? (Select one): (1. Starting a new business; 2. Finding new buyers and clients; 3. Maintaining communication with existing clients; 4. Taking or managing sales orders; 5. Exchanging information on prices and clients with others traders and entrepreneurs; 6. Accessing better or cheaper inputs; 7. Friends told me to use; 8. Receive a subsidy; 9. Getting access to finance; 10. Advisory and information (real time info) – prices, weather; 11. Data analytics – remote sensing use; 12. To engage with other young people; 13. Other). 1.1.2 What have been the benefits of the ag-platforms to you? (Select all that apply): (1. Reduced transportation costs; 2) Gained access to credit; 3) Improved business productivity/ better crop quality; 4) Improved production practices and grading; 5) Gained access to better quality inputs: chemicals, seeds, fertilizers; 6) Gained access to new buyers/ markets; 7) Gained access to trainings and skills development; 8) Increased bargaining power; 9) others, please specify___) 1.1.3 How long have you used the ag-platform for? 0-3 months; 3-6 months; 6-9 months; >9 months 1.1.4 How much do you pay to register with the platform? ____ 1.1.5 How do you pay for registering on the platform? (1. Savings, 2. Income, 3. Borrowings, 4. Other, please specify ____) 1.1.7 What does the platform you use run on? (1. Information via SMS, 2. Information via USSD, 3. Through an app on Android) 1.1.8 Who helps you use the ag-platform? (1. Platform itself; 2. Extension officers; 3. Family and friends; 4. Farm group leader; 5. Village agent; 6. Others please specify ____) 1.1.9 Are you still registered on the ag-platform? Y/N ____ If NO: 1.1.9.1 What are the main reasons for stopping engagement with ag-platforms? (1. Too expensive. 2. Very complicated to use. 3. Time consuming. 4. No support, 5. Not aware, 6. Lack of regular internet access, 7. Lack of literacy and numeracy; 8. Lack of skills to use phones; 9. Others please specify ____) 1.1.10 Have you used ag-platforms more frequently since COVID-19? Y/N ____ 90 ODI Report If YES, 1.1.10.1 COVID-19 has accelerated the use of ag-platforms in your business for…? (select all that apply): (1. Buying inputs from other businesses; 2. Selling products online on ag-platforms; 3. Getting information on buyers and sellers online; 4. Contacting and communicating with buyers or sellers; 5. Accessing credit and online banking; 5. Communicating with other young people; 6. Finding information on COVID support; 7. Others, please specify ____) If NO to 1.1 1.1.1 What is the main reasons for not using any ag-platforms? (1. Too expensive; 2. Very complicated to use; 3. Time consuming; 4. No support; 5. Not aware; 6. Lack of regular internet access, 7. Lack of literacy and numeracy; 8. Lack of skills to use phones; 9. Others please specify ____) Section 2: Training and ICT skills * Informal training refers to peer-to-peer learning while formal training refers to training provided by Ministeries, organisations, institutes, apprenticeships. 2.1 Have you done any training (informal or formal) Y/N ____ If YES, 2.1.1 What type? (select all that apply): (1. Technical skills such as electrical, plumbing etc.; 2. Training in good agricultural practices; 3. Training in chemical and fertiliser use; 4. Safety trainings; 5. Sexual reproductive health; 6. Other health trainings; 7. Business management training; 8. Digital or ICT skills training; 9. Soft skills training; 10. Other trainings, please specify ____) 2.1.2 Select sources of training (1. Local broker; 2. International firm; 3. NGO; 4. Ag-platform; 5. Government extension officer; 6. Friends or family, 7. Farmers group or business association; 8. Other) 2.2 Do you have access to a mobile phone? (1. Yes, I own a mobile phone; 2. Yes, I have access but I don’t own it; 3. No I don’t have access) If YES, 2.2.1 What kind of mobile phone do you have access to? (1. Smartphone; 2. Feature phone) 2.2.2 What do you primarily use the mobile phone for? (1. Accessing apps; 2. Mobile money; 3. SMS; 4. Phone calls; 5. Playing games; 6. Surfing the web; 7. Emailing; 8. Other, please specify ____) Section 3: Formalisation of work 3.1 Are any of your businesses formally registered? (1. Yes, primary business; 2. Yes, secondary business; 3. Yes, both primary and secondary business; 4. No.) If YES, 3.1.1 What was the main motivation of registering your business? ____ 91 ODI Report 3.2 Are you given a contract for sales in your primary business? Y/N ____ If YES, 3.2.1 Who gives you the contract? ____ 3.2.2 What is the contract type? (1. Written-greater than 1 year; 2. Written-short term; 3. Oral; 4. Other) 3.3 Are you part of any group/business association? Y/N ____ If YES, tick all that apply: (1. Farmers group; 2. Village Savings and Loan Association (VSLA); 3. Cooperative/ SACCO, 4. Others; please specify ____) Section 4: Business growth pathways * Business growth can be achieved through various channels such as diversification of production, access to loans, trainings etc. 4.1 Have you ever had your products rejected? Y/N ____ 4.2 What % of total OUTPUT has been rejected? • 0–25% • 25–50% • 50–75% • More than 75% 4.3 Have you diversified production? Y/N ____ If YES, 4.3.1 In which business did you diversify production? (1. Primary; 2. Secondary; 3. Both) 4.3.2 How? (1. New product; 2. New market/ buyers; 3. More value addition; 4. Other) 4.4 Which of the following services/information do you have access to? (tick all that apply): (1. Real time information on input or product prices; 2. Information on government extension and legal services; 3. Input use; 4. Real-time weather information; 5. Testing soil and water services; 6. Digital skills training; 7. Other skills training; 8. Information on buyers and sellers; 9. Real time pest control and diseases related updates; 10. Information on leasing or sharing farming equipment; 11. Other, please specify ___) 4.4.1 What is the primary source of this information? (1. Local broker; 2. International firm; 3. NGO; 4. Ag-platform; 5. Government extension officer; 6. Friend, 7. Family; 8. Youth group associations such as VSLA; 9. Cooperative; 10. Farmers’ association; 11. Radio; 12. Other, please specify ___) 4.5 Do you have access to commercial loans or working capital? Y/N ____ If YES, 4.5.1 What is the primary sources of finance ? (1. Insurance co; 2. Farmers’ group; 3. Bank; 4. Ag-platform; 5. Friends and relatives; 6. Buyers, 7. VSLA; 8. SACCO; 9. Others, please specify ____)