Northern Uganda Social Action Fund – Youth Opportunities Program
Youth unemployment is widely considered a threat to development and to security. In the least developed nations, where firms are rare, aid-based employment interventions commonly provide inputs into self-employment to reduce poverty and social instability. Such programs are rooted in at least three assumptions. The first is that poor people have agency and are capable of making informed economic decisions. The second is that the poor possess high returns to investments but are constrained from reaching those returns unaided. The third is that increased income reduces youth alienation and aggression. This evaluation looks for evidence of all three claims in Uganda’s largest employment program.
Twenty years of insurgency, instability and conflict have led to high rates of poverty and unemployment in northern Uganda. By 2005, a measure of peace and stability had returned to the region. The centerpiece of the post-conflict recovery plan was a decentralized development program, the Northern Uganda Social Action Fund (NUSAF). To stimulate employment growth through self-employment, in 2006 the government launched a new NUSAF component: the Youth Opportunities Program (YOP), which provided cash transfers to groups of young adults for self-employment in trades.
The YOP intervention had two official aims: raise youth incomes and employment; and improve community reconciliation and reduce conflict. The program, targeted at youth from ages 16 to 35, required young adults from the same town or village to organize into groups and submit a proposal for a cash transfer to pay for: (i) fees at a local technical or vocational training institute of their choosing, and (ii) tools and materials for practicing a craft.
The average applicant group had 22 members. Group cash transfers averaged nearly UGX 12.8 million (US$7,108), and varied by both group size and group request. The average transfer size per member was UGX 673,026 (US$374) – more than 20 times the average monthly income of the youth at the time of the baseline survey.
Due to vast oversubscription, the 535 eligible groups were selected at random, using a lottery, to either receive the YOP program (treatment group) or not (comparison group). A baseline survey was conducted with 2601 individuals in 2008, and 87 percent were successfully followed and interviewed in the endline survey two years later. Researchers are then able to compare the impact of the intervention across the two groups on an array of economic and social indicators.
Mid-term results are now available 2 years after the intervention. Long-term results will be collected in 2012.
Grant Use and Investments: Overall, and rather remarkably, the vast majority of beneficiaries make the investments they proposed: most engage in vocational training and approximately two-thirds of the transfer appears to be spent on fees and durable assets (not including other startup costs or materials), suggesting that the fears over funds mislaid and misspent are confined to a minority of beneficiaries.
Relative to the comparison group, the average beneficiary received 405 more hours of training and acquired additional business assets worth UGX 656,000 (US$300) since the intervention – increases of 814 percent and 481 percent, respectively.
Employment, Incomes and Wealth:Beneficiaries experienced sizable economic impacts as a result of these investments. The average beneficiary was nearly 100 percent more likely to be engaged in skilled employment, and saw hours spent on market activities increase by roughly a third, relative to non-beneficiaries. Cash earnings increased by nearly 50 percent on average, and household wealth also increased relative to the comparison group, although by a lesser amount. Consistent with these income and wealth gains, treated subjects perceive themselves as doing economically better than fellow community members. They report increases in perceived wealth levels relative to the comparison group and similar increases in access to basic services in their community.
Social Cohesion, Engagement and Stability: In general, we see modest increases, of the order of 0 to 10 percent, in common community participation and other indicators of social and community support. Treated individuals are engaged more in community groups than comparison individuals, and are more likely to speak out at and mobilize for community meetings. Men who participated in YOP reported decreases in aggressive behavior in contrast to the comparison group. Conversely, female beneficiaries reported heightened levels of aggression and hostile behaviors, but it is important to note that overall levels of hostile behaviors are quite low, with fewer than 40 percent of men and women reporting any aggressive behaviors at all.
Governance and Corruption: While popular media reported some degree of leakage of YOP funds, the evaluation found little evidence of significant misuse of funds—fewer than 2 percent of groups reported funds being stolen before reaching the group and less than 1 percent reported the money never being disbursed amongst group members.
Lessons Learned: Overall, the mid-term results demonstrate that relatively unconditional cash transfers have the potential to be an efficient means of improving livelihoods and, potentially, improve social cohesion and stability.
Consistent with other studies, findings indicate that many of the poor, especially males, have reasonably high returns to investment when capital is made available and without close supervision or conditionality. The results suggest that credit constraints and the lack of financial development in Uganda are substantial impediments to poverty alleviation. Cash grants or subsidized credit may be a means to achieve higher levels of stability and freedoms than otherwise available to the poor.
The results suggest further areas of research, such as unpacking the composite contributions of cash, assets and skills on improvements in livelihoods. Similarly, variation in grant size could help determine the extent to which individuals are credit-constrained. Future programs and evaluations provide an opportunity to learn more about which program models are most effective and most cost-effective.
The upcoming final phase of research will collect more detailed evidence on (i) the longitudinal effects of the YOP program, (ii) the distribution of economic impacts, (iii) why access to credit and capital does not appear to be the binding constraint on the youth, (iv) why larger per person grants do not lead to proportionally more impact, (v) the impact of employment on social stability, and (vi) how government transfers affect citizen attitudes and voter choices.