Beyond Technical Skills Training: The Impact of Credit Counseling on the Entrepreneurial Behavior of Ugandan Youth

16 Pages Posted: 9 Oct 2020

See all articles by Maria Laura Alzua

Maria Laura Alzua

Universidad Nacional de La Plata - Centro de Estudios Distributivos, Laborales y Sociales (CEDLAS)

Maria Josefina Baez

affiliation not provided to SSRN

Samuel Galiwango

Government of Uganda - Office of the Prime Minister

Daniel Joloba

Independent

Benjamin Kachero

Government of Uganda - Office of the Prime Minister

Maria Adelaida Lopera

affiliation not provided to SSRN

Juliet Ssekandi

affiliation not provided to SSRN

Zeridah Zigiti

Government of Uganda - Ministry of Finance, Planning and Economic Development

Date Written: August 2020

Abstract

There is low take‐up of financial credit among youth in Uganda because potential beneficiaries perceive associated risks as high. This study assesses the determinants of entrepreneurial risk tolerance among Ugandan youth using experimental data from a randomized control trial and a real‐life investment‐risk experiment. Credit counseling was provided to young men and women aged 18–35 who owned a business to educate them about the obligations and commitments associated with financial credit. The intervention had a significant impact on demand for credit and related intermediate outcomes such as ownership of a bank account and investment in assets. The study finds that youth exhibited lower demand for credit after business training because of increased awareness regarding the actual risks associated with receiving credit. Our findings reinforce national strategies to promote soft skills for business entrepreneurship that extend beyond standard business training.

Keywords: credit counseling, randomized experiment, risk experiment, risk tolerance, Uganda, youth employment, Youth Venture Capital Fund

Suggested Citation

Alzua, Maria Laura and Baez, Maria Josefina and Galiwango, Samuel and Joloba, Daniel and Kachero, Benjamin and Lopera, Maria Adelaida and Ssekandi, Juliet and Zigiti, Zeridah, Beyond Technical Skills Training: The Impact of Credit Counseling on the Entrepreneurial Behavior of Ugandan Youth (August 2020). Review of Development Economics, Vol. 24, Issue 3, pp. 750-765, 2020, Available at SSRN: https://ssrn.com/abstract=3706975 or http://dx.doi.org/10.1111/rode.12706

Maria Laura Alzua (Contact Author)

Universidad Nacional de La Plata - Centro de Estudios Distributivos, Laborales y Sociales (CEDLAS) ( email )

Calle 6 e/47 y 48
La Plata, Provincia de Buenos Aires 1900
Argentina

Maria Josefina Baez

affiliation not provided to SSRN

No Address Available

Samuel Galiwango

Government of Uganda - Office of the Prime Minister ( email )

Twin Towers on Sir Apollo Kaggwa Road
Kampala
Uganda

Daniel Joloba

Independent ( email )

Benjamin Kachero

Government of Uganda - Office of the Prime Minister ( email )

Twin Towers on Sir Apollo Kaggwa Road
Kampala
Uganda

Maria Adelaida Lopera

affiliation not provided to SSRN

No Address Available

Juliet Ssekandi

affiliation not provided to SSRN

No Address Available

Zeridah Zigiti

Government of Uganda - Ministry of Finance, Planning and Economic Development ( email )

2-12 Apollo Kaggwa Road
Kampala
Uganda

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