Beyond technical skills training: The impact of credit counseling on the entrepreneurial behavior of Ugandan youth

Abstract

AbstractThere 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.