Income Security as an Entrepreneurial Runway: Evidence from Recent Graduates in East Africa

Background— Youth unemployment persists across East Africa despite rapid tertiary-enrolment growth. Many graduates aspire to create ventures, yet student-loan obligations and absent safety nets truncate the time they can afford to experiment. This study tests whether post-graduation income-security instruments furnish an “entrepreneurial runway” that converts intention into business formation. Methods — We assemble a harmonised panel of 25,000 graduates from Kenya, Uganda, and Tanzania (2016-2022), linking higher-education loan-board ledgers, national labour-force surveys, enterprise registries, and UN-Habitat urban indicators. Logistic regressions with cubic-spline and interaction terms estimate the effect of income support—loan-repayment moratoria, stipends, or wage subsidies—on entrepreneurial entry within 24 months, with clustered errors at university level. Results — Receiving any income support raises the odds of launching a venture by 82 % (marginal effect +5.5 percentage points, p < 0.001). The relationship is non-linear: predicted entry peaks at 20 % when support lasts 9-12 months and tapers thereafter, indicating an optimal runway length. Direct stipends outperform loan holidays, while high student-debt burdens and multiple dependents attenuate, and urban opportunity density amplifies the treatment effect. Conclusions — Modest, time-bound income security demonstrably mitigates risk aversion and institutional voids, doubling graduate entrepreneurship across three national contexts. Policies pairing a one-year stipend or grace period with targeted debt relief and rural ecosystem investment could unlock inclusive, innovation-driven growth. Originality/Value — This is the first large-sample, cross-country evidence from Sub-Saharan Africa that quantifies a causal link between graduate income security and venture formation, integrating behavioural, institutional, and human-capital lenses to refine entrepreneurship theory and inform design of cost-effective support programmes.