The Observer (Kampala)
Ben Ssebuguzi
4 November 2009
opinion
Kampala — Many times micro-businesses have been neglected when it comes to the national development of this country. Most of the government programmes put their focus on Small and Medium Enterprises (SMEs). All banks are looking at working with SMEs too, neglecting the Micro-businesses. The civil society organizations have also put their emphasis on SMEs, effectively shutting out the 'micros'.
According to Wikipedia.org, a Micro-business or Micro-enterprise is described as "a type of small business that is often unregistered and run by a poor individual. Broadly stated, a Micro-business is a business started with as little capital as possible, or less capital than would be usual for a business.
Because Micro-enterprises typically have no access to the commercial banking sector, they often rely on 'Micro-Loans' or 'Micro- credit' in order to be financed". According to the Uganda Bureau of Statistics, SMEs differentiate from country to country but by Ugandan standards, Small Enterprises employ more than 4-19 people, Medium Enterprises employ 19-100 people and Large Enterprises employ more than 100 people. So the question is: where are Micro-enterprises mentioned?
Micro-businesses have been sidelined when it comes to the national development agenda because there is no where they are talked about. The Uganda Investment Authority has the Presidential Investors Round Table where investors get an opportunity to discuss with the President about their problems.
Can the Private Sector Foundation or Uganda Chamber of Commerce and Industry, the oldest traders' umbrella body, show us the minutes of the meetings where they discussed about Micro-businesses and not SMEs instead? It should be noted that these Micro-businesses are scattered around the country and are involved in activities like chapatti making, fruit-selling, kiosks, small scale agriculture, carpentry, airtime selling, to mention but a few.
They begin with as little capital as 10,000/=. These are mostly people who are not educated enough and are not legally registered with the Registrar of Companies. Many times these Micro-businesses have been duped out of their money. One example is the case involving Front Page Microfinance whereby Bank of Uganda took too long to intervene and by the time they did many people had lost a lot of money.
This is the little capital these people hold but some unscrupulous people go ahead to steal it anyway. Some Microfinance bodies are lending Micro-businesses at a high interest rate of 5% per month, or 60% per annum, which is far above the market rate of 23% at which other banks lend.
In simple terms when you borrow Shs 1million, you give them back Shs 1.6 million plus other charges like registration, insurance which boils down to daylight robbery because it becomes hard for them to break even.
Micro-business owners are being harassed by local authorities who confiscate their merchandise which they sometimes don't return, leading to losses that have a ripple effect on many households.
Granted, these people sometimes operate in illegal places like verandas and walkways, but should they be harassed instead of designating places where they could operate from?
This category of people are very vital to the development of this country because they sell their goods at a relatively cheap price compared to those in shops and have an appeal to the vast majority of Ugandans. It should be remembered that these people are the majority; let's respect them for what they do for this nation.
It's for this reason that I call upon all concerned authorities beginning with our President, down to the local authorities, to give protection and recognition to this group of people if we are to be successful with national programmes like 'Prosperity for All'.
Bank of Uganda should screen all Microfinance Institutions, put in place strong laws in the microfinance sector and supervise these institutions so that we can protect our people from conmen.
I strongly believe that if Uganda is ever to reach the level of developed of countries like Japan, USA, etc, it would be by beginning to support Micro-businesses so that they can gradually grow into giants like Mukwano Industries which employ more than 100 people and thereby create jobs for this nation.
The writer is an Economics Analyst
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