20 November 2009

Uganda: Bbumba Asks Banks to Back Enterprenuers

Finance Minister Syda Bbumba has called on the banks to financially support the Small and Medium Enterprise (SME) sector.

The minister said SMEs form the country's economic base and it would be imperative if banking institutions extend financial incentives to support their growth and development.

Ms Bbumba, who was officiating at the 10th anniversary of Citi Bank in Kampala recently, said banking services ought to target the SME sector, which is vital in attaining the country's dream of economic independence.

"Banking services are crucial to the development of SMEs," she said at the event, attended by experts from local and international monetary institutions.

"By supporting SMEs, we will be supporting people who employ themselves, as well as those with the potential to employ other people. Banks should come up with products to support SMEs."

The SME sector presently forms the bulk of domestic investments.

Data from the Uganda Bureau of Statistics (UBOS) estimates that businesses categorised as small and medium constitute about 80 per cent of all investment entities in Uganda.

But despite the sector's significance in determining the country's development, the industry is still too insolvent to trigger-off the country's projected more than 7 per cent economic growth.

And because of their vulnerability to the effects of local market competition, UBOS says more than 70 per cent of the SME enterprises collapse prematurely- mostly before the fifth year after their establishment.

In the 2009/ 2010 Financial Year, the Ministry of Finance, through the investments overseer, Uganda Investments Authority allocated 0.027 per cent (Shs1 billion) of the more than Shs7 trillion budget to the sector that averagely contributes 75 per cent of Uganda's Gross Domestic Product. Uganda in East Africa has the least number of domestic enterprenuers.

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