New Vision (Kampala)

15 February 2013

Uganda: Formalise SMEs to Spur Growth - UIA

The Uganda Investment Authority (UIA) is calling for complete formalisation of all small-and-medium-sized enterprises (SMEs) as a stimulus for containing the rampant unemployment currently at about 62%.

Top executives of the investment promotion agency observed that SMEs create the biggest percentage of new jobs at 26% annually, but to maximise their potential, they must be assisted to become formal entities.

Formalising SMEs means they can structure contracts to supply large companies, register and become tax compliant and operate sound basic business principles and management.

"The biggest challenge is their small size and clustering them is critical," said Albert Ouma, the UIA director for SMEs.

He said even annual exhibitions such as the Uganda Manufacturers' Association annual show only showcases major companies yet their exist several good SMEs that are employing thousands of Ugandans.

"The mortality rate is very high and it is because we do not use local expertise to mentor companies," said Ouma.

There is a draft policy that has been stuck at the finance ministry for two years since UIA submitted it, which has slowed down efforts of sparking the latent potential of the SME segment.

Ouma said passing and implementing the policy would reduce duplication of tasks and maximise the available resources by directing them to appropriate segments.

"We would also structure security for SME credit funding," said Ouma. He was speaking as part of UIA top executive who briefed the media on attempts being made at making Uganda a top investment destination in Africa as a five-year short-term goal.

Job creation in the SME segment is growing at an average of 26% per annum, which if supported and helped to formalise and be competitive, could spark overall economic activity and GDP growth.

Ouma said there are over 300 business ideas online that can be built on.

Frank Ssebowa, the UIA executive director, said Uganda still enjoys the best infrastructure and political stability despite different challenges.

"How come we are still shouting our selves hoarse about investment? It is because people still do not know about investment," said Ssebowa.

He implored Ugandans, including the media, to invest in their country to safeguard their future.

Ssebowa said there is a growing middle-class and the consumer is now more discerning in their choices, describing the emerging malls as a business opportunity for SMEs to supply products.

"There is more confidence now people are putting money in value. Aggregate demand and supply have grown alongside investment," said Tom Buhunguriza, the deputy executive director.

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