Lack of Trust Killing Ugandan Enterprises - Sejjaaka

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Dr. Samuel Sejjaaka, Uganda Development Bank Board Chairperson, says while trust and transparency lie at the heart of social life and are key to building a healthy economy, they have been lacking among many Ugandans that have set up family businesses.

Founders of Small and Medium Enterprises (SMES) have been urged to develop a culture of trust if they are to survive longer in business.

Uganda Development Bank Board Chairperson, Dr. Samuel Sejjaaka, says while trust and transparency lie at the heart of social life and are key to building a healthy economy, they have been lacking among many Ugandans that have founded family businesses.

Dr. Sejjaaka, while delivering a keynote address at the opening of the first Stanbic Bank Enterprise Banking conference, said many entrepreneurs normally cheat banks and other business partners and end up losing trust. He said because of lack of trust, many of the SMES end up collapsing at infancy.

Dr. Sejjaaka, who has served on boards of several financial institutions, observed that Uganda is one of the world's most entrepreneurial countries but also has the highest rate of enterprises that collapse before reaching ten years. 

He also cited lack of financial discipline and failure to manage success as one of the reasons why may SMES in Uganda tend to collapse.

Small and Medium Enterprises (SMEs) are said to be the backbone of the Ugandan economy. They are vital suppliers, customers and employers of over 2.5 million Ugandans equivalent to 90% of total non-farm sector workers.

According to the Global Entrepreneurship Monitor (GEM), Ugandans have high aspirations and positive attitudes towards entrepreneurship.

The 2017 report said Ugandans have low levels of fear of failure in starting enterprises, and the vast majority see good opportunities to start a business in the country. 

While entrepreneurial activity in Uganda is high, the fact that many of the enterprise collapse at infancy has been an issue of concern. Some of the participants at the conference being held at Hotel Africana complained that the regulatory regime in Uganda together with lack of, or expensive, capital have made it very difficult for them to survive.

Stanbic Bank Chief Executive Officer, Patrick Mweheire, agreed that the regulatory measures in Uganda don't favour small and medium enterprises (SMEs). 

Mweheire said many of the SMES cannot meet requirements set by the international oil and gas companies.

Mweheire says the regulatory regime should be reviewed to ensure a fair playing ground for SMES in Uganda.

SME financing in Uganda is provided primarily by banks with loans being backed by credit guarantees or collateral, but Mweheire believes an alternative source should instead be sought.
 
The Micro, Small, Medium, Enterprises (MSMEs) according to Uganda Bureau of Statistics are spread across all sectors with 49% in the service sector, 33% in the commerce and trade, 10% in manufacturing and 8% in other fields.
 

 

Mentioned: stanbic bank