Government approves enterprise policy to improve efficiency

Subscribers make transactions at a Mobile money kiosk in Kampala. This is an example of a micro enterprise. FILE PHOTO

Kampala- Government has finally approved the micro, small and medium enterprises (MSMEs) policy after years of operating unrecognised.

The MSMEs policy, 2015, a copy of which Daily Monitor has seen, indicates that much as technology provides entrepreneurs with tools to improve efficiency and productivity, access to finance, poor standards, and negative attitudes and perceptions, remain major obstacles holding back MSMEs from being part of the global trade.

These, among others, are the challenges that the policy seeks to deal with.
“Government places great importance to the role played by private sector and all other stakeholders in socio-economic transformation of our country. As ministry of Trade, Industry and Cooperatives we therefore commit ourselves to full implementation of this policy, with the support of all stakeholders,” the ministry committed itself in the policy.

Who are these MSMEs?
Micro, small and medium enterprises (MSMEs), according to the policy; includes all types of enterprises irrespective of their legal form (such as family enterprises, sole proprietorships or cooperatives) or whether they are formal or informal enterprises, to ensure inclusiveness.

In quantitative terms, micro enterprises are those businesses employing not more than five people and have total assets not exceeding Shs10 million.

On the other hand, small enterprises employ between five and 49 and have total assets between Shs10 million but not exceeding Shs100 million.

And the medium enterprise is the one that employs between 50 and 100 with total assets of more than 100 million but not exceeding Shs360 million.

The MSMSEs are also important drivers in fostering innovation, wealth and job creation in Uganda.

More than 2.5 million people are employed in MSMEs, accounting for approximately 90 per cent of the entire private sector.
This generates more than 80 per cent of manufactured output that contributes 20 per cent of the gross domestic product (GDP).

Despite the sector’s enormous size and contribution to the economy, the 2015 World Bank Doing Business Survey identifies impediments for sufficient MSME growth and competitiveness as the longer time taken to register property and trading across borders.

Other challenges include not protecting investors, starting a business, enforcing contracts, and getting credit. The major contributing factor to these impediments is the large informality of the sector, with many enterprises only lasting five years or less.

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