Nytil masks monopoly wrong, involve SMEs too

Thursday May 21 2020

 

By Mbabazi Peninnah

I n efforts combat the spread of Covid-19, many countries have been caught between having to save lives or the economy, leaving small and medium sized enterprises (SMEs) clutching at straws.

In order to achieve sustainable and equitable growth, there must be greater attention paid to the actors that have the most potential to harness growth of the economy, crucial among these are SMEs. SMEs make up the bulk of the tissue of the economy.

They are the engine of development, innovation, and wealth creation. According Uganda Investment Authority, SMEs are spread across all sectors of the economy, employing more than 2.5 million people who account for 90 per cent of the entire private sector, and contribute 20 per cent of the gross domestic product.

On Monday, during his national address on Covid-19, the President offered free facemasks to all Ugandans, with Nytil placed in charge of the manufacturing, leaving monopoly of production to one large firm.

SMEs should be included in part of the production of these masks, especially since some of them from the beginning had already taken into making these masks, selling them for less than the price being sold in pharmacies.

These SMEs can be able to gain not only in profiting from producing these masks but also to maintain some of their workers. The combined effort of alcohol and spirit companies to make sanitizers was well put, since these same companies worked with others in the production, which increased their incentives for growth.

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Domination by a few large firms with significant market power tends to make economies less dynamic, in particular if small firms cannot challenge the big players when lobbying for policy reforms.

A balanced firm size distribution instead stimulates competition within the economy and puts more firms in a position to also compete internationally. Credit facilities should as well be able to effectively facilitate access to finance SMEs.

It would be helpful for some of these Micro-Finance Institutions to provide lasting solutions to include direct assistance to SMEs. SMEs should be supported through an extended period of an economic downturn by increasing their liquidity.

There is so much untapped and profitable opportunities from SMEs which can gear towards resilience, inclusiveness and sustainable growth in Uganda.

Mbabazi Peninnah,

Uganda Debt Network

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