2.2m businesses not registered, have no bank accounts

Government says there is need to accelerate formalisation of informal businesses through easing registration processes and bringing services closer to the people. Photo / File 

What you need to know:

  • Informal businesses, the EPRC study found, contribute 29 percent to Gross Domestic Product. 

MARTIN LUTHER OKETCH  
A study by the Economic Policy Research Centre (EPRC) found out that at least 2.2 million businesses in Uganda have no legal status. 

The study, conducted last year, according to details contained in the Ministry of Finance 2021/22 Annual Performance Report, found that of the 2.2 million businesses, at least 28 percent are not registered anywhere in both national and local records and do not hold any personalised bank accounts. 

Informal businesses, the EPRC study found, contribute 29 percent to Gross Domestic Product. 

Therefore, the Ministry of Finance noted, there was need to accelerate formalisation of informal businesses through easing registration processes and bringing services closer to the people. 

Already, a number of laws have been reformed to ease registration of companies, insolvency processes and protection of copyrights. 

The reforms will also push for the amendment of the Companies Act, 2012 to enable compulsory formalisation of businesses and protection of the minority shareholders.

Government has also sought other ways through which formalization of businesses is expected to be achieved. 

Early last year, government launched the Business Development Services Framework that will seek to, among others, offer non-financial services to help entrepreneurs and informal businesses improve their performance, facilitate access to markets, and improve ability to compete through for example, business advice, mentoring, incubation and training. 

Other channels include shortening registration procedures by Uganda Registration Services Bureau. 

For instance, by  the of the 2021/22 financial year, the number of procedures to legally operate a company had reduced to four, which is a much better performance compared to the annual target of six and previous year’s performance of eight procedures. 

The Ministry of Finance also noted that the time required to start a business had by the close of last year, reduced from four hours during the 2020/21 financial year, to three while the cost of starting a business (as a percentage of income per capita) stood at 0.03 percent, which was much lower than the target and last year’s performance. 

URSB also recently indicated that it had put in place an automation process that will enable businesses to apply for company registration, certify documents, search and reserve company names, among others. 

Welcome!

You're all set to enjoy unlimited Prime content.