Govt starts push to formalise small businesses
Mr Ocici (right), Mr George Oumo (second right), a director at Enterprise Uganda and Ms Judith Ineku (second left), the Enterprise Uganda marketing executive, listen to Ms Botvina during the small business training in Kampala recently. Photo / Michael Kakumirizi
What you need to know:
- Government is seeking to formalise more than 10,000 informal small businesses in the next five years
Government, under the Informality Management for Compliance and Resilience programme, will seeking to formalise more than 10,000 informal small businesses in the next five years.
The programme, which is a comprehensive government intervention, seeks to strengthen small business operational capacity and eliminate business informalities.
Mr Richard Mubiru, the Finance Ministry enterprise growth and development lead officer, said the programme, whose implementation will kick off this month with a pilot phase involving 100 enterprises in Kampala and Wakiso, before rolling out across the country, will help targeted beneficiaries to push for a significant share of the market provided under the African Continental Free Trade Area.
Through the programme, government intends to grow a critical mass of organised small and medium enterprises that are fully registered, and compliant with standard financial and non-financial reporting systems - a strategy whose primary objective is to create employment opportunities and widen the tax base.
The programme will also establish simplified accounting, record keeping and other financing reporting systems to ease formalisation and compliance of small businesses.
Government defines small businesses as those with an annual turnover of between Shs10m and Shs100m, employing between five and 49 workers.
Speaking on the sidelines of a training of 100 small informal enterprises selected to participate in the programme, Ms Elena Botvina, the economic affairs officer of the division on investment and enterprise at the United Nations Conference on Trade and Development, which is supporting the programme technically, said digitising small businesses will be key in cutting costs and creating growth and competitiveness. “Digital financial reporting tools will empower enterprises into generating financial records that will inform key internal decisions on the direction of expansion, that way, entities will avoid the costs of hiring expensive accountants and auditors, thus reducing the cost of doing business,” she said.
Other implementing partners include Uganda Revenue Authority, Private Sector Foundation Uganda, Uganda Registration Services Bureau, Local Governments, and Private Sector Development Unit, among others.
At least 300 business management experts will be deployed to offer hands-on support to 10,000 participating small informal businesses across the country, in a two-managers-per-enterprise basis focusing on financial and other business development services aspects.
Mr Charles Ocici, the Enterprise Uganda executive director, said the programme will deal with small business survival challenges that deprive Uganda of better economic progress.
“Dealing with informalities will help in creation of joint ventures, attract financing and compliance with legal regimes,” he said, noting that when the programme ends, government will assess performance indicators for consideration while designing micro-economic policies.
Survival rate
A 2023 research published in the African Journal of Business Management, shows that median survival for small businesses in Uganda was 4.85 years, with more than 60 percent of those enterprises not surviving past their fifth year.
