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Uganda Industrial Research Institute
A Lead Agency in Industrialization of Uganda
SMEs are engines of growth
Prof Charles G. Kwesiga
Executive Director
Uganda Industrial Research Institute
EMRC Agribusiness Forum
Cape Town, South Africa
June 2009
Uganda Industrial Research Institute
A Lead Agency in Industrialization of Uganda
Map of Uganda
Facts about Uganda
Total Area:
Land Area:
GDP* (est 2004):
Approx. 27Million
236,000 Sq. Km
199,710 Sq Km
East-Central Africa
$39.4 Billion
* Based on Purchasing Power Parity Calculation
SMEs in development
In developing countries:
SMEs are the engines of growth and
are responsible for most jobs, products,
tax revenues, welfare, and
SMEs in development (contd.)
In developed countries:
SMEs play a vital role in acting as
suppliers to large corporations, as well
as carrying out innovations for new
products and processes.
What is an enterprise ?
Entrepreneurs/enterprises are entities
that provide a new product or service, or
develop methods, procedures, or
technologies to produce or deliver
existing services more optimally (i.e.
lower cost, better quality, improved
environment, etc)
Global implications of SMEs
Indonesia: Recognizing the potential of SMEs as
engines of growth, ADB is increasingly seeking to
address policy and financial constraints inhibiting
SME development
UK: “SMEs make up a half of all jobs in the UK,
and account for half of our GDP, yet the significance
of the SME sector is often overlooked.” A report by
B2B international.
Global implications of SMEs
Romania: Volksbank Romania, a subsidiary of
Austria Volksbank, secured a facility of Euro 10
million from EBRD and the European Commission to
provide loans to local SMEs, “an important sector in
any successful private economy.”
“The bank is committed to promoting the growth of this
important sector in the region, and the EBRD is
pleased to work with Volksbank to help develop these
engines of growth.” Noreen Doyle, 1st VP at EBRD.
Attributes of SMEs
Tightly managed, decisions are quickly
 SMEs bring out innovation, create jobs
 Increase productivity, competition, and
high value added activities
 Flexible, able to explore new ideas
 Important for acceleration of change in
economies in transition
SMEs contributions to national
Employ higher per capita investment
Assist towards increasing investment
Big role in generating entrepreneurship and
A good training ground for skill development
and management skills
Provide back-up service for large industries
Seow (1989)
SMEs and economies in transition
Greater utilization of local raw materials
Employment generation
Encouragement of rural development
Development of entrepreneurship
Mobilization of local savings
Self employment
Opportunities for training (managers and
semi-skilled workers)
Regional balance, because of even spread of
Challenges faced by SMEs
Lack of financing
Lack of entrepreneurship and managerial skills
Scarcity of skilled manpower
Enabling environment for investment in SMEs is
High mortality rate of SMEs
Financial indiscipline
Inadequate infrastructure
Poor implementation of policies
Overbearing regulatory and operational environment
Restricted market access
Prof Chibundu
What must be done with subsaharan Africa SMEs?
We need to address the challenges highlighted
above and take to heart the following words
by Africa’s 1st Citizen:
“The knowledge required to create wealth…
not lacking, what is lacking in sub-saharan
Africa is the will to turn this knowledge into
practical innovations.” H.E. Kofi Annan
Uganda Industrial Research Institute
A Lead Agency in Industrialization of Uganda
Nakawa Industrial Area
Plot M 217
P.O. Box 7086
Tel: + 256-41-286- 245 / 124
Fax: + 256-41-286- 695
[email protected] / [email protected]