President Yoweri Museveni’s recent visit to the oil-endowed middle-east has started yielding positive results, according to the Evelyne Anite, the State Minister for Investment and Privatization. Part of the successes, she says, will be the arrival of Private Equity companies in July.
“Following President’s Museveni’s visit to Qatar, we have been able to identify private equity companies that are interested in partnering with Ugandan small scale enterprises (SMEs),” Anite says, adding that what Ugandans need now is the application of best business practices, including keeping books of accounts.
Speaking at the 3rd Kampala Private Equity Conference at the Serena Hotel, Minister Anite said the Qatari private equity companies could provide cheap loans to only organized SMEs, urging sector players to employ professionalism in whatever they do access funding for growth. She also urged Ugandan businesspersons to make use of the shs50 billion the government is injecting in the capitalization of Uganda Development Bank for borrowing.
The Minister, who has been directed by Museveni to spearhead investments in the country, says Ugandan SMEs find it hard to access financial loans due their failure to keep audited books of accounts and failure to separate personal interests from the business.
Charles Ocici, the Executive Director of Enterprise Uganda, agrees with the minister, saying that the failure by individuals to distinguish themselves from businesses is one of the major causes that are responsible for the collapse of businesses before they even celebrate their first birthday.
One Enterprise Uganda’s roles is to nurture young entrepreneurs capable of creating future jobs for the rest of society.
“Ugandans should know that for a business to be considered a success, it should survive three generations,” Ocici says, adding that not many businesses in the country have achieved this milestone. He says directors/owners should desist from the habit indiscriminately spending company money.
Minister Anite also decried the high levels of corruption exhibited by the Ugandan youth who got government money to start businesses but instead majority used the money for personal purposes.
“The youth venture capital fund worth shs19 billion was badly misused by the youth and the same is happening with the youth livelihood fund,” she says, adding that the bad practices will turn the youth livelihood programme into a crisis.
“Some of the youths in the north fled to South Sudan after mismanaging the money. The success story is there but failures are very high,” Anite says of the shs53 billion Youth Livelihood Programme that was meant to uplift many Ugandan youths out of unemployment but also provide them with business skills.
However, Mr Ocici, who worked with the PTA Bank, calls for a policy shift in as far as providing money to the youths is concerned. “Government should give money to established and well-run SMEs as these have potential to grow and provide jobs,” he says.
Anite says there is need for SMEs in Uganda to exhibit a high degree of trustworthiness if they are to have partnerships with foreign private equity companies that give money for short and medium term investments at better rates.
Fred Opolot, a board member of the Uganda Registration Services Bureau, says there is need establish business incubators to prepare SMEs for the private equity funds, which he says are cheaper than bank loans. He says focus should be on the export-driven SMEs.
Research show that SMEs make up 67% of Uganda’s business sector and when the Micro businesses which employ less than 5 people are included the figure comes up to 99%. All the major sectors in Uganda’s economy are also dominated by SMEs.
However, despite accounting for a big percentage of Uganda’s business sector, SMEs still heavily rely on internal funds or retained earnings to meet their long-term financing needs which significantly limits their ability to take advantage of new market opportunities, access new technology, and build internal capacity.
