Small and Medium Enterprises (SMEs) in Uganda have been given another boost to grow bigger with the new Shs6b equity and venture fund facilitated by the Uganda Development Bank (UDB).
The UDB board chairman, Samuel Sejjaaka, said in Kampala that the bank is ready to avail mid-term credit and expertise to organized SMEs in the country.
Ssejjaaka said this during the ceremony to award millions of cash to the best enterprising projects in agriculture and manufacturing.
“We are putting forward Shs6b out of our capital and we will invest in equity viable projects,” he said, adding that the bank would also invest Shs1 billion in venture capital to help firms grow their businesses and create jobs.
Speaking at the same event in Kampala, Prof. William Bazeeyo, the Chief of Party at Resilient Africa Network, urged government to avail interest free loans to key SMEs dealing in agricultural value addition. Bazeeyo argued that interest free loans could help innovative firms to break even, adding that “some emerging economies across the world have piloted such incentives”.
A recent I-Growth Accelerator Survey 2017 shows that Uganda’s import bill is high because of the limited innovations and inclusive technologies that have failed to make manufacturing equipment and machinery.
However, the State Minister for Finance in charge of General Duties Dr Gabriel Ajedra speaking of the local SMEs said there was need to protect them from outside competitors if they were to grow into large scale production enterprises.
“Ministry of Finance will impose higher taxes on imports where we have products available on the local market,” he said, adding that the cost of acquiring raw materials in Uganda was expensive compared to Kenya and Tanzania. He said the next national budget would come with provisions to give local manufacturers a competitive edge over foreign ones.
Government last year introduced the Buy Uganda Build Uganda (BUBU) Policy, aimed at encouraging Ugandans to buy goods produced within the country instead of spending on imported items. Government believes the policy will help develop the local industries as well as help create jobs.
In Uganda Small Enterprises employ between 5 and 49 and have total assets between Shs10 million but not exceeding Shs100 million.