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Micro, Small and Medium Enterprises (MSMEs) in Uganda

Uganda has an extensive MSME sector which accounts for approximately 90% of the entire Private Sector, over 80% of manufactured output and contributes about 75% to the gross domestic product (GDP). It employs more than 2.5 million people equivalent to 90% of total non-farm sector workers. It comprises about 1,100,000 enterprises which makes the sector one of the largest employers in the country.

The MSMEs are largely concentrated in the major urban areas of Uganda with the majority in Kampala City. The MSMEs are predominantly engaged in hospitality and entertainment, education, wholesale and retail trade, manufacturing, finance and insurance, health, social work, furniture, agriculture, professional services, and Information and Communication Technology (ICT).

The enterprises ownership are spread as follows;

  • Sole proprietorships comprises 43%
  • private limited liability comprises 33%,
  • partnerships 18%,
  • Associations 2% ,
  • Cooperatives 3% and
  • NGOs (1%).

 MSMES Policy objectives

  • To harmonise and harness the legal and regulatory mechanism for enhancing competitiveness of the MSME sector.
  • To promote the start-up, survival, formalisation and growth of MSMEs.
  • To provide a mechanism for inter-institutional collaboration in MSME development.
  • To develop strategies for facilitating the provision of financial services to MSMEs.
  • To increase access to appropriate technology for MSMEs
  • To encourage Research and Development.
  • To increase access to market information for MSMEs.
  • To build the entrepreneurial, managerial and business skills of MSMEs backed by a positive mindset.
  • To improve the overall business environment in which MSMEs operate

 Organizations which facilitate MSMEs

  • Investment and Private Sector Development in the Ministry of Finance, Planning and Economic Development;
  • Ministry in charge of Trade, Industry and Cooperatives;
  • Uganda Investment Authority (UIA);
  • Enterprise Uganda;
  • Uganda Industrial Research Institute (UIRI)
  • Makerere University Entrepreneurship Centre.

The above organizations design and implement the necessary policies and programmes that support the development of the MSME sector.

 Challenges facing MSMES in Uganda

  • Limited access to business development services remains a major constraint to the performance of MSMEs.
  • Limited Access to Appropriate Technology and financial resources to acquire appropriate technology to maximize their business potential
  • Limited Access to reliable, up-to-date and timely information to enable selection of target markets, product development, technical skills, business development services and financial solutions for MSMES
  • Inadequate Managerial and Technical Skills which affects decision making and thus affecting the progress of MSMES
  • Low Quality of Products resulting from inferior technology, low capital and production skills and MSMEs are not appreciative of the need to have their products certified.

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