This would also enable the SMEs to create more employment and boost production for export NSSF’s chief fi nancial officer Steven Mwanje receiving an award from Kibedi during the 10th Financial Reporting Awards at Skyz Hotel in Naguru, Kampala The Institute of Certified Public Accountants (ICPAU) has asked informal small and medium-sized enterprises (SMEs) to formalise in order to access capital and realise growth.
The ICPAU president, Fredrick Kibedi, said the high closure rate of the SMEs is closely linked to governance of the young enterprises as most of them are informally managed, without transparent rules, records and procedures.
He said beyond a relatively small size, the investment needs of a firm outstrip the financial resources of a sole proprietor, but because of informal financial management, the SMEs struggle to access capital for expansion.
"The problem with doing business informally is that time comes when you need to demonstrate how your business has been doing. If you want to access capital and grow your business, then formalise, so that you have a benchmark with which anybody can measure you," he said.
Kibedi was speaking on the sidelines of the 2020 Financial Reporting Awards (FiRe) at Skyz Hotel in Naguru, Kampala recently.
The awards are organised annually by ICPAU in partnership with Capital Markets Authority (CMA), the Uganda Securities Exchange (USE) and Vision Group.
Kibedi said if SMEs formalise, they would be able to access funding from Islamic financing institutions and expand their businesses.
He said this would also enable the SMEs to create more employment and boost production for export, which in the long run will help improve the country’s current account.
"The problem with Islamic finance is that they don’t lend, but finance the business and take part in its running because they only share profits. For them to consider you, you must be formal, with proper financial reports," he said.
Make financial reports
Kibedi also called on SMEs to embrace integrated financial reports in order to attract new investors and capital into their businesses.He said in a world of competition where everybody is trying to present themselves as the viable alternative, it is important that the success with which the financial report is measured is set higher."In a global setting, somebody is able to access your reports online and decide whether to invest with you or not. That is why an integrated financial statement is important, because the numbers support the story," Kibedi said.He […]
