John Walugembe is the Executive Director for Federation of Small and Medium Enterprises, an umbrella body for SMEs in Uganda. The Independent’s Julius Businge had an interview him on the impact of COVID-19 on SMEs. What major milestones has the federation recorded since its establishment?
The Federation was established in 1990 but reconstituted in 2017. The organization plays a pivotal role in creating a robust and conducive business environment for small and medium businesses in Uganda. The organization also offers business development services to SMEs, either directly or indirectly. We have over the years grown our membership base to more than 25,000, with a presence in every district of Uganda. We regularly organize digital literacy trainings countrywide – these have benefitted close to 5,000 people.
Could you sum up the contribution of SMEs to Uganda’s economic growth aspirations?
The SMEs in Uganda constitute more than 80% of Uganda’s private sector, employ 8.5 million people and account for between 70-90% of non-farm employment. SMEs are the engine of economic growth, innovation and wealth creation. Uganda cannot therefore attain middle income status without paying sufficient attention to this sector.
The government has put in place a stimulus package for SMEs to support their recovery from COVID-19 effects. What is your assessment of this package?
The COVID-19 pandemic has had both supply side and demand side negative impacts on the businesses of our members. The pandemic and the restriction measures adopted by the government have led to job losses, supply chain disruptions, cash shortages and a sudden drop in demand for goods and services leading to very minimal or no sales. In our position paper presented to the Parliamentary committee on the national economy, we argued that any stimulus package should include the following measures: tax relief to SMEs, measures to boost liquidity, the payment of domestic arrears, reviewing of the budget to remove any wastage and support to SMEs to digitalize. Subsequent to our statement, the Government announced a Stimulus Package which included Shs130 billion being allocated for labor intensive works to boost demand, Shs256 billion being allocated as seed capital for youth and women, Shs94 billion being allocated to SACCOs and MFIs and Shs1.045 trillion being allocated to Uganda Development Bank for lending to SMEs among others. In addition, Shs673billion was allocated towards payment of domestic arrears. Overall, we find these measures to be well thought out and sufficient. However, […]