Uganda: How SMEs Can Tap Into Oil and Gas As First Oil Nears

Uganda: How SMEs Can Tap Into Oil and Gas As First Oil Nears

Kampala, Uganda — Small and medium-sized enterprises need to enhance their capital base, embrace partnerships and adhere to high corporate governance standards to reap from the upcoming oil and gas sector, sector players said.

Patrick Mweheire, the Chief Executive at Standard Bank Group, Eastern Africa and Chairman of Uganda Chamber of Mines and Petroleum said during the 2-day East African SMEs Oil and Gas conference held at the Kampala Serena Hotel from November 18-19 that SMEs continue to face big challenges especially in record keeping which among others limits lenders’ ability to support them financially.

"With the oil and gas industry’s steady growth, sufficient capital for SMEs is required to keep a business afloat," he said.

Mweheire said, reversing challenges faced by SMEs into strengths would see them reap big opportunities and help put the economy back to its growth curve.

"Investing a million dollars in Stanbic Bank may create 20 jobs, but investing a million dollars in 1000 SMEs will create thousands of jobs," he said.

Mweheire cited the Stanbic Business Incubator where SMEs are being supported to bridge their gaps to enable them participate in the oil and gas sector. The Incubator allows small and medium-sized businesses interested in and/or engaged in the oil and gas industry to skill and train in order to address prevalent business challenges in Uganda.

Uganda’s oil and gas sector is expected to benefit SMEs in more than 16 sectors including; transport, security, foods and beverages, hotel accommodation and catering, human resource management, office supplies, fuel supply, land surveying, clearing and forwarding, crane hire, locally available construction materials, civil works, supply of locally available drilling and production materials, environment studies and impact assessment, communications and information technology services and waste management.

Peter Lokeris, the state minister for minerals in the ministry of energy and mineral development said, the expected beneficiary sectors are directly linked to the oil and gas value chain, but a section of SMEs can still get indirect and induced contracts along the chain like electronic money services and recreation services.

He said, the government intends to establish a fund for local content development in order to finance the performance of sector contracts. The fund will provide low-interest loans to SMEs in order to facilitate their entry into the market.

John Walugembe, the Executive Director of the Federation of Small and Medium Enterprises said, the new "investors present an opportunity for the local firms to build a strong and […]

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