1 smes are engines of growth prof charles g. kwesiga executive director uganda industrial research...
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SMEs are engines of growth
Prof Charles G. KwesigaExecutive Director
Uganda Industrial Research Institute
EMRC Agribusiness Forum
Cape Town, South Africa
June 2009
Uganda Industrial Research InstituteA Lead Agency in Industrialization of Uganda
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Map of Uganda
* Based on Purchasing Power Parity Calculation
Facts about Uganda
Population: Approx. 27MillionTotal Area: 236,000 Sq. KmLand Area: 199,710 Sq KmLocation: East-Central AfricaGDP* (est 2004): $39.4 Billion
Uganda Industrial Research InstituteA Lead Agency in Industrialization of Uganda
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SMEs in development
In developing countries:
SMEs are the engines of growth and are responsible for most jobs, products, tax revenues, welfare, and development.
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SMEs in development (contd.)
In developed countries:
SMEs play a vital role in acting as suppliers to large corporations, as well as carrying out innovations for new products and processes.
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What is an enterprise ?
Entrepreneurs/enterprises are entities that provide a new product or service, or develop methods, procedures, or technologies to produce or deliver existing services more optimally (i.e. lower cost, better quality, improved environment, etc)
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Global implications of SMEs
Indonesia: Recognizing the potential of SMEs as engines of growth, ADB is increasingly seeking to address policy and financial constraints inhibiting SME development
UK: “SMEs make up a half of all jobs in the UK, and account for half of our GDP, yet the significance of the SME sector is often overlooked.” A report by B2B international.
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Global implications of SMEs (contd)
Romania: Volksbank Romania, a subsidiary of Austria Volksbank, secured a facility of Euro 10 million from EBRD and the European Commission to provide loans to local SMEs, “an important sector in any successful private economy.”
“The bank is committed to promoting the growth of this important sector in the region, and the EBRD is pleased to work with Volksbank to help develop these engines of growth.” Noreen Doyle, 1st VP at EBRD.
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Attributes of SMEs
Tightly managed, decisions are quickly made
SMEs bring out innovation, create jobs Increase productivity, competition, and
high value added activities Flexible, able to explore new ideas Important for acceleration of change in
economies in transition
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SMEs contributions to national economies
Employ higher per capita investment Assist towards increasing investment Big role in generating entrepreneurship and
creativity A good training ground for skill development
and management skills Provide back-up service for large industries
Seow (1989)
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SMEs and economies in transition
Greater utilization of local raw materials Employment generation Encouragement of rural development Development of entrepreneurship Mobilization of local savings Self employment Opportunities for training (managers and
semi-skilled workers) Regional balance, because of even spread of
investments
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Challenges faced by SMEs
Lack of financing Lack of entrepreneurship and managerial skills Scarcity of skilled manpower Enabling environment for investment in SMEs is
absent High mortality rate of SMEs Financial indiscipline Inadequate infrastructure Poor implementation of policies Overbearing regulatory and operational environment Restricted market access Prof Chibundu
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What must be done with sub-saharan Africa SMEs?
We need to address the challenges highlighted above and take to heart the following words by Africa’s 1st Citizen:
“The knowledge required to create wealth…..is not lacking, what is lacking in sub-saharan Africa is the will to turn this knowledge into practical innovations.” H.E. Kofi Annan
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CONTACT US
Nakawa Industrial Area
Plot M 217
P.O. Box 7086
Kampala
Tel: + 256-41-286- 245 / 124
Fax: + 256-41-286- 695
E-mail: [email protected] / [email protected]
Website: www.uiri.org
Uganda Industrial Research InstituteA Lead Agency in Industrialization of Uganda