Informal enterprises missing out on opportunities for growth,says Ggoobi

The Permanent Secretary to the Treasury (PSST), Ramathan Ggoobi, has called on entrepreneurs to embrace formalisation and professionalism to unlock the vast economic opportunities the country offers.

Speaking at the Pakasa Forum in Kampala, Ggoobi noted that Uganda ranks among the most entrepreneurial countries globally, with three in every ten Ugandans starting a business annually.

“Uganda is known as a global hotspot for entrepreneurs. More interestingly, 7 out of 10 startups in Uganda are owned by the youth,” he said.

However, Ggoobi cautioned that most businesses are small, informal, and often short-lived because they are necessity-driven rather than opportunity-driven.

He said informal businesses, in their bid to avoid taxes and registration, miss out on opportunities such as government contracts and other incentives available to formalized enterprises.

He pointed to research highlighting that these “necessity enterprises” often fail to achieve growth and sustainability.

To address these challenges, Ggoobi outlined government initiatives aimed at supporting Micro, Small, and Medium Enterprises (MSMEs).

He said a physical One-Stop Centre at the Uganda Business Facilitation Centre in Kololo has been operationalised to ease registration and investor support.

Additionally, entrepreneurship skilling programs under the Presidential Zonal Industrial Hubs and SME workspaces in industrial parks, such as the Mbarara SME Park, have been established to boost entrepreneurship.

In the oil and gas sector, Ggoobi highlighted significant progress under the Buy Uganda Build Uganda (BUBU) policy, with 465 Ugandan firms securing contracts worth $1.973 billion.

The number of Ugandans registered on the National Oil & Gas Talent Register has also grown to 8,856 by December 2023, reflecting the sector's potential for job creation.

Looking ahead, Ggoobi revealed that the government, under the National Development Plan IV, is implementing a Ten-fold Growth Strategy to expand Uganda’s economy from $50 billion in 2022/23 to $500 billion by 2040.

Key sectors driving this growth include agro-industrialization, tourism, mineral-based industrialization, and ICT.

He further urged MSMEs to position themselves to benefit from three key economic opportunities: Business-to-Households (B2H), Business-to-Business (B2B), and Government-to-Business (G2B).

He projected increased demand for household consumables, intermediate goods, and government procurement contracts as Uganda’s economy doubles in the next five years.

To leverage these opportunities, Ggoobi advised entrepreneurs to formalize their businesses through registration, certification, and specialization, ensuring compliance with regulations.

“MSMEs must learn how to follow the money from export markets and recognize that Uganda’s economy is changing,” he concluded.

He highlighted several challenges hindering business survival and growth, including limited access to capital, insufficient technology such as tools, codes, and expertise, as well as inadequate infrastructure like electricity, transport, logistics, and workspaces.

Businesses also face constraints in knowledge and operational environments, such as lack of development services, weak corporate governance, limited market access, burdensome taxes, numerous fees and licenses, urban politics, and high crime rates.

Ggoobi, noted that the government is actively addressing these issues to foster the growth of small and medium enterprises (SMEs).

He emphasised that the government is focused on facilitating the private sector, especially SMEs, to drive economic growth, create jobs, generate wealth, enhance exports, and increase local content.

"Government has prioritised private sector facilitation, particularly SMEs, to accelerate growth, create jobs and wealth, enhance exports, and increase local content," said Ggoobi.

One of the government’s significant measures is providing alternative sources of affordable capital.

To date, a total of Shs 8.03 trillion has been allocated to various wealth funds to support businesses.

These include the Uganda Development Bank, Emyooga, Parish Development Model, Agricultural Credit Facility, Youth Venture Capital Fund, Youth Livelihood Fund, and the Uganda Women Entrepreneurship Program.

Additional initiatives include the Small Business Recovery Fund, Generating Growth Opportunities and Productivity for Women Enterprises, and the Investment for Industrial Transformation and Employment initiative.