Many Small and Medium Enterprises have failed to grow because they cannot access cheap credit, government has said.
The observations as the business community closed the 3rd edition of the SMEs week in Kampala.
The acting director Economic Affairs at the ministry of Finance, Moses Kaggwa said it is important to solve the problem of inadequate capital that is faced by most MSMEs so that they can reach their full potential.
"There are so many reasons why this is happening but one is lack of collateral by SMEs. The structure of our financial sector is such that they are looking at formal institutions who can have books of accounts for three and above years,"he said.
He expressed concern that SMEs have or are experiencing a low turnover in their businesses and this is derailing their growth and development.
He said the government has initiated strategic interventions to address access to affordable financing and empower individual businesses with enhanced capability.
Speaking during a news conference on Sunday, the executive director of the Federation of Small and Medium Enterprises(FSME) John Walugembe called for closer engagement with the business sector to help stimulate business through credit.
"SMEs complain of limited access to some of these funds. There were also issues of misinformation and we are happy that the government has suggested a meeting with some of these financial institutions to resolve this problem," he said.
