NSSF urges financial institutions to enhance support for SMEs

The National Social Security Fund (NSSF) made a strong call for financial institutions to adopt a collaborative framework to better support small and medium-sized enterprises (SMEs) in Uganda.

This initiative aims to bridge the gap between financial institutions and the evolving needs of Ugandans, both now and in the future.

Speaking at the  21st East African Banking School Conference, peter Kimbowa, Board Chairman of NSSF, emphasized the importance of creating a roadmap that fosters cohesion, focus, and dynamism between financial institutions and the Ugandan populace.

"The collaborative framework will generate new ideas, insights, and innovations that drive better value and predictability for good living, now and in the future, with improved regulations, incentives, and support from both the government and financial institutions," he stated.

Kimbowa pointed out that the current fragmented approaches have been a significant challenge.

He noted that the Institute of Bankers is working to build a common platform and agenda, aiming for measurable initiatives and activities that can track progress and impact.

"The conference is meant to bring forth common-based solutions to identify challenges, find solutions, and provide testimony of impact," he added.

Kimbowa also addressed the collapse of SMEs, which constitute 90% of Uganda’s entrepreneurship ecosystem.

He stressed the need for better communication and collaboration between business owners and banks.

"Every time you see somebody sick, there must be a reason why. So, the diagnostic effort and treatment must be a collaborative solution," he said.

He urged bankers to consider scaling up technology execution, focusing on opportunities from the fourth industrial revolution, and enhancing digital capabilities.

In attendance Mrs. Goretti Masadde, CEO of the Uganda Institute of Banking and Financial Services, responded to concerns about the banking sector failing SMEs.

She assured that the sector is evolving and banks now have dedicated SME banking functions.

"Many banks are now getting into trade finance to help our SMEs, particularly those in trade," she noted.

Masadde acknowledged the need for further efforts but highlighted ongoing support through partnerships with the microfinance sector and initiatives like financial literacy and cultural change campaigns.

She emphasized about the potential for greater collaboration between banks, the pension sector, and the insurance sector to improve financial service access and risk management for customers.

"We are already partnering with these sectors through the banking and financial services awareness month," she said.

Looking ahead, Masadde called for a more formalized approach, suggesting a memorandum of understanding and greater government involvement to ensure comprehensive support for SMEs.