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Current mortality rate of SMEs will kill private sector – Economist warns

PAU’s Ernest Rukundo,Prime Minister, Rt Hon. Ruhakana Rugunda and Stanbic bank Uganda CEO Patrick Mweheire at the Stanbic Business incubator Programme (PML PHOTO)

Economist Patrick Mweheire who is also the CEO of Stanbic Bank has warned that the current mortality rate of SMEs will kill the private sector.

While passing over participants who had completed the Entrepreneur Development Programme, a course equipping Ugandan SMEs with the necessary skills and understanding of the requisite standards required to successfully participate in the Oil and gas sector, Patrick pointed out the importance of SMEs to the economy.

According to statistics, SMEs constitute 90% of the private sector – contribute 80% of all manufacturing output and provide 2.5 million jobs.

However, only 30% of them live to celebrate their 3rd birthday.

“Business sustainability is a major problem among Ugandan SMEs. This is an acceptably low figure which cannot be tolerated going forward, otherwise the private sector will become stagnant and slowly die,” Patrick warned.

Its against that background that Stanbic Bank together with other stakeholders in the Oil and Gas sector have augmented their commitment to promoting increased local content participation with the graduation of 34 SMEs as the first cohort in the recently launched business incubator to help entrepreneurs run their businesses in a sustainable and profitable manner.

At the same event, Patrick congratulated the participants who successfully completed the course.

PM Ruhakana Rugunda cuts ribbon to launch the Stanbic Business Skilling Incubator with Stanbic’s CEO Patrick Mweheire & PAUs Ernest Rubondo (PML PHOTO)

“It fills me with great pride to see you here today because this represents a new dawn in the new relationship between the bank and SME’s who form the back bone of our economy. For too long many stakeholders have spent a lot of time talking about the challenges SMEs face without presenting any solutions. The Business incubator was conceived in order to buck the trend and reverse the status-quo. I am confident the entrepreneurs who have successfully completed the course will put the knowledge, skills and ideas from the programme to good use and therefore become a lot more professional and sustainable long term.”

SME owners who have successfully graduated from the business incubator were taken through various programmes and activities by industry and sector specialists as well as subject matter experts who discussed a variety of subjects including understanding the oil and gas sector, compliance and contracting, business and financial management, bid management, joint ventures and quality and other specialized areas.

The objective being that the SMEs will become longer term focused, better equipped to run their businesses and therefore better positioned to bid for, win and service major contracts with International Oil companies.

Post-graduation from the business incubator, Stanbic will provide a coach to each of the SMEs for a 9-month period to ensure that the incubator capacity building is appropriately put into practice in the market place.

“I believe this is a very powerful intervention that can be scaled across the country and have a meaningful impact on business sustainability and ultimately job creation. Approximately 160,000 SMEs in Uganda employ 2.5 million people and if we can enable each of them create an additional 4 jobs, it would go a long way towards solving the unemployment problem in Uganda,” Patrick added.

Delivering his key-note address as guest of honour, the Prime Minister of Uganda Hon. Ruhakana Rugunda thanked Stanbic for investing in the project which he observed was in line with government’s priority of promoting local content in the oil and gas sector.

Graduates of the Stanbic Business Skilling Incubator pose for a photo with the Prime Minister%2c Stanbic%27s CE and Petroleum Authority of Uganda (PML PHOTO)

“As Government we believe our people will only be able to maximise the benefits from our oil, if local companies are given the chance to participate in the sector. The positive trickle-down effect of this happening is not questionable because SMEs touch all aspects of our economy. This will not happen by chance however, as international oil companies have very high operational standards which cannot be compromised just to give Ugandan companies a foot in the door. So collaborations are necessary between the public and private sector to find ways of providing local companies with capacity building, training and skills required to bring them up to the requisite standards.”

The oil and gas sector is expected to be one of the mainstays of Uganda’s economic future with a minimum of 15 billion dollars of investments projected over the next 10 years.

However according to Mr. Mweheire, in order for the investments to have a lasting impact a minimum of 5% of this amount needs to be remain within the country.

“This will only happen if Ugandan SME are involved because they are uniquely positioned and sized to scale up and therefore make the biggest impact.”

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