Minister wants SMEs to be open

KAMPALA, UGANDA - Amelia Kyambadde, Uganda’s Minister of Trade and Industry has asked Small and Medium Enterprises to be transparent in order to benefit more from government programmes.

The Minister who was officially launching Business Partners International Uganda (BPI), a specialist risk finance company that provides customised financial solutions, said because most SMEs are not transparent; it is becoming very difficult to support them.

“Imagine, I don’t know whether they fear or are hiding away from taxes. Someone can tell you that he/she is using 100% locally made goods while this person is using 100% imported goods. This kind of lack of transparency is making it very difficult for us to work closely with them,” said Kyambadde.

She said they must improve and ensure integrity in the management of their businesses.

Business Partners International Uganda provides sectoral knowledge, mentorship, and other added-value services for formal small and medium enterprises (SMEs).

It forms part of the establishment of the larger Business Partners International East Africa (BPI EA) company, which aims to provide SME focused investments ranging from $50,000 to $1 million.

According to Mark Paper, the Chief Operating Officer at BPI Uganda, their company will initially focus on investments in East Africa, namely Kenya, Rwanda and Uganda, but we foresee that in the short-to-medium term before they roll- out to other countries.

He said they seek to reach out to small family-owned companies and those enterprise owners whose businesses are doing well but cannot attract the full commercial lending support that they need for traditional bank attention.

“Private equity firms often refrain from lending to these SMEs as they are either too small, or prefer not to deal with the complexities of doing business with a family management team rather than a board of members. This is however the area that BPI specialises in and the exact service offering that we are working to expand to entrepreneurs across Africa.”

Daniel Kaggwa, the Country Manager BPI Uganda, indicated that the company has recognised Uganda as a growth centre for Africa due to the country’s growing economy over the past five year period.

“The fact that the East African region continues to prosper, with a forecasted GDP growth of 5.5% expected this year, we decided to set foot in the region,” said Kaggwa.

He said entrepreneurship is thriving in Uganda and currently contributes approximately 90% to the country’s GDP.

Founding shareholders in BPI East Africa include South African SME risk financier - Business Partners Limited, which is leading a consortium, the IFC (International Finance Corporation, the World Bank Group private lending Swiss Investment Fund for Emerging Markets (SIFEM), Dutch impact investor Stichting DOEN and the Dutch Development Agency (FMO), the Canada-based Mennonite Economic Development Associates (MEDA) and Norfund, the Norwegian development agency.

“While entrepreneurship may be thriving in the country, access to finance continues to be a challenge across the continent and restricts entrepreneurs in their ability to truly unleash the positive spin offs that entrepreneurship can offer a countr,” said Kaggwa.

He said both business and commercial property finance will be available, and they will be structured using equity, royalties and term loans, or a combination of these. Entrepreneurs can apply for loans between UGX200 million and UGX3.5 billion.

Kaggwa said all applications will be assessed on the viability of the business, the entrepreneur’s integrity, drive and experience, as well as their ability to manage a successful independent enterprise.

“Capital and security are not necessarily required for an application to be accepted, as each investment is individually structured according to the entrepreneur’s needs and profile. We seek to structure investment opportunities for entrepreneurs that suit their cash flows, aligned with their business growth trajectory which, at the same time, provides us with a return proportionate to our risk.”

By Paul Tentena, Monday, April 18th, 2016


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