Government plus grassroots combo laying foundations for MSME success
Honey, ginger, groundnuts and pineapple scent the air here, and they are just a few of the fragrances emanating from small businesses in Uganda’s Masaka District.
With a national economy and people dependent on agriculture, this makes a lot of … sense. But these enterprises are also the building blocks of Uganda's trade, and they are not just growing crops for sale, they are extracting flavours, grinding pastes and producing flour. And, they are bottling, branding and packaging with the aim to get their items into more and more buyers’ hands.
According to the Uganda Ministry of Trade, Industry and Cooperatives, 95 per cent of businesses established in the country are micro-, small- and medium-sized enterprises (MSMEs).
“We realized that although our economy was premised on MSMEs we actually didn’t know what was happening… We didn’t have one body that was a locus of organizing these MSMEs. Now we have an MSME Directorate in the Ministry, and this Directorate has the data on MSMEs and we are using our District Commercial Officers [DCOs]. They give us the information, they are our eyes and ears on the ground,” Minister of Trade, Industry and Cooperatives Amelia Kyambadde said.
“It has helped us to oversee the growth of our MSME enterprises,” she added.
Part of the nurturing of this growth has been through increased support to small businesses provided by the country’s DCOs, who work in each of Uganda’s 134 districts and whose job is to get local businesses registered, assist with certifications and provide necessary information to local entrepreneurs and those aiming to become ones.
AT YOUR SERVICE
Recognizing that services needed a boost and that it would result in improved incomes for the country’s mass of small business owners, in 2012 the Government of Uganda and the Enhanced Integrated Framework (EIF) targeted 25 District Commercial Offices, providing needed funds for the offices themselves, hiring and training people where positions had sat empty before, and offering support and services to MSMEs. Now, the work is being rolled out across all Uganda’s districts with direct government support.
“The Commercial Officer used to be far away from here… It was far to coordinate with the farmers. Now we have managed to mobilize farmers, and 15 cooperative societies we have incorporated and registered and also guided to solve and mediate the many issues they face from financing to legal frameworks,” said Masaka District Production and Marketing Officer Lawrence Mayega.
“We have the mobilization of the small-scale manufacturers, we have been able to bring them together – more than 55 core industries. To us that is a positive impact,” he said.
These businesses include honey producers, a drinks maker and an enterprise creating a range of flours from millet to groundnut to okra.
The owner of Mutima Beverages, creator of sweet ginger drinks, attended a district course on small business development.
“I had training about the carrots that I had been growing and the aloe vera and the ginger, about how to add value to them by making juice or processing, and starting simple. So I got the idea to do juice with what I had been growing myself,” said Mutima Beverage owner and former farmer Paddy Mayiga.
Numerous Masaka businesses have now blossomed following this kind of support from DCOs, but owners still face a host of difficulties of the kind that beset those in developing countries.
Mayiga, who now employs around 85 people, said of his businesses expansion, “This year we have covered around 18 districts. The problem is marketing. It is really, really difficult, and it is very expensive.”
“We are still in the process of trying to get the quality mark. We applied for primary testing and there were recommendations so now we are applying the recommendations in the use of stainless steel and hygiene,” he said.
When asked about boosting local trade, Deputy Chief Administrative Officer Robert Mutungi mentioned the hurdles, including standardization. “I don’t look at it in the sense of they have gone to the level of export. Why? Because of the production, because of the skills, because of the standards. The production is still at a subsistence level. We help on production at the commercial perspective. Then this is when the time will come to have exports.”
Samuel Musoke, processor of flours and pastes under the Noah’s Ark brand, is struggling with the quality mark, specifically the cost.
“Maybe when they fixed the figures they fixed it to other big companies, not knowing that there are some micro organizations that are just growing – and that is a very big challenge. Now if we want to send our products out [to export] we can’t because we are not certified,” he said.
Both Masaka business owners also mentioned access to finance to expand needed facilities to keep up with production as another obstacle.
The pilot project has now concluded, having registered 494 businesses and trained 1,680, including Mutima Beverages and Noah’s Ark. With that success, the Government of Uganda is expanding the effort to all the country’s districts.
This means offering more direct services to MSMEs and trying to keep up with the continued demand for assistance. And this means that more resources are needed.
“This has given people some energy to work together, we saw some cooperative enterprises coming up with individuals working. One of the enterprises is almost at the level of exporting coffee – they are a cooperative in another district – and they are at the point of grading – so we are saying they can push it to the point of exporting themselves,” said Masaka DCO Wasswa Seempijja.
With people working in new positions, increased incomes and getting the inspiration for business expansion, Uganda’s DCOs are working in a way that contributes to the country’s entire economic development plan.
“The key objective is to increase human resources but also to increase the volume of produce from farmer to market but also the issue of quality and to export,” said Mayega.
For Minister Kyambadde, “All these District Commercial Officers, they are our baby of EIF, they are actually the link to these SMEs. EIF started us off and we have continued because we have realized the importance that the DCO plays. This is going to create jobs.”