Kampala, Uganda | JULIUS BUSINGE | Audit firm Deloitte says Uganda’s economy could expand further once cheap financing to small and medium enterprises is offered.
“With sufficient financing and access to business advisory services to foster continual improvement of operational efficiency and productivity, SMEs can become more competitive and resilient, drive innovation and be sustainable in today’s competitive economic landscape,” said Lilian Lwantale, a senior manager for advisory, strategy and operations at Deloitte Uganda Limited in a notice dated Oct.16.
Lwantale said in the advent of the digital age, financial institutions in Uganda have to rethink the role of banks in the SME banking space to address the financing gap and capitalise on the SME banking opportunity.
Available data indicates that the SME sector employs over 2.5 million people (90% of the entire private sector) and generates 80% of manufactured output which contributes 20% of the gross domestic product (GDP).
According to Lwantale, less than 40% of SMEs in Uganda have access to bank loans and approximately 80% of the SMEs are unserved or underserved by financial institutions.
She said that financial institutions need to design products that relate with the nature of SME operations so as to make them more relevant to Uganda’s economy.