Creating Economic Resilience and Growth Through Micro, Small and Medium Enterprises
We’re pushing for an economy driven by, and for, East Africans. We can do this by supporting micro, small and medium enterprises (MSMEs)—the backbones of economies across the world. On June 27, we are celebrating Micro, Small and Medium Enterprises Day by uplifting the critical role that MSMEs play in developing and sustaining an inclusive green economy. In Uganda, MSMEs contribute about 75% to the gross domestic product (GDP) and over 80% of manufactured output. There are about 1,100,000 enterprises, employing more than 2.5 million people. Particularly in the clean energy and tourism industries, small, East African-led businesses offer significant employment, growth and community development opportunities.
Clean energy is a burgeoning industry, largely because of endeavors by MSMEs. Not only because of Uganda’s motivation to become a middle-income country but also to meet the urgent demands of an exacerbating climate crisis, we must lean into these businesses that have created a foundation of growth for clean energy. MSMEs contribute a large percent of total employment in the energy sector, offering more and more opportunities for individuals to support themselves and their families. They focus on low energy access areas, creating innovative products that meet the energy needs of various communities in remote areas. MSMEs take part in several miniature clean energy technology developments and services, for example, the manufacture and supply of equipment and on-site services like installation and maintenance. This, in turn, further develops the renewable energy sector and contributes to economic growth as well.
Consistent and sufficient funding, business incubation and mentoring, and flexible grant programs are some of many ways for donors and policymakers to galvanize MSMEs in the renewable energy space. Supporting MSMEs with investment helps modernise and expand operations by enabling marketing linkages and entrepreneurial skills training. Moreover, it unlocks further financial intermediation that aids scaling up of clean energy technological solutions to offgrid communities. The sector has strong potential for long-term growth and accounts for approximately 90 percent of the private sector. MSMEs are a vehicle through which the rural poor and informally employed Ugandans can transform themselves into the middle and the industrial class of tomorrow.
In addition to the renewable energy sector, investing in MSMEs will be essential to growing East African tourism. By the end of 2017/2018, Ugandan MSMEs in the tourism industry were employing 229,000 persons directly and 376,500 persons indirectly. Greater investment will pull in more businesses while expanding previously existing ones with increased staff and capacities. There are clear incentives for individuals to support these businesses, but greater buildout also offers considerable benefits for surrounding communities. Enhancing MSMEs will attract development which can provide locals with increased access to basic resources such as cleaner water, more electricity and improved roads. Tourism is reliant on the conservation of its surroundings. And supporting businesses that not only protect but elevate these resources deserve attention and care from donors and policymakers.
If these MSMEs are to operate favorably, they need support in capital investment, implementation of standards like ISO14001, increased staffing and training, and marketing efforts for products and services—to name a few. All these, and more, require significant investment. But, with the above in place, the future is bright for the MSMEs and the tourism industry. They will be able to engage in policy and can influence infrastructural development and technological innovations in the sector to sustain the growth of dignified and fulfilling employment for all.
MSMEs account for a sizable proportion of Ugandan industries and contribute greatly to our economic development. Their leaders are perseverant and creative, forming unique employment opportunities that benefit individuals and communities. We find ourselves in a salient moment of recovery where we must tactfully respond to the economic devastation of COVID-19. It is an incredible responsibility to support efforts that will empower Ugandans with financial stability and economic mobility today, and well into the future. Investment and legislative support in Ugandan MSMEs are essential to spurring the development of industries like clean energy and tourism. On #MSMEDay2021, we are reminded that MSMEs are a key building block for an economy umbrellaed by resilience, sustainability and inclusivity.