The Ministry of Finance Permanent Secretary and Secretary to the Treasury, Ramathan Ggoobi has called on Micro, Small and Medium Enterprises (MSMEs) to embrace recovery funds from both government and private institutions.
Mr Ggoobi made this call while launching Financial Sector Deepening (FSD) Uganda and Mastercard Foundation’s five-year Micro and Small Enterprise (SME) Recovery Fund under Young Africa Works Initiative on Thursday at Serena Hotel, Kampala.
He revealed that Government is committed on promoting financial inclusion as laid out in the National Financial Inclusion Strategy that envisions all Ugandans having access and use of broad range of quality and affordable financial services which helps to ensure their financial security.
Mr Ggoobi added that it’s not economically correct for government to be wealthy while its people are languishing in poverty therefore SMEs must get support to recover from covid-19 effects.
“These initiatives are appropriately designed to respond to the challenges faced by the Micro, Small and Medium Enterprises in Uganda, with respect to limited access to appropriate and affordable financial services. The available financing on the market is expensive for the people in this sector. It is also important that the fund is well popularized and the right information regarding its accessibility is widely circulated to the population. There should be fairness, inclusivity, and transparency in the implementation of this initiative if it is to be successful,” he noted.
He also said that government is implementing the presidential initiative on wealth and jobs creation (the Emyooga program) through which the it is channelling financial support in form of a grant to enterprise based savings groups for onward lending to members at 180/affordable rates. This program is at the moment targeting 18 enterprises/categories.
“Government is devoted to promoting the recovery of the economy and welcomes any efforts from development partners and other actors geared towards this cause. The positive economic outlook will only continue and be achieved if we purposely support the private sector and the business community to shorten their recovery journey from the effects of the pandemic. I expect that the participating financial institutions will diligently profile the beneficiaries to ensure the recovery and sustainability of the borrowed funds. The turnaround time is of the essence and Business Development Services to these enterprises.”
He further welcomed FSDU and Mastercard Foundation’s Recovery Fund initiative meant to support Micro and Small Enterprises that were hit by Covid-19. Over 50,000 MSEs are to benefit from the fund.
Mr Ggoobi said it is timely and will complement and bolster Government efforts in supporting the economy’s recovery from the effects of the pandemic.
“It is so relevant given that it is targeting the most vulnerable and financially excluded. I have been informed that the fund is targeting to provide affordable credit to over 50,000 enterprises. I am glad to know that the fund also targets strengthening the grassroots financial institutions that on-lend to micro, small and medium enterprises. This will cause a positive ripple effect and a significant boost to the Ugandans who benefit from these businesses. Therefore, I call upon the eligible businesses to take advantage of this recovery fund we are launching today and other Government initiatives to boost their businesses. I also caution them to deploy the credit for its intended use.”
The Executive Director of FSD Uganda, Rashmi Pillai, said that there’s a greater need to help MSEs because they were much affected by Covid-19 and according to their research, since many Enterprises closed there is an increasing level of poverty.
“The MSE Recovery Fund was a result of the FSD Uganda 5-waves COVID-19 studies. The studies show that while most people returned to jobs by late 2020, the quality of jobs declined, and net pay was still below pre-pandemic levels for nearly 73 per cent of surveyed adults. Individuals and households that worked for and with MSES were the worst hit. That’s why the facility we are launching today is intentional in targeting micro and small enterprises whose credit needs fall between Shs100,000 to Shs10 million. We are confident that this facility will be an excellent complement to the Government of Uganda’s Small Business Recovery Fund,” she added.
Mastercard Foundation’s Country Head, Adrian Bukenya noted, “MSMEs are a significant driver of employment in Uganda. So, as the Foundation looks towards enabling 3 million young Ugandans to access dignified and fulfilling work by 2030, we know we can only get there by addressing the residual effects of the pandemic on MSMEs. This facility is about standing with the individuals and businesses that are the backbone of our economy as they bounce back.”
Meanwhile, the fund will directly secure 100,000 at-risk jobs while enabling 150,000 additional opportunities for dignified and fulfilling work for young people.
MSES in the program will receive credit worth between Shs100,000 and Shs10 million, which will be delivered through participating microfinance institutions and SACCOS (Tier III and Tier IV financial institutions).
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