Small businesses that have been negatively impacted by the COVID-19 lockdowns could smile any time from now if government plan to inject cash into their enterprises come to pass.
This follows a meeting where the Federation of Small and Medium-sized Enterprises was invited by the Ministry of Finance, Planning and Economic Development to contribute to the designing of a low-cost credit package that meets the needs of this segment of the economy.
In an interview with journalists over the weekend, John Walugembe, the executive director of the Federation of Small and Medium-Sized Enterprises (FSMU) in Uganda, said, he is optimistic this plan will come to pass and that the ministry of finance will announce very soon when actual implementation will begin.
“We note with gratitude that we have been asked to share ideas on how best this package would be managed to effectively address the liquidity needs of these businesses countrywide,” Walugembe said.
Meanwhile, Walugembe said, as the federation works on a detailed proposal, his members need to know that the Shs200bn fund will primarily target small businesses and not micro or medium sized businesses. This is largely because the government is already targeting micro businesses through the Microfinance Support Centre and medium sized businesses through Uganda Development Bank.
The fund will primarily offer credit and not grants. It will be managed by participating financial institutions under the supervision of the central bank.
“The federation will play a central role in ensuring that the fund benefits its intended beneficiaries,” Walugembe said.
He added: “We call upon businesses with ideas on how this fund should serve their interests to share them with us to better inform the design of this package.”
Meanwhile, Walugembe informed his members that the UDB is in the process of refining its portfolio to make it more suitable for the needs of medium sized businesses.
He also said that the federation will engage the Microfinance Support Centre to ensure that “we resolve any challenges that might have constrained the effective administration of the Emyooga programme to the satisfaction of medium small and micro enterprises.
Walugembe said, only businesses with the right documentation will benefit from this fund. President Yoweri Museveni announced a second 42-day total lockdown on June 18 to tame the fast spread of COVID-19 that threatened lives of the people.
He lifted the lockdown after 42 days leaving some sectors like education and entertainment locked until further notice.