Mentoring Small and Medium-Sized Enterprises in East Africa

Published on 30th August 2010

A Ugandan businesswoman at work       Photo courtesy
The contribution of small and medium-sized enterprises (SMEs) to employment, growth and sustainable development is widely acknowledged. Evidence available indicates that SMEs played a major role in the growth and development of all leading economies in Asia. In United States of America (US), small businesses provide approximately 75 percent of the net jobs added to the economy and represent 99.7 percent of all employers. There were approximately 22.9 million small businesses in 2002 in US.

Small Business Administration (SBA) has established size standards for small businesses. The most common size standard is 500 employees for manufacturing and mining industries; 100 employees for all wholesale trade businesses; United States Dollar (USD) 6 million (average annual receipts) for retail and service enterprises and USD 28.5 million for most general and heavy construction industries.

Uganda’s businesses are very small according to the SBA standards. They employ a maximum of 50 paid employees who in most cases are members of the same family. They have a working capital of less than USD 26,882; annual revenue of between USD 5,376–26,882 throughout each year of operation and value of assets including land, building and working capital of less than USD 50,000. In addition, most of them operate in shared premises; are owned and managed on family basis and are labour intensive. Skills are acquired on the job and often use adapted technology.
According to Uganda Bureau of Statistics, the value of goods and services created or generated by small and medium enterprises was USD 1,363,733 million of the total USD 2,360,157 million; thus a contribution of 58%. They employed 2,704,127 people, representing 56% of employment size. In addition, they are responsible for human resource and entrepreneurial development, poverty alleviation and improved quality of life, resource mobilization, business adaptability and sustainability. This state of affairs agrees with findings that around 60% of ACCA students and members work for small and medium-sized practices (SMPs). This pattern is the same in all economies.

If this is the case, how can the majority of student accountants and members employed by SMEs or SMPs continue to play their role of business advisor-consultants? We know that the accounting syllabus does this by preparing accountants well for this highly-varied, self-motivated environment. However, we have no regret for contributing to this debate by considering a hypothetical small business from an East African country-south of the Sahara whose business environment is totally different from that of the north, South Africa and the emerging economies of Asia. Though a hypothetical case, it depicts what these small and medium-sized enterprises are in the context of East African business environment. Also the political and economic context is very different; less predictable and corruption-riddled.

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By Charles Tushabomwe-Kazooba.

Charles Tushabomwe-Kazooba is B.Com graduate of Makerere University, MBA graduate of University of Birmingham and Certified Public Accountant. He is currently a Senior Lecturer in Management and Accounting at Mbarara University of  Science and Technology, Uganda.

 


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