KAMPALA, December 2, 2025 — The Private Sector Foundation Uganda [ PSFU ] has called for comprehensive reforms to the country’s micro, small and medium enterprise [MSME] and national standards policies, warning that outdated regulations and structural constraints are choking the growth of businesses that form the backbone of Uganda’s economy.
Speaking today at Four Points by Sheraton in Kampala during the National Catalytic Stakeholder Consultation on the Review of the Uganda MSME Policy [2015] and the National Standards and Quality Policy, PSFU Vice Chairperson Sarah Kagingo emphasised that MSMEs are central to Uganda’s economic transformation, yet remain hindered by long-standing challenges that require immediate government action.
According to the Ministry of Finance, MSMEs account for 90 percent of the private sector, produce over 80 percent of manufactured goods, contribute approximately 75 percent of gross domestic product [GDP], and employ at least 2.5 million Ugandans.
Kagingo cited persistent obstacles such as limited access to affordable financing, high operational costs, unreliable electricity supply, costly data charges, and delays in product certification by the Uganda National Bureau of Standards [UNBS]. These, she said, erode productivity and undermine the competitiveness of Ugandan products locally and internationally.
A study commissioned by PSFU and the MasterCard Foundation in 2023 found that manufacturing plants operate at just 43 percent capacity, largely due to weak demand and recurrent power fluctuations, issues that disproportionately affect MSMEs.
Although government has increasingly incorporated private-sector proposals into the national budget, adopting 82 percent of PSFU’s submissions this financial year, Kagingo stressed that urgent reform of the certification system remains the most pressing need. She urged government to increase funding to UNBS to shorten inspection and accreditation timelines.
Kagingo also disclosed the ongoing interventions, including the Small Business Recovery Fund established in 2021 to support enterprises affected by the COVID-19 pandemic. However, she called for further assessment to determine whether such initiatives have yielded measurable impact.
She noted collaborative programmes with development partners such as the World Bank, MasterCard Foundation and the European Union. Through one partnership with the MasterCard Foundation, PSFU has supported the certification of 200 products and trained 500 SMEs.
Kagingo explained that the National Startup Policy—developed jointly with the Ministry of Trade—is expected to redefine MSME classifications and offer clearer guidelines for government and development partners in designing targeted support.
She also highlighted the recently launched Women MSME Finance Code, developed with the World Bank, Bank of Uganda and government, which harmonises the definition of a woman-owned enterprise across financial institutions to improve access to capital for women entrepreneurs.
Kagingo said that PSFU now unites more than 300 business associations representing 3.5 million enterprises across manufacturing, agriculture, ICT, tourism and professional services.
She attributed achievements, including the creation of 417,000 decent jobs for youth and women, to strong collaboration with stakeholders.
“Our biggest learning is that when we listen, co-create and co-design, we deliver better,” she said, urging stakeholders to adopt the same approach as Uganda reviews policies that will shape future MSME growth and industrialisation.
On his part, GAIN Country Director Damaging Saali warned that Uganda will not achieve its Vision 2040 target of becoming a US$ 500 billion economy unless it urgently reforms policies governing MSMEs and national standards.
He noted that 98 percent of the country’s enterprises are SMEs, contributing 75 percent of GDP and employing 77 percent of the labour force, yet the policies guiding them no longer reflect current market realities.
He said gaps in standards and regulatory frameworks have weakened product quality, hindered competitiveness and limited enterprise expansion, slowing progress towards national development goals.
Saali added that the ongoing consultation aims to align government, private sector, development partners and MSMEs around a shared plan that delivers evidence-based, implementable reforms. Stakeholders are expected to agree on a roadmap to accelerate MSME growth and strengthen standards across sectors.
He stressed that accountability and partnership are essential to effective reform, particularly for MSMEs in food systems, which are often excluded from decision-making processes.
Saali explained that GAIN has supported more than 300 SMEs over the past three years in business development, product innovation, regulatory compliance, digital commerce and investment readiness, and thanked the Embassy of the Netherlands for its continued support.
https://thecooperator.news/afdb-and-standard-bank-unite-to-support-smmes-and-boost-trade/
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