3.0 The Growth of Small Enterprises - the Problem: Entrepreneurship and Small Business Enterprise Growth in Uganda
3.0 The Growth of Small Enterprises - the Problem: Entrepreneurship and Small Business Enterprise Growth in Uganda
Waswa Balunywa
Director
Makerere University Business School
Kampala, Uganda
The Growth of Small Enterprises: the Problem
Because of the importance that has been attached to these enterprises, there has been a lot of effort directed towards promoting these units. In many countries especially India, there has been affirmative and positive action towards promoting SSEs. A lot of literature is available on the success and failures of these enterprises. Many countries and indeed multilateral institutions have set up agendas and strategies for the development of these units. In Kenya, for instance, the Jua Kalis have been supported by the Kenyan government (Alila and McCormick, 1994) as avenues of industrialising and developing the country.
In Uganda the role of this sector has been recognised and various financing schemes have been established to assist the growth of these enterprises. Many NGOs have been established to finance small enterprises as one of the problems that has been identified that this sector has. Pride Africa, FINCA Uganda, Uganda Women Credit Finance Institution, and many others are cases in point (Balunywa and Sejjaaka, 1997).
The growth of the small enterprise sector will be reflected in the increasing number of registered businesses and with successful enterprises that recruit more people, produce more output and are better competitors. Possible these small units would emerge to become big units. The big multinationals today must have definitely started small (Stoner et al, 1996).
Success of these enterprises therefore should be reflected in profitable enterprises, growing enterprises, and conversion into medium or large enterprises.
In studies done by Liedholm and Mead (1993), growth of small enterprises was measured using number of workers employed. They not that the number of small enterprises was increasing annually with a birth rate of about 20% per year. They did note however, that the death rate was also high. They found that the majority of the small enterprises did not grow at all. While many reasons have been identified for the lack of growth of small enterprises, the key reasons include lack of access to finance, poor managerial skills, lack of market information, an appropriate technology, poor pricing methods, and lack of government support. It is true that these reasons contribute greatly to the poor performance.
However, it is suggested that the major reason for this lack of growth has been lack of an enterprising culture within the small business. Entrepreneurship is central to the success of any business activity and we cannot assume that all small business people are entrepreneurs. Another cause I attribute this poor performance to is the national culture of the people. Hofstede (1992) in his work identifies cultural dimensions which explain many behaviours of people in different countries. He talks of power distance, individualism versus collectivism, masculinity versus femininity and uncertainty avoidance. These dimension appear to explain the business performance of many countries, although their relevancy to African countries is still debatable.
Sewannyana (1997) and Mutazindwa (1997) establish that while in some of the small enterprises they studied entrepreneurial behaviour and culture is prevalent, the performance of the enterprise is poor. Not many studies are available locally about the performance of small enterprises in developed countries but we do not expect them to face similar problems as those in developing countries or most specifically Uganda.
The purpose of this paper is to review the literature available on small enterprises and propose ways of developing small enterprises in Uganda.
30 The Growth of Small Enterprises the Problem Entrepreneurship and Small Business Enterprise Growth in Uganda - To learn more about this author, visit Makerere University Business School's Website.
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by
Waswa Balunywa
Director
Makerere University Business School
Kampala, Uganda
The Growth of Small Enterprises: the Problem
Because of the importance that has been attached to these enterprises, there has been a lot of effort directed towards promoting these units. In many countries especially India, there has been affirmative and positive action towards promoting SSEs. A lot of literature is available on the success and failures of these enterprises. Many countries and indeed multilateral institutions have set up agendas and strategies for the development of these units. In Kenya, for instance, the Jua Kalis have been supported by the Kenyan government (Alila and McCormick, 1994) as avenues of industrialising and developing the country.
In Uganda the role of this sector has been recognised and various financing schemes have been established to assist the growth of these enterprises. Many NGOs have been established to finance small enterprises as one of the problems that has been identified that this sector has. Pride Africa, FINCA Uganda, Uganda Women Credit Finance Institution, and many others are cases in point (Balunywa and Sejjaaka, 1997).
The growth of the small enterprise sector will be reflected in the increasing number of registered businesses and with successful enterprises that recruit more people, produce more output and are better competitors. Possible these small units would emerge to become big units. The big multinationals today must have definitely started small (Stoner et al, 1996).
Success of these enterprises therefore should be reflected in profitable enterprises, growing enterprises, and conversion into medium or large enterprises.
In studies done by Liedholm and Mead (1993), growth of small enterprises was measured using number of workers employed. They not that the number of small enterprises was increasing annually with a birth rate of about 20% per year. They did note however, that the death rate was also high. They found that the majority of the small enterprises did not grow at all. While many reasons have been identified for the lack of growth of small enterprises, the key reasons include lack of access to finance, poor managerial skills, lack of market information, an appropriate technology, poor pricing methods, and lack of government support. It is true that these reasons contribute greatly to the poor performance.
However, it is suggested that the major reason for this lack of growth has been lack of an enterprising culture within the small business. Entrepreneurship is central to the success of any business activity and we cannot assume that all small business people are entrepreneurs. Another cause I attribute this poor performance to is the national culture of the people. Hofstede (1992) in his work identifies cultural dimensions which explain many behaviours of people in different countries. He talks of power distance, individualism versus collectivism, masculinity versus femininity and uncertainty avoidance. These dimension appear to explain the business performance of many countries, although their relevancy to African countries is still debatable.
Sewannyana (1997) and Mutazindwa (1997) establish that while in some of the small enterprises they studied entrepreneurial behaviour and culture is prevalent, the performance of the enterprise is poor. Not many studies are available locally about the performance of small enterprises in developed countries but we do not expect them to face similar problems as those in developing countries or most specifically Uganda.
The purpose of this paper is to review the literature available on small enterprises and propose ways of developing small enterprises in Uganda.
30 The Growth of Small Enterprises the Problem Entrepreneurship and Small Business Enterprise Growth in Uganda - To learn more about this author, visit Makerere University Business School's Website.
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