4.0 What are Small Scale Enterprises?: Entrepreneurship and Small Business Enterprise Growth in Uganda
4.0 What are Small Scale Enterprises?: Entrepreneurship and Small Business Enterprise Growth in Uganda
Waswa Balunywa
Director
Makerere University Business School
Kampala, Uganda
What are Small Scale Enterprises ?
To be able to understand the problem at hand, it is important that we articulate the issue we are discussing. SSEs are defined differently in different countries. It is true that a SSE in the United States may be a large enterprise in India and a very large enterprise in Uganda. While the absolute figures involved in the definition of these enterprises may differ, there are some underlying similarities in the concept used in the definitions. The following are common measures of defining SSE.
• Number of people employed
The number of people varies from country to country. In Uganda the figure is put to between 5 - 50. (Karlibbala, 1994: Ngobo, 1995) In India, the figure is that between 30 - 100. In the European Union, this figure including what they call medium enterprises is one that employs up to 250 people (The Netherlands, 1997). Stoner et al (1996) reports that in the United States, small enterprises are those which employ less than 500 people. Kibera and Kibera (1997) say that in Kenya business with 10 or fewer workers are called micro enterprises. Those with 11 - 50 are small enterprises and 51 - 100 are medium
• Capital employed
The number of people employed may not be a good indicator especially if the industry is labour intensive. This is true in countries like India where there is a labour intensive approach to industrialisation as a policy. In some cases trading organisations can transact huge sums of business worth transactions and yet they employ a few people. Consequently, capital employed is at times used as a measure of defining small business. In Uganda there is no proper agreement as to the capital employed though a figure ranging between US$5,000 to US$50,000 is a reasonable estimate. The Uganda Investment Authority has put this figure to now Shs.50 million (about US$50,000). The Ministry of Industry however had indicated a figure of an investment not exceeding US$300,000. This figure of course varies from country to country but in the Ugandan conditions, Shs. 5 - 50 million (US$5,000 - 50,000) would be a reasonable amount.
• Sales Turnover
Another criteria for indicating what a small enterprise is, is the annual sales turnover. In the Ugandan conditions, in an attempt to define who was eligible to participate in the Value Added Tax (VAT) Administrative structures, a figure of Shs.20 million (US$20,000) was agree on as a threshold (Sejjaaka, 1997). The assumption here is that such an enterprise has a monthly sales turnover of about Shs.1.5 million (about US$1500) and a daily turnover of about Shs.75,000 (about US$75). Using sales turnover to define small business, this, therefore, can be related to other methods and say that in the Uganda conditions, Shs.50 million (US$50,000) would be an ideal average turnover for identification of a small scale enterprise.
40 What are Small Scale Enterprises 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
What are Small Scale Enterprises ?
To be able to understand the problem at hand, it is important that we articulate the issue we are discussing. SSEs are defined differently in different countries. It is true that a SSE in the United States may be a large enterprise in India and a very large enterprise in Uganda. While the absolute figures involved in the definition of these enterprises may differ, there are some underlying similarities in the concept used in the definitions. The following are common measures of defining SSE.
• Number of people employed
The number of people varies from country to country. In Uganda the figure is put to between 5 - 50. (Karlibbala, 1994: Ngobo, 1995) In India, the figure is that between 30 - 100. In the European Union, this figure including what they call medium enterprises is one that employs up to 250 people (The Netherlands, 1997). Stoner et al (1996) reports that in the United States, small enterprises are those which employ less than 500 people. Kibera and Kibera (1997) say that in Kenya business with 10 or fewer workers are called micro enterprises. Those with 11 - 50 are small enterprises and 51 - 100 are medium
• Capital employed
The number of people employed may not be a good indicator especially if the industry is labour intensive. This is true in countries like India where there is a labour intensive approach to industrialisation as a policy. In some cases trading organisations can transact huge sums of business worth transactions and yet they employ a few people. Consequently, capital employed is at times used as a measure of defining small business. In Uganda there is no proper agreement as to the capital employed though a figure ranging between US$5,000 to US$50,000 is a reasonable estimate. The Uganda Investment Authority has put this figure to now Shs.50 million (about US$50,000). The Ministry of Industry however had indicated a figure of an investment not exceeding US$300,000. This figure of course varies from country to country but in the Ugandan conditions, Shs. 5 - 50 million (US$5,000 - 50,000) would be a reasonable amount.
• Sales Turnover
Another criteria for indicating what a small enterprise is, is the annual sales turnover. In the Ugandan conditions, in an attempt to define who was eligible to participate in the Value Added Tax (VAT) Administrative structures, a figure of Shs.20 million (US$20,000) was agree on as a threshold (Sejjaaka, 1997). The assumption here is that such an enterprise has a monthly sales turnover of about Shs.1.5 million (about US$1500) and a daily turnover of about Shs.75,000 (about US$75). Using sales turnover to define small business, this, therefore, can be related to other methods and say that in the Uganda conditions, Shs.50 million (US$50,000) would be an ideal average turnover for identification of a small scale enterprise.
40 What are Small Scale Enterprises 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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