Social enterprises neglected in Uganda

Jan 24, 2020

A new report entitled ‘The Status of Social entrepreneurship in Uganda’ said social enterprises suffer from lack of access to cheap credit; they do not have the space and environment for growth.

Social enterprises in Uganda have been neglected despite the fact that they do promote inclusive growth and economic development.

A new report entitled ‘The Status of Social entrepreneurship in Uganda' said social enterprises suffer from lack of access to cheap credit; they do not have the space and environment for growth.

A social enterprise is an organisation that applies commercial strategies to maximise improvements in financial, social and environmental well-being—this may include maximising social impact alongside profits for co-owners. The report, the first of its kind called for government policy for social enterprises to enable them is recognised.

The head of Budget Monitoring and Accountability Unit at the Ministry of Finance Margaret Kakande while launching the report said the emergence of many social enterprises was a sign that Ugandans were actively solving their community problems. The function took place in Kampala on Thursday.

The report was produced by Capital Solutions Ltd, a social enterprise incorporated in Uganda and Civsource Africa, an independent non-profit advisory organisation that seeks to refine the practice and footprint of philanthropy in Africa.

Kakande said the social enterprise model promotes inclusive growth, which is a policy government was pursuing. Inclusive growth is a concept that advances equitable opportunities for economic participants during economic growth with benefits incurred by every section of society.

"Social enterprises will help reduce unemployment, poverty, improve livelihood. It will promote women employment because many social enterprises are operated by women," she explained.

She supported calls for a government policy for social enterprises. She appealed to banks to find suitable financial services for social enterprises.

Joyce Tamale, CEO Capital Solutions Ltd said there was a need for a repository or registry for social enterprises.

Tamale who presented the report said social enterprises will help overcome reliance on aid and help Uganda achieve the middle-income status.

The report highlighted challenges facing social entrepreneurs notably; inadequate finances, lack of awareness on where to access cheap sources of finance and high bank interest rates, limited skilled employees to work for the enterprises, lack of specific policy in government for social entrepreneurs.

Other problems are limited networking space for social entrepreneurs to learn and grow their businesses.

Several recommendations were proposed in order to improve the status of social entrepreneurs in Uganda: These include; push for a policy that will be specifically focused on social enterprises through the relevant ministries, create initiatives that will improve access to finances such as social investments, favorable commercial bank terms. Others were increase networking platforms to enhance business growth among social enterprises.

Jacqueline Asiimwe, chief executive officer Civsource Africa said many systems make people in communities poor. She added that some managers manage and create workspaces that are toxic. She asked that systems that keep people poor or keep destroying the environment should be a challenge.

She noted that there was a false narrative that Africans do not give. She said social enterprises are a sign that Africans give and the correct stories told about social enterprises can demonstrate that Africans give and are philanthropic. "Social enterprise is business doing good for the community and for the love of humanity," she said.

During the discussion of the report Irfan Hejee, managing director Graphic Systems said when their employees were provided financial literacy skills; they became more stable financially and became more productive. Hejee said education needs to be improved to provide people with the right skills.

Arthur Isiko, managing director Bank of Africa said when the bank lends money it does not look at collateral as the main point in giving loans. Isiko said the education sector presents a rich value chain where social entrepreneurs can thrive. He explained that the demand for education services was high and providers of various services such as health, food, construction materials were needed.

He said banks do not lend money for businesses at the testing stage but to those who are scaling up. "The pilot stage is venture capital, we look at cash flows you intend to generate because the money we lend is for someone else and they need it back," Isiko said.

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