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SME banking – Unlocking the growth potential of an underserved segment

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Lillian Lwantale, senior manager Advisory, Strategy and Operations Deloitte Uganda Limited

Lillian Lwantale, senior manager Advisory, Strategy and Operations Deloitte Uganda Limited

Small and Medium-sized Enterprises (SMEs) are an important segment in Uganda’s economy. According to the Ministry of Trade, Industry and Cooperatives, the SME sector employs over 2.5 million people (90% of the entire private sector) and generates 80% of manufactured output which contributes 20% of the gross domestic product (GDP).

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Even though SMEs play a significant role in the economy, most have limited access to financing. “Less than 40% of SMEs in Uganda have access to bank loans and approximately 80% of the SMEs are unserved or underserved by financial institutions. SMEs are typically deemed riskier than large corporations due to lack of credit history, poor financial backing and governance structures, less business experience, and low business diversification,” explained Lilian Lwantale, senior manager Advisory, Strategy and Operations Deloitte Uganda Limited.

Today, these needs are inadequately addressed by Uganda’s financial ecosystem. Although the SME loan size is growing, the amount of loans SMEs receive is still disproportionately less than corporates despite their more significant contribution to gross domestic product (GDP) and employment. The current state of SME financing
remains both a sizeable gap to fill and opportunity to serve. SME loan volumes in Uganda constitute less than 20% of total loans, presenting a sizeable opportunity for banks to target and increase lending to the SME market.

Lack of financing is consistently cited by SMEs as one of the main barriers to growth. However, several key factors impede SME lending. “Financial infrastructure such as low SME coverage by credit reference bureaus increases the cost of SME credit risk assessment, inadequate distribution channels limit banks from reaching out and serving SMEs in either the physical or digital space- not to mention lack of cash flow visibility which forces banks to adopt stringent collateral-based credit risk models hindering lending,” she emphasized.

These impediments are not unique to Uganda but also prevalent in more advanced economies where SMEs have easier access to loans. In those countries, we see banks, financial technologies (FinTechs) and e-commerce providers seeking to fill the SME financing gap by adopting innovative business solutions. So what opportunities are ripe for Uganda’s case study?

“Research shows that there is a disparity between what SMEs want and expect from banks and what banks can deliver. They require access to unsecured credit and are willing to pay a higher interest rate to obtain it through reliable, convenient channels such as branches, ATMs, and internet banking. At Deloitte, on top of providing SMEs with financial oversight, we offer business advice on how to lower their business costs, improve productivity and be better prepared for the global market,” Lwantale added.

Lwantale further mentioned that in the advent of the digital age, financial institutions in Uganda have to rethink the role of banks in the SME banking space to address the financing gap and capitalize on the SME banking opportunity.
“Given the importance of SMEs to Uganda’s economy, a strong well financed SME base is key to local and regional economic growth. With sufficient financing and access to business advisory services to foster continual improvement of operational efficiency and productivity, SMEs can become more competitive and resilient, drive innovation and be sustainable in today’s competitive economic landscape.”

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Movit Products Limited donates to Muslim communities

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Moslem clerics at Kibuli Mosque receive assorted food stuffs handed over by a team from Movit.

Moslem clerics at Kibuli Mosque receive assorted food stuffs handed over by a team from Movit.

By Our Reporter

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On Thursday, Movit Products Limited visited various mosques across the country to extend support to the Moslem community as the holy month of Ramadan came to an end through donating several items including foodstuffs among others to enable them fulfill their compulsory fasting obligations.

According to Musa Mutebi, the Assistant Marketing Manager Movit Products Limited, “Movit believes very strongly in coming together to help people wherever and whenever possible. We are not giving because we have a lot of money but only because Movit is a company with a big heart and we care for our community.”

Movit Products Limited purchased some food items for Eid al-Fitr among which were food stuffs such as Rice, Sugar, Salt, Posho /maize flour, wheat flour, washing soap, Basins, Cooking Oil and a number of Movit Items. This exercise was a sole initiative of Movit products limited and covered various areas across the country among which were Kampala, Mbale, Mbarara and Masaka.

In Kampala, at the Ghadafi Mosque, the Moslem clerics thanked Movit for its continued support towards the Moslem community and implored Movit to keep up the giving spirit because Allah appreciates a giving heart.

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StarTimes Uganda partners with Africell Uganda to bring the world cup to your phone

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StarTimes Uganda, in partnership with Africell Uganda, has launched a mobile platform to enable Ugandans enjoy quality programming on the convenience of their mobile devices.

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By Our Reporter

StarTimes Uganda, in partnership with Africell Uganda, has launched a mobile platform to enable Ugandans enjoy quality programming on the convenience of their mobile devices, beginning this World Cup Season. This innovation is driven by the need to connect viewers to the FIFA World Cup Russia 2018 on the go.

As part of the partnership, Africell has introduced discounted data packages dedicated to the App users with validity of up to 24 hours a day, seven days a week with a feature of Image Quality; Small Definition, High Definition & Ultra Definition. The data bundles are accessible through USSD Code *133# Option 10.

The Mobile application is available to both Playstore for android users and AppStore for Iphone users. With this mobile app, viewers can enjoy the world cup action from anywhere and everywhere.

StarTimes is the official FIFA World Cup Russia 2018 broadcaster of all the games with exclusive rights to broadcast all the 64 matches on its channels.

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Jumia Food & KFC launch delivery service in Entebbe

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Jumia food delivery team pose for a group photo.

Jumia Food delivery team pose for a group photo.

Jumia Food, Africa’s leading online food delivery platform has seen an increase in group orders, leading to a partnership with KFC, the world’s most loved chickenrestaurant brand that has grown in its popularity in Uganda.

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After the great success of the partnership in Kampala, the two companies have extended the partnership that will now enable customers in Entebbe to also be able to order online for the KFC meals and have them delivered to them.

Expressing his optimism about the expected success of the partnership, KFC’s Operations Director Jacques Theunissen said “Brands that cater to convenience now need to re-invent their service delivery to cater to consumers’ dynamic needs. KFC has partnered with Jumia Food to take the headache out of businesses having to think about how to keep their teams satisfied so that they can focus on their core business.”

“The expansion of our partnership with KFC to Entebbe is not only a implication of how well we have both served our customers in Kampala but also our desire to make sure that all our customers enjoy the best convenience service in the country,” said Jumia Food Uganda Country Manager Timothy Mugume.

“Our strategy, is part of an expansion move by the company aimed at bettering customer experience through new and exciting innovations to make food ordering faster and more convenient, in this case extending delivery to Entebbe and also increasing the delivery radius for all KFC branches.” added Timothy.

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