Financing Small and Medium-scale Enterprises (SMEs): Uganda's Experience
This paper investigates the economic rationale for intervention in support of Small and Medium Scale Enterprises (SMEs) on both theoretical and empirical grounds. It argues that the inherent weaknesses of SMEs in Uganda deny them access to financial services. It further argues that the justification for their support lies in market and institutional failures rather than any inherent economic benefits. Specifically, the reasons given for supporting SMEs are basically to increase their access to financial markets and other services; and to reduce policy induced bias against them. The Uganda government and other institutions ha ve made significant strides to accelerate the development of markets for financial and non-financial services suited to SMEs by promoting innovation in products and delivery mechanism and by building institutional capacity. However, even with this support, the SMEs have to so more, themselves, to overcome some of the challenges they face.