Business Linkage & Cluster Development

Overview

The Business Linkage Promotion Programme is an initiative of a partnership comprising the Government of Uganda (GoU), development partners and the private sector. It is aimed at promoting the growth and survival of local businesses (SMEs) through capacity and capability enhancement on one hand, and improving the policy environment for Trans National Corporations (TNCs) to flourish on the other.

 

Comprising over 90% of Uganda’s private sector, SMEs are considered to be critical in accelerating economic growth through the expansion of productive jobs, tax revenue and export revenues, as well as through the reduction of the country’s import bill by substituting imports. Yet most of Uganda’s SMEs are generally not only unable to meet business standards required to deal with TNCs on such crucial competitive issues as price, quality and volumes, but are also wanting in governance standards. In spite of such limitations however, TNCs were found to be ready to upgrade business relationships with SMEs into long-term relationships, provided SMEs committed themselves to remedy shortcomings.

Programme Objectives

The programme is expected to nurture SMEs to meet international business standards and encourage TNCs to source locally from the SME clusters instead of sourcing from foreign firms. The Programme target linkages in sectors like; Agriculture, Telecommunications, Building/Construction, Real Estate Development, manufacturing and Petroleum oil and gas sectors.

 

Benefits include;

  1. Improved competitiveness of SMEs through technological, knowledge and management skills transfer and capital injection.
  2. Behavioral transformation as entrepreneurs display much higher commitment to fulfilment of contracts.
  3. Improvement in turnover and staff numbers.
  4. Increased domestic sourcing by TNCs and large local companies – import substitution.
  5. More quality jobs created and or preserved.
  6. Ability to attract commercial banks to provide credit and other financial products to SMEs.
  7. TNCs deeply getting rooted in the local economy.
  8. A more dynamic private sector.
  9. Increased capacity to attract Foreign Direct Investment.

 

 

The cluster based development approach enables domestic entrepreneurs’ to integrate their business systems into global value chains by providing economies of scale and recognizing the role of multiple stakeholders in the system. The cluster based development approach seeks to address the challenges of isolation in small firms by creating a critical mass of mutually beneficial business relations. Clusters are an effective platform to enlarge production base, trigger growth, alleviate poverty and redress regional economic imbalances.