Lack of access to formal credit is a major constraint to establishing
or expanding business operations in Uganda, and is a particularly acute
problem for the small to medium enterprise. Only about ten percent of
Ugandans have ever applied for a loan, and among them the single largest
source of credit is relatives and friends. Most of the credit available
targets the microentrepreneur or the large firm, with virtually nothing
available to the "missing middle" of small or medium business.
Bobbie Leathers is a case in point. The business, owned and operated
by Mr. Robert Ssemakula, had surpassed its total 2000 sales of 90.3
million Ugandan Shillings (approximately US$51,600) in the first six
months of 2001 alone. His bankers were impressed with the performance
of the company but could only lend against invoiced orders. The situation
was further complicated by the fact that Bobbie did not have established
accounts or systems, and that company finances were not separate from
the owner's finances. Bobbie had been forced to rely on moneylenders
for short-term working capital, which proved expensive and resulted
in a loss for the company despite the increasing sales.
Mr. Ssemakula approached USAID's Support to Private Enterprise Expansion
and Development (SPEED) program in July 2001, after reading about the
project in the local media. Although this is a very small enterprise
that manufactures safety footwear and hand gloves for use in industry
and employs ten people, SPEED was intrigued by the business acumen of
its owner, as well as the high growth potential of the company, the
value added processing potential involving local raw materials, and
the high profile of Bobbie's customers. SPEED engaged a local consultant
through its Business Development Services roster, SKM & Co., which
assisted Bobbie to establish company accounts and institute formal management
and accounting systems. In addition, SPEED cost-shared a consultancy
with Mr. Ssemakula to develop a business plan for the company and develop
clear cashflow projections.
Based on SPEED's intervention, Mr. Ssemakula's bank is now processing
a working capital facility for Bobbie. This will result in lower financing
costs and increased savings, which will allow the company to invest
in equipment and enhance its production capacity. Mr. Ssemakula projects
a continued sales growth of ten percent each year for the next three
years, and SPEED will consider further assistance to ensure that Bobbie
handles its growth successfully and profitably.
Bobbie Leathers Limited
