Summary:
- Local SMEs, crucial to the economy, face high failure rates due to poor financial literacy. Charles Ocici of Enterprise Uganda emphasizes the need for reinvesting profits for growth, warning that mismanagement leads to business failure. Barbara Kyobutungi of Financial Diet supports this, stressing informed financial decisions and customer satisfaction as keys to success.
Local small and medium-sized enterprises (SMEs), often hailed as the backbone of the economy, are facing a critical challenge: a lack of financial literacy. Experts are warning that without proper financial management skills, these businesses are at risk of failure, despite their significant growth potential.
Charles Ocici, Executive Director of Enterprise Uganda, underscores the importance of financial literacy for business owners to make informed decisions and secure long-term economic stability.
“Many Ugandans running SMEs see profits as an achievement to spend rather than a resource to reinvest. They spend their profits without realizing that reinvesting capital is key to scaling their businesses,” Ocici explains.
Speaking at the launch of an 8-week financial literacy program by the Financial Diet, Ocici shared a powerful example: “Spending Shs10,000 without reinvesting it could kill a project that might yield billions in three years.”
Ocici urges business owners to prioritize financial literacy, emphasizing its universal importance. “Financial literacy matters to everybody; it can be learned by everybody, and it is a challenge to everybody. Never underestimate yourself. Even when you feel you have mastered it, remain vigilant. When you become successful, banks will approach you with loan offers; you must then decide if you really need a loan.”
Barbara Kyobutungi, Director of Financial Diet, echoes Ocici’s sentiments. “Poverty begins with not knowing how to manage your money. We want people to be informed and make smart decisions about managing their finances, no matter how much they earn,” she says.
Kyobutungi also highlights the importance of customer satisfaction for business success. “A happy customer will always return if what you sold them meets their expectations,” she notes.
As SMEs continue to navigate these financial challenges, the emphasis on financial literacy and customer satisfaction becomes ever more crucial for their survival and growth.
