TRADE AND DEVELOPMENT BOARD COMMISSSION ON ENTERPRISE, BUSINESS FACILITATION AND

DEVELOPMENT

Expert Meeting on

"ENHANCING THE PARTICIPATION OF SMALL AND MEDIUM-SIZED ENTERPRISES IN GLOBAL VALUE CHAINS"

Geneva, 18-19 October 2007

PAPER SUBMITTED TO THE EXPERT MEETING*

Benefits of participating in the business linkages program & the

requirements to be met by SME’S to be suppliers of KSGL

by

Mr. Moris Nagabitho Kinyara Sugarcane Growers Ltd., Uganda

____________________ *The views expressed are those of the author and do not necessarily reflect the views of the UNCTAD

Expert Meeting on

"ENHANCING THE PARTICIPATION OF SMALL AND MEDIUM-SIZED ENTERPRISES IN GLOBAL VALUE CHAINS"

Geneva, 18 October 2007

Benefits of participating in the business linkages program & the

requirements to be met by SME’S to be suppliers of KSGL

by

Mr. Moris NagabithoKinyara Sugarcane Growers Ltd., Uganda

“The views expressed are those of the author and do not necessarily reflect the views of the UNCTAD”

Presented by: Moris Ngabitho

General Manager Kinyara Sugarcane Growers Limited (KSGL)18th – 19th October 2007GenevaCountry of Origin: Uganda

United Nations Conference on Trade & Development (UNCTAD) Expert Meeting

KSGL ownership and area of operation

Kinyara Sugarcane Growers (KSGL) is a registered company of farmers founded in 1996Founded as an Association of Sugarcane FarmersRegistered as a limited liability company in 2001Owned by Sugarcane Growers who supply Sugarcane to Kinyara Sugar LimitedSupplies 50% of Sugarcane requirements to Kinyara Sugar LimitedKSGL has 920 shareholders spread out in Budongo, Nyangahya, Karujubu and Masindi Town Council Sub Counties in Masindi

Ownership of the Transnational Company -Kinyara Sugar Limited (KSL)

KSL is owned by Rai Group 51% and Government of Uganda 49% jointlyKSL’S production capacity is 65,000 tones per yearKSL’S production is expected to rise up to 120,000 tones per year in the next three years

Services provided by KSGL to its members/Growers

Harvest of Sugarcane for the millers and growersPloughing for the farmersExtension of credit services for the farmersWeeding services for the farmersOther services as needs arisesPayment for these services are made by KSL to KSGL directly on behalf of the benefiting farmers

Problems of KSGL before the Business Linkage program

Lacked a long term vision Lacked a strategic business planInadequate knowledge of corporate governance

PracticesLacked a clear organizational structureInadequate access to loansInadequate business knowledge.Lacked useful intermediaries such as Enterprise UgandaLacked confidence in planning, strategizing and

Negotiating

Participation in the Business Linkage program

KSGL has been a beneficiary participant of the two year pilot Business linkage project in UgandaIt has been implemented by Enterprise Uganda in collaboration with Uganda Investments Authority (UIA), UNDP and UNCTAD with funds from the Swedish Government. In Sept 2005, Enterprise Uganda entered into partnership with KSL and KSGL to provide business support services to the latter so as to grade it.All parties to the partnership were to commit resources in the proportion of KSGL 10%, KSL 30% and Enterprise Uganda 60% of the 34,300 US $ project

The three parties had specific roles to play and the expectations of the outcome were;

A cohesive company with a clear shared membership values, mission and vision was the expectationRationalized leadership of KSGL matched with competence and commitment to work with Kinyara Sugar Limited.A long term relationship between KSWL and

KSGL as a result of the training from Enterprise Uganda.A clear organizational structure for the management of KSGL and any other target agreed upon.

Benefits arising from the project

Successful business company audit of KSGL carried out by Enterprise UgandaInduction of a Board of Directors was done through advisory services of Enterprise Uganda. Review of the company’s legal standing was done Training has been carried out for staff, directors and other shareholders on the following; Corporate Governance Entrepreneurship and Finance for non Finance Managers.A strategic plan for KSGL formulated

Benefits arising from the project continued…….

Installation of an accounting software and training of staff Staffing needs and alignment is currently being undertaken.Continuous advice on the business related matters has been sought from the senior Business Linkage Officer. Through Enterprise Uganda WHT wrongfully deducted from the growers sales revenue was refunded and no further deduction of 6% WHT on gross revenue.

Benefits arising from the project continued…….

KSGL was able to access a loan worth UGX 200Million from Micro Finance Support Centre (MSCL) because of the existence of a strategic plan and we expect to receive an agricultural loan worth 500 million shillings from the same body. Frequent business counseling for example during the Leadership change in November 2005. The Leadership wrangle was settled.

Challenges encountered by KSGL in this project

Change in management of Kinyara Sugar LimitedAbsence of a Sugar policy in UgandaBenefits not going directly to Shareholders of KSGL

Requirements to be fulfilled for an SME to be supplied by KSGL

The SME must be a Legal entity with a domicile through registration.Long term plan commitment in production and supply of KSGL.Clear Governance and management system with focus for growth.Compliant to the legal and statutory requirementsProper credit managementQuality assurance especially suppliers of tractors, spare parts, with price and quality stability

Requirements to be fulfilled for an SME to be Supplied by KSGL Continued………….

Able to meet business standardsMust be Consistent in volumes produced and suppliedShould be keeping Proper transactions records Credit utilization and repayment capacityMust have Respect for business contractsMust be with Experience and expertise in the item of supply.

Way forward foe upgrading SME’S

Provision of Business Development ServicesEntrepreneurial skills and mentoringEfforts should be made by Business linkage program to make KSGL more productive

Thank you for Listening and giving me an opportunity to make this presentation, your comments are welcome.

Moris NgabithoGeneral Manager

Kinyara Sugarcane Growers Limited

(KSGL)18th – 19th October 2007

GenevaFrom Uganda