Constraints to Ugandan SME’s Participation in AGOA

Abstract

Many Small and Medium Enterprises (SMEs) in Uganda have not utilized the opportunities presented by AGOA. The objective of this study was to examine the constraints that hinder these firms from utilizing these opportunities. Specifically the study examined the macro constraints facing these firms, with a view to finding solutions to them. A literature review was carried out to identify challenges to SME’s participation in AGOA. , followed by a triangulation technique in which a qualitative study (Focus Discussion Group) involving key stakeholders in this business was done to further identity these constraints and their underlying dimensions. Instrument development was next, followed by a reliability analysis in which the psychometric properties of the instrument were assessed on the basis of Cronbach’s alpha. A quantitative study was then done by administering the refined questionnaire to a group of exporters. Factor Analysis by promax (oblimin ) rotation revealed six oblique factors identifying that the most important constraints facing Ugandan SMEs are Lack of middle managers, infrastructure, technology, marketing , inadequate export credit and governance issues. The study calls for technological transfer from the developed countries to the Less Developed Countries (LDCs) in addition to addressing the other barriers. There is also a need for exporters to develop better marketing skills through training .The study implores the government to put policies in place that will enhance the development of SMEs.