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The Economic Policy Research Centre (EPRC) in Uganda conducted a study in 2022 which showed that 28% of 2.2 million businesses in the country have no legal status.
Termed informal businesses, these unregistered operations contribute a very great deal to the Ugandan economy at large as seen in the Ministry of Finance 2021/22 Annual Performance Report.
According to this study, these informal businesses are not registered anywhere in both national and local records and do not hold any personalized bank accounts, regardless the study showed that they contribute 29% to the country’s gross domestic product.
The Ministry as a result has noted that rather than legally indict these businesses, it would be more reasonable to legitimize them.
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The Ministry decided that it would be a more effective strategy to the Ugandan economy to speed up the licensing of these unregistered businesses through easing registration processes and bringing services closer to the people.
As of this moment, the country’s administration has already begun to ease up on a number of restrictive protocols that have prevented local business owners from following the legal channel.
Several business registration regulatory laws have been reformed to make it easier for companies to be registered, go through the insolvency processes and ease the process of protecting copyrights.
According to The Monitor, a news agency in Uganda, “early last year, government launched the Business Development Services Framework that will seek to, among others, offer non-financial services to help entrepreneurs and informal businesses improve their performance, facilitate access to markets, and improve ability to compete through for example, business advice, mentoring, incubation and training.”
The publication also noted, “the Ministry of Finance also noted that the time required to start a business had by the close of last year, reduced from four hours during the 2020/21 financial year, to three while the cost of starting a business (as a percentage of income per capita) stood at 0.03 percent, which was much lower than the target and last year’s performance.”