Private enterprise support, training and organizational development project (PRESTO), 617-0134 : project paper

The project will be implemented by an institutional contractor. The first, and largest, component will target microenterprises, which account for the majority of employment and output in Uganda"s non-farm sector, but lack access to financial and business development services. Focus will be on financial services. To increase microenterprises" access to savings and lending opportunities, TA will be provided to strengthen the ability of commercial banks and NGOs to provide cost-effective services to microenterprises; grants for operational costs and loan capital will also be provided to these institutions to absorb some of the risk of starting or expanding programs targeted at microenterprises. Targets include establishment of 100 new village banks and 20 bank units. The component will also include limited non-financial services in specified subsectors with high growth potential; small grants will be available for NGOs or firms that have sound proposals for helping microentrepreneurs to improve their technology, skills, and market linkages. As Uganda"s macroeconomic policy environment is already favorable to business, the policy and regulatory component will seek to remove second-tier constraints to private sector activity. The project will provide TA to help the Government of Uganda to design and implement reforms. In addition, short-term TA and operational support for the Uganda Investment Authority (UIA) will strengthen UIA"s ability to facilitate investment, as well as to provide input to policy analysis and formulation in the Ministry of Finance and Economic Planning. A number of policies and regulations are already under review and correction by the World Bank and bilateral donors; PRESTO"s contribution will not duplicate these, but will carve out areas that are more relevant to the smaller-scale end of the enterprise spectrum. The links between this component and the other two components of PRESTO will be close, with the other two providing input to the technical advisors in this component. The final component will provide TA and training to business associations to improve the services they offer and their effectiveness as advocates, and to increase business owners" participation in the associations, especially among female entrepreneurs. This component will also support two highly targeted interventions -- assisting the Uganda National Chamber of Commerce and Industry (UNCCI) in establishing a private arbitration mechanism for resolving business disputes, and establishing a credit reference bureau in coordination with the Uganda Manufacturers Association (UMA).