Constraints and Opportunities for SMEs Investment in Uganda’s Oil and Gas Sector

"Uganda’s Oil Industry has attracted huge foreign investment, but participation by SMEs has remained poor despite their importance in income generation, employment and poverty eradication. Although the Oil industry is highly specialised, it provides indirect investment opportunities for SMEs who make up 80 percent of Uganda’s private sector. The opportunities available however have not been sufficiently usurped by SMEs due to the information gap on how to create business partnerships, requirements of the industry and actors in the industry. The study therefore investigated key actors in the Oil and Gas value chain, potential business linkages between the existing large oil prospecting companies and SMEs and; factors that influenced SME decisions and willingness to invest in the Oil and Gas value chain. A total of 220 registered SMEs were purposively selected from a cross section of sectors. Using the Logit model, ten variables were regressed against the dependent variable “willingness to invest.” The dependent variable was treated as a dichotomous variable taking on values 1= willingness to invest and 0 = none willingness. The results of the study revealed that the main actors in the Oil and Gas value chain were Trans-National Oil Companies, large foreign and domestic direct and indirect service providers with minimal involvement of SMEs. Business linkages for SMEs and TNCs existed at the vertical and horizontal levels but they were rather poor. Only 10 percent of SMEs had permanent contractual terms to supply Oil companies."