Important Lessons For Ugandan SMEs From Germany

By Godfrey Ssenteza

Small and Medium Enterprises (SMEs) constitute 99.95% of all companies in Germany.

There are 3.67 million SMEs in Germany employing 68% of the working population of the country.

The SME sector is thriving in this part of the world. With an annual turnover of up to 500m Euros, SMEs are arguably among the biggest contributors to the GDP of the Republic of Germany.

SMEs in Uganda and Germany are not fundamentally different in terms of philosophy. However, the degree of success these entities have scored over the years compared to their Ugandan counterparts, presents us with numerous lessons.

Heads of over 30 Small and Medium Enterprises (SMEs) in Uganda recently visited Germany and Turkey on a 10-day familiarization trip organized by KCB Bank Uganda Business Club. Below are the lessons learned from the trip.

Family Businesses; 95% of the SMEs in Germany are family businesses, even the big names like BMW and Liebherr were started by families.

Family businesses in Germany have got a “we” philosophy that is ingrained in all the family members as opposed to the “I” philosophy in our Ugandan entities.

This ideology enables these SMEs to be handed over from one generation to another, and they embrace a “work in progress” approach, every member at the helm of the company gives it his best and passes it on to the next one in line.

Every family member has got a responsibility to ensure that business survives and does not collapse in his time. Nobody works to satisfy his own needs but to fulfill the ideology of the founding father.

Brand resilience; Germany SMEs build Brands not personal empires. A brand like Schussenrieder, have survived since 1183 and today it is one of the most popular brands of beer in Bavaria Germany.

Brands have the capacity to live on long after their founders but personal empires don’t. Ugandan SMEs must embrace the registration of their trade names and endeavor to grow them with a connotation of quality and reliability; this is how Germany has built strong brands.

Technical education; University Degrees are good but to build sustainable SMEs everyone in the business must have the knowhow of the primary business the entity deals in. SMEs in Germany provide training for more than 1.2million youth constituting 89% of all trainees in the country.

Liebherr, a market leader in the manufacture of Mobile and crawler cranes has got a fully-fledged apprenticeship department on their more than 10 acre manufacturing complex, for students as young as 15 years learning to create breath taking technological breakthroughs in the engineering arena. We need to embrace this approach in every line of business we are doing as SMEs; our young ones should be exposed to the primary business before they are elevated to management positions in the organization, and this is the sure way to create sustainable and resilient brands.

Succession Planning; Bavaria, Germany is well known for its good brands of beer and milk production. One farmer running a modern dairy farm with 85 heads of cattle single handedly with state of the art technology, confessed that “this farm has been running in the family for the last 50 years”.

He learnt the trade from his father and he was training one of her daughters to care for the animals in preparation of her taking over from her father. Irrespective of the profession one has taken at college or University, he pays allegiance to the family trade, this way everyone is a producer in Germany from lawyers, teachers, doctors, bankers mention it. This how Germany has managed to maintain a high GDP.

The writer is the head of SME banking at KCB Bank(U) Ltd,

He holds a B.com (MUK), PGDFM(UMI), MBA (MUK) and Candidate CFA Level II

(+256701890046ssentezag@gmail.com)