The Role of Small and Medium Enterprises in Public Procurement: Barriers, Strategies, and Socio-Economic Impacts in Uganda
Abstract
Public procurement makes up a significant share of Uganda’s economy, yet small and medium-sized enterprises (SMEs) account for only 15% of government contracts despite contributing 18% to GDP and 90% of private sector employment. This study examined the barriers, strategies, and socio-economic contributions associated with SME participation in public procurement for services and supplies. Using a qualitative action research design, data were collected from 17 purposively sampled SMEs in Kampala and Gulu through semi-structured interviews. Thematic analysis, guided by Institutional Theory, Resource-Based View, Knowledge-Based View, Stakeholder Theory, and Innovation Theory, revealed three major barriers: i) regulatory constraints (complex bidding procedures, strict prequalification, and lengthy processes), ii) structural resource limitations (financial capital, skilled labour, and IT infrastructure), and iii) skills gaps coupled with information asymmetries. SMEs employ diverse strategies to enhance competitiveness, including advocating for policy reforms, improving access to finance and technology, fostering collaborations, and building digital and entrepreneurial capacities. Findings highlight that participation of SME generates substantial socio-economic benefits, including revenue growth, job creation, innovation, community development, and enhanced procurement transparency. Differences in access to technology and finance emerged between urban Kampala and regional Gulu SMEs. The study concludes that targeted policy interventions, resource support, and tailored capacity-building programs are essential to enhance SME inclusivity in Uganda’s procurement ecosystem. These findings provide actionable insights for policymakers, procurement authorities, and development partners seeking to promote inclusive growth through procurement reforms
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