Shop of a tailor on a suburban street in Kampala, Uganda. Photo credit: znm via Getty Images.
Enabling entrepreneurs: Business training for high-potential firms in Uganda
Can business training help small firms grow? Evidence from a structured incubation programme in Uganda suggests that intensive training, mentoring, and longer-duration support for high-potential SMEs can improve business practices and deliver substantial gains in revenue and profits, offering lessons for SME support programmes across developing countries.
Small and medium enterprises (SMEs) account for over 80% of employment in many low- and middle-income countries, yet most struggle to formalise, scale, or sustain productivity growth. Some of the most widely used tools to support these firms are business training programmes - governments and aid agencies spend more than USD 1 billion annually training millions of entrepreneurs in developing countries.
Does business training deliver growth?
The evidence on the effectiveness of business training is mixed. Meta-analyses suggest mixed effects on sales and profits with variations based on the types of training programmes, the length of skill-impartation training sessions, and target trainees. A common critique is that many programmes are short - sometimes just a few hours - and target heterogeneous groups of microentrepreneurs with limited growth potential. This heterogeneity may dilute average treatment effects and obscure larger gains for a smaller group of higher-capacity firms that are better positioned to absorb and apply what they learn.
Business incubators offering longer-duration support, including mentorship, networking, and structured training, are proliferating across Africa. Yet, rigorous evaluations of these programmes remain scarce. We set out to fill this gap by studying a structured incubation programme in Uganda that specifically targets high-potential firms.
A mini-MBA for Uganda’s growth-oriented SMEs
We partnered with the Stanbic Business Incubator (SBI) to evaluate its Enterprise Development Program (EDP), a three-and-a-half-month ‘mini-MBA’ for formally registered SMEs in Uganda. Unlike many training interventions, the EDP sets a high bar for entry: firms must have operated for at least 12 months, be formally registered, employ at least five workers, and report annual turnover above USD 10,000 - roughly ten times Uganda’s GDP per capita.
The programme combines classroom instruction across 16 modules - covering hard skills such as financial literacy, procurement, and quality management alongside soft skills like negotiation, design thinking, and business ethics - with a subsequent one-year mentoring programme pairing firms with experienced coaches. With approximately 85 contact hours spread over 20 sessions, the EDP is substantially longer and more intensive than most training interventions studied in the literature.
Between 2020 and 2024, over 2,100 firms applied to the programme, and about half of these were selected to participate. Using retrospective information from the list of applicants, we studied 584 firms in a quasi-experimental design, comparing trained firms with applicants not selected for the programme. Using inverse probability weighting to adjust for observable selection differences, we estimate the programme’s effects on financial performance, business practices, innovation, and management.
Business training increased firms’ revenue and profits
The results show that the programme was associated with substantial improvements in firms’ financial performance. Trained firms increased revenue by 44% and profits by 32%, while costs rose by 19% - consistent with the expectation that for small firms in this context, growth comes primarily through scaling investment rather than pure efficiency gains.
Figure 1: Impact of the training programme on firms’ financial performance
Bar chart showing the impact of the training programme on firms’ financial performance. Provided by authors.
In absolute terms, firms increased annual revenue by approximately USD 4,000 and annual profits by over USD 2,300 on average. These effects are considerably larger than those typically found in business training evaluations. For comparison, standard classroom programmes for microentrepreneurs tend to produce around 5% increase in sales, while a mentorship programme in a South African incubator yielded revenue gains of just 3.2%. More intensive programmes generate larger effects: in Singapore, a field experiment found revenue growth of 37-41%, while in South Africa, a randomised controlled trial reported profit increases of 41-61% depending on the training arm. Our results sit comfortably within this upper range, consistent with the idea that matching longer, more intensive training to higher-capacity firms produces stronger returns.
Better practices and innovation, not (yet) better management
Financial gains alone tell us little about how the programme works. We therefore measured effects on four intermediate outcomes - business practices, innovation, inventory management, and management practices - and used causal mediation analysis to trace the pathways through which training translates into better financial performance.
Figure 2: Impact of the training programme on intermediate outcomes
Chart showing the impact of the training programme on intermediate outcomes. Provided by authors.
Business practices improved strongly, driven by gains in credit record-keeping, budgeting, and maintaining profit-and-loss accounts. The innovation index rose, with trained firms significantly more likely to adopt enterprise resource planning systems. Inventory management also improved, with firms strengthening their record-keeping for tax returns, personnel costs, and marketing activities.
Causal mediation analysis reveals that these improvements were not just side effects - they were key pathways to financial gains. Business practices alone accounted for 37% of the total effect on revenue and 39% of the effect on profits. Innovations contributed an additional 16-17% of the total effects on both revenue and profits. Together, improvements in practices and innovation explain the bulk of how training translates into better financial performance.
Figure 3: Revenue effects decomposed by mediation pathway
Figure showing the revenue effects decomposed by mediation pathway. Provided by authors.
Management practices, however, told a different story. While the programme was associated with a modest increase in rewarding good performance, the overall talent management index did not shift significantly, and management practices did not meaningfully mediate the programme’s effects on financial performance. This aligns with findings from a study in Colombian auto parts firms, which showed that correlations between different management measurement instruments are often low, suggesting that management is multidimensional and hard to shift with a single intervention. An experiment in Tanzania found that only combined classroom-plus-coaching interventions produced durable gains in management practices, and even these were modest.
Importantly, our study is among the first to apply a standardised instrument – the Development World Management Survey – in evaluating a business training programme, focusing specifically on talent management. The limited effects we find may reflect the genuine difficulty of shifting deeper organisational behaviours through training alone and point to the need for more targeted management interventions, possibly involving ongoing coaching or peer accountability.
How can these findings inform SME support programmes?
These findings carry several implications for policymakers and programme designers thinking about SME support in low-income settings.
First, targeting high-potential firms appears to generate stronger returns than generic programmes aimed at the general population of firms. The eligibility criteria used by SBI identify firms with the absorptive capacity to turn training into performance gains. This is consistent with emerging evidence that training effects are largest among more ambitious and growth-oriented entrepreneurs.
Second, programme intensity matters. The EDP’s 85 contact hours, combined with structured mentoring, far exceed the typical short-form training. While more intensive programmes are costlier per participant, the absolute gains suggest that the investment may be worthwhile. As we do not have data on the cost of the intervention, we did not implement any cost-effectiveness assessments; therefore, cost-effectiveness questions remain, and policymakers must weigh per-firm costs against the scale of potential impact.
Third, the limited effects on management practices suggest that even well-designed programmes have boundaries. Deeper organisational change in talent management, promotion, and retention may require complementary approaches such as ongoing consulting, peer learning networks, or behavioural tools. The growing literature on heuristics and personal initiative training suggests promising avenues for making training more psychologically grounded and practically actionable.
While intensive business training programmes can generate meaningful improvements in firm performance, addressing gender-specific barriers to entrepreneurship is also essential if SME programmes are to be equitable as well as effective.
This blog is part of a series highlighting research supported by the Small and Growing Businesses (SGB) Evidence Fund, which generates evidence on the policies, programmes, and investments that can help firms grow, create jobs, and contribute to economic development.