Access to Finance and Growth of Small and Medium Enterprises in Uganda.
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Date
2023
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Abstract
The purpose of the study was to establish the relationship between access to finance and the growth of Small and Medium Enterprises in Kampala Uganda. The study adopted a crosssectional descriptive and survey design that involved 116 private schools in Kampala. The results indicate that access to finance and structure of banks cause a significant variation in growth of SMEs. However, bank, business support services and collateral requirements had no significant variation in growth of SMEs. The combined effect of the independent variable caused a significant variation which was more than some of the independent variables except financial information access. Access to financial information is the most influential factor driving SME growth, leading to substantial development compared to those with limited access. Bank and business support services show minimal impact on SME growth, and their structures contribute less than financial information access. While collateral requirements are linked to growth, other factors play a more significant role. The study recommends that; stakeholders must focus on enhancing financial information access through initiatives like accessible databases and financial literacy programs to promote SME growth. Tailored support services from financial institutions, including specialized advice and networking opportunities, to maximize their impact. Banks should optimize their structure, streamline processes, and adopt a customer-centric approach to better serve SMEs. Re- evaluating collateral requirements, striking a balance between risk assessment and credit accessibility, is crucial. The study had several limitations. First, sampling bias was present as the selection of private schools in Kampala did not represent all SMEs in the region. Additionally, data collection was challenging due to SME owners' reluctance to share sensitive financial information. The study's timeframe was limited, hindering the capture of long term trends in SME growth and finance access. Areas for further research include; a longitudinal study to gain valuable insights into the long-term effects of access to finance on SME growth. A comparative analysis of different SME types in various industries across Uganda to provide a more comprehensive understanding. Complementing quantitative analysis with qualitative research methods, such as in-depth interviews, to capture contextual factors overlooked in data.
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A Dissertation Submitted to Makerere University Business School (Faculty of Graduate Studies and Research) in Partial Fulfilment of the Requirements for the Award of Degree of Master of Business Administration of Makerere University. (PLAN A).
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Musa, K (2023) Access to Finance and Growth of Small and Medium Enterprises in Uganda : A Case of Private Schools in Kampala. Unpublished Masters Dissertation Makerere University Business School. Kampala, Uganda.