Access to Finance, Technology Cost And Financial Performance of SMES in Ugnanda. A Case of Selected SMES in Arua City.
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Date
2025-06-16
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Makerere University Business School
Abstract
This study investigates the relationship between access to finance, technological costs, and the financial performance of SMEs in Uganda, focusing on selected SMEs in Arua City. The research aims to address the problem of inadequate financial performance among SMEs despite their significant contributions to the economy. The primary objectives are to examine the relationship between access to finance and financial performance, evaluate the impact of technological costs on financial performance, and assess the combined effect of these factors.
A cross-sectional quantitative survey design was employed, targeting a population of 120 SMEs from which a sample size of 92 SMEs was determined using the Krejcie and Morgan (1970) table. Data were collected using structured questionnaires distributed to individuals responsible for financial management within the SMEs. The data were analyzed using SPSS
The findings revealed a positive and significant relationship between access to finance and financial performance, with access to finance showing a strong influence on profitability and growth. Technological costs also exhibited a significant positive relationship with financial performance, particularly in terms of organizational capacity and change management. The regression analysis demonstrated that both access to finance and technological costs significantly predict financial performance, with technological costs having a slightly stronger impact.
Major findings indicated that improved access to finance enables SMEs to invest in operations, expand market presence, and implement strategic initiatives, thereby boosting financial performance. Similarly, strategic investments in technology enhance operational efficiency, productivity, and competitiveness, leading to better financial outcomes. The combined effect of access to finance and technological costs accounted for 55.3% of the variance in financial performance, underscoring the critical importance of these factors. Based on these findings, it is recommended that policymakers create supportive financial regulations to reduce collateral requirements for SME loans and that financial institutions design affordable and flexible financial products tailored to SMEs. Additionally, SMEs should establish dedicated technology investment funds and develop training programs to enhance digital literacy and technological proficiency among employees. These strategies will enable SMEs to optimize their financial resources, invest in technology effectively, and sustain long-term growth and profitability.
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This is a master's thesis
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Citation
Kissah, V. (2025). Access to Finance, Technology Cost And Financial Performance of SMES in Ugnanda. A Case of Selected SMES in Arua City. Makerere University Business School.