Effect of microfinance on the growth of SMES in Mukono district
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The purpose of this study was to establish the effect of Microfinance on the growth of SMEs in Mukono district. The specific objectives of this study were as follows; to assess the level of availability and accessibility of loans by SMEs, determine the extent to which microfinance services affect business capital of SMEs, determine the extent to which microfinance services affect stock accumulation of SMEs and establish the constraints to SMEs’ accessibility to microfinance services. The study used a cross-sectional research design in which 100 SMEs were used as a sample size: 20 clients were selected from the 5 MFIs. The researcher used primary data for the study, which was obtained through self-administered questionnaire with closed and open-ended questions. SPSS was used to perform the analysis as it aided in organizing and summarizing the data. The analysed data was represented in tables, charts and crosstabs. The resultant findings of this study revealed that the independent variables had a positive correlation with the dependent variable. ANOVA findings in this study showed that there was correlation between the predictor variables (Micro-credit (business loans), Micro-insurance, Savings, Financial literacy, Marketing services and Business management training provided by MFIs) and response variable (Annual growth in turnover) since P- value of 0.011 is less than 0.05. This indicated that there was a strong positive relationship between the study variables. The ANOVA results indicate that the independent variables significantly (F=2.094, p=0.011) explain the variance in Annual growth in turnover. However, the statistical findings also revealed that the following null hypothesis are statistically significant under t-test at 0.05 level of significance; There is statistical significant on microfinance access on SMEs growth. While null hypothesis stated that there is statistical significant relationship between SMEs growth and start-up capital and the other which stated that there is no statistical significant that experience on SME activities improves SME’s growth which reveals that it is not statistically significant at t-statistic 0.05 level of significance. The study also established that the four microfinance services; micro-credit (loans), savings, business management training, financial literacy, marketing services and insurance have a significant effect on the financial performance of SMEs. From the study findings, the study recommends that in order to enhance the effects of microfinance on the growth of SMEs in Mukono district, the MFIs should continuously train and educate their clients (SMEs) on entrepreneurial skills. Government on the other hand should also consider partnering with MFIs to enhance this training or even take a step forward and establish institutions that will be responsible for strictly training and educating mainly the youths in entrepreneurial skills. The study also recommends that the government and the MFIs’ regulating bodies support MFIs to facilitate their growth and increase capacity. It is through this support that MFIs can be able to reach more SMEs. The study also further recommends that academicians, should carry out more research on the beneficiaries of MFIs services and those that are not but are engaged in SMEs.