The contribution of commercial banks to the success of business enterprises in Uganda: a case study of Wandegeya, Kampala central division

Abstract

This study was carried out to determine the contribution of commercial banks to the success of business enterprises in Uganda. It was guided by the following objectives. To assess the contribution of bank credit to the profitability of businesses. To determine the contribution of bank credits to business growth in terms of asset base. To determine the contribution of bank credit to the employee retention. Respondents were selected randomly. Sample size was 100 BEs. Primary data were collected using structured questionnaires and interview guide. Descriptive statistics by use of frequencies and percentages was used to analyze responses. Correlation analysis was used to determine the relationship between the profitability of the business, asset base growth and employee retention with the success of the business enterprise. The majority of the participants of the study were males (63%) while the rest (37%) were females. 46% of the respondents were operating business in the sector of trade and commerce, followed by 40% that operated service businesses while 14% operated manufacturing businesses around Wandegeya. The study that majority of the respondents always visited the commercial banks rarely (52%) followed by 30% that visited commercial banks monthly followed by 11% that visited commercial banks on a daily basis and 6% visited commercial banks every week.Bank loan and business growth over time had no significant relationship at 5% level of significance where (P = 0.055).73% of the respondents reported that their business assets greatly increased ,22% claimed that their assets improved over time due to using credit from commercial banks ,3% had business assets increase whereas 2% had their assets stay the same and others the asset base declined. However, there was a significant relationship between asset growth and the services offered by commercial banks. Employee retention and growth of businesses had no significant association at 5% level of significance.The study established that individuals that were using credit from commercial banks 27% was making profits of 500,000 annually ,37% made profits between 500,000 and 1,000,000 while 36% made profits above 1,000,000 every year.