Factors affecting the performance of small and medium sized enterprises in Uganda: a case study of areas around Makerere University

Abstract

The study examined the economic factors affecting the performance of Small and Medium Enterprises (SMEs) in around area near Makerere University. The study was premised on the following research objectives: to establish the relationship between demographic factors and the performance of Small and medium Enterprises around areas near Makerere University, to examine the relationship between social factors and the performance of Small and medium Enterprises, and to establish the relationship between economic factors and the performance of Small and medium Enterprises. The study adopted a descriptive cross-sectional survey design where both quantitative and qualitative approaches were used. In this study, a total number of 109 respondents were expected but 61 respondents returned the survey instruments representing a response rate of 55.9%. The data was collected using questionnaire and analysis was done using Pearson correlation coefficients. Qualitative analysis was done using content and thematic analysis. Findings revealed that there is a positive significant relationship between business location and performance of SMEs, the coefficient is 0.688** and p =0.00. Thirdly it was revealed that there is a positive significant relationship between access to credit and performance of SMEs in areas around Makerere University, the coefficient is 0.78** and p =0.00. Thirdly it was observed that there is a positive significant relationship between market size and performance of SMEs, the coefficient is 0.42** and p =0.00. Study findings revealed the SME owners draw budgets before starting businesses. It was concluded that: It was observed that management of SMEs set goals before beginning this business. It was observed that very few SMEs keep books of account in their business. Findings revealed the interest rates are high and SMEs can’t benefit fully from the loans they get from the financial institutions. It was recommended that: there is need to introduce best value planning. Payment processes should be well defined and efficient; appropriate checks and authorization processes should be put in place for paying invoices. The loans should be given at low interest rates since most of the SME owners cannot afford loans at high interest rates.