The Impact of Government Policies on the Performance of Small Scale Businesses in Kampala District

Abstract

The study examines the impact of government policies on the performance of small and medium enterprises in Kampala. Specifically, the study examined the influence of government policies(taxation, licensing, capital financing and training) on small and medium enterprises growth and performance. At univariate level, the analysis was carried out with frequency tables to describe the characteristics of the data. At the bivariate level, chi square was employed to study the relationship between the performance of SMEs and the independent variables, furthermore, at the multivariate level; a linear regression analysis was carried out to establish the factors affecting performance of SMEs in Kampala. The analysis was done using STATA 16 Version. The findings show that, the government policies that have a significant effect on the performance of SMEs are, taxation, training and capital financing. Furthermore, the results reveal that licensing has no significant effect to the performance of SMEs According to the findings of the study, government policy reforms especially on financing that enable SMEs to access services of commercial banks, microfinance and SAACOs at subsidized rates which can help them in strengthening their capital base for further expansion of their business. The fact that taxation, capital financing and training are significant does not necessarily mean that they do not affect SMEs performance, the government should therefore intervene I regulating the works of some of the commercial banks that charge higher interests to their customers. This can help many SMEs owners access financing at affordable interests.