Micro credit schemes and the performance of small-scale enterprises in Uganda:

Abstract

This study investigated the role of micro-credit schemes’ activitieson performance of SMEs in Uganda. The specific objectives of the study were; to investigate the impact of micro-credit loan terms on the performance of small scale business, to assess the impact of micro-credit savings on performance of small scale business and to examine the impact of micro-credit training schemes on performance of small scale business. The study used a comprehensive literature review based on the study objectives. The study also adopted the cross-sectional study design with quantitative and qualitative research techniques. A total sample size of 101 respondents was used with the help of Self-administered questionnaires and face to face interviews. Univariate descriptive frequencies that were used included frequencies, tables and graphs. Bivariate analysis was performed with the use of Pearson Chi-square (X 2 ) test to establish the relationship of the categorical variables. From the study, it was revealed that micro-Credit loans have helped them start some income generating businesses and that the schemes enable Quick decision making without the red tape as compared to banks and that the small loans have enhanced technology adoption, productivity and growth. The study also proved that Microcredit Savings can help the SMEs to buy assets which can be used as collateral for bigger loans and that it enables poor ones with little or no savings to acquire inputs for their small businesses. It can also be seen from the study that clients are able to get training in business and related skills and that credit trainings guarantee effective use of credit and improvements in productivity. Finally, it is recommended that the government needs to supplement efforts of microcredit institutions and allow more microcredit institutions to operate in all areas of the country especially the rural areas so as to meet the increasing demand of their services in such areas. It was also recommended that microcredit institutions should also establish programs that sensitize SMEs on performance improvement through training and educating the communities on how to save and gain