The effect of management skills on the performance of informal businesses: A case study Kisenyi, Kampala district

Abstract

Informal businesses are very important in the development of the economy. They contribute greatly in terms of creating jobs, GDP and social welfare of most economies. However, there is high rate of failure among informal businesses due to various reasons of which lack of management skills is one. The study at hand was undertaken to find out whether the application of management skills could help informal businesses succeed using the following variables; financial skills, marketing skills, interpersonal skills, profitability, returns on capital employed and market share. The study analyzed the effect of management skills on the performance of informal businesses in Kisenyi, Kampala district where the following objectives were considered; to assess the relationship between financial skills and the performance of informal businesses, to examine the effect of marketing skills on the performance of informal businesses and to analyze the effect of interpersonal skills on the performance of informal businesses. A case study design and quantitative approach was used in which 44 questionnaires were distributed and the data about management skills and performance of informal businesses was collected and analyzed using SPSS to generate tables for which analysis and discussions were made. The findings reveled that there is a strong linkage between management skills and performance of informal businesses. The findings also showed that despite the linkage between management skills and performance of informal businesses, most of the informal business owners lack management skills. The research concluded with a strong argument for education and training as an essential tool for determining the informal sectors success, effectiveness and efficiency. It was recommended that training especially in management skills such as marketing, financial management and interpersonal skills be integrated into all training programs of informal business owners. The government should also work hand in hand with agencies like Kampala Capital City Authority and Uganda Revenue Authority to register all informal businesses and this will enhance controlling, monitoring and regulation of this sector. The Ugandan government must provide affordable alternative sources of finance for informal businesses. To address the issue of borrowing constraints, the government should act as a guarantee to banks and credit institutions for informal businesses Key word: Management skills and performance of informal businesses.