Analyzing the impact of trade finance on export trade. A case of the floriculture sector in Uganda

Abstract

The study analyzed the impact of trade finance and export trade in Uganda’s floricultural sector. Four objectives guided the study: to determine the relationship between pre-shipment finance and floriculture export trade; to determine the relationship between post-shipment finance and floriculture export trade; to establish the relationship between export credit insurance and floriculture export trade; and to analyze the challenges in accessing trade finance by exporters. A case study survey research design was employed during the study. A quantitative research approach was used where primary data was collected using Self-Administered Questionnaires (SAQs) as a tool from a sample size of 43 respondents who are employees of the flower farms and were reached through purposive and referral sampling techniques. The data was analyzed statistically in line with the study objectives using Statistical Package for Social Science (SPSS) to generate descriptive statics and test for association between variable using correlation after which presentation and conclusions were made in made in chapters four and five respectively. The main findings of the study show that there is a significant relationship between pre-shipment, post-shipment and export credit insurance with export trade in terms of volume and value. According to the research findings, availability of trade finance increases floriculture exports. The study also found that exporters face challenges in accessing trade financing for export trade. This relationship was reached after carrying out the statistical analysis using the t-test and a linear regression for the case of challenges. In conclusion, the researcher reveals that since there is a positive relationship between variables that this study examined and export trade; trade finance is an important trade facilitation tool that increases exports. Therefore, various institutions need to use appropriate interest to come up with new schemes, and support the existing mechanisms in place in order to ensure availability and access to trade finance to exporters to increase export earnings, encourage and boost commercialization, and diversification of agriculture for exports in Uganda so to increase foreign exchange earnings from exports.