Table of Contents
DECLARATION
APPROVAL ii
DEDICATION iii
ACKNOWLEDGEMENT iv
TABLE OF CONTENTS v
LISTOFTABLES vii
LIST OF FIGURES viii
ABSTRACT ix
CHAPTER ONE 1
1 .ONTRODUCTION 1
1.1 BACKGROUND 1
1.2 STATEMENT OF THE PROBLEM 2
1.3 PURPOSE OF STUDY 3
1 .4OBJECTIVES OF THE STUDY 3
1.5RESEARCH QUESTIONS 4
1.6SIGNIFICANCE OF THE STUDY 4
1.7 SCOPE OF THE STUDY 5
CHAPTER TWO 7
2.0 Introduction 8
2.1 Procedures employed by Microfinance institutions to provide credit services to small scale
businesses 11
2.2 Benefits derived by small scale businesses from Microfinance institutions 16
Lease Financing 16
2,3 Challenges faced by small businesses in accessing and maintaining the loans 19
2.4 Conclusion 23
CHAPTER THREE 24
METHODOLOGY 24
3.1 Introduction 24
3.2 Research Design 24
3.3 Area of the study 24
V
3.3.1 S~dy pop~1ation . 24
3.4 Sampling procedure 25
Purposive sampling was used to select respondents who are knowledgeable about the services of
MFI’s and management of small businesses. Also, random sampling was employed to to remove
bias 25
3.5 Data sources 25
The study used both primary and secondary sources, with much emphasis on primary data 25
3.5.1 Primary data 25
3.5.2 Secondary data 25
Data was obtained from records of Pride Microfinance Limited - Katwe Branch, journals,
textbooks as well as Internet 25
3.6 Research instruments 25
3,7 Validity and Reliability of instruments 25
3.8 Data analysis and processing 25
CHAPTER FOUR 27
PRESENTATION, INTERPRETATION, ANALYSIS, AND DISCUSSION OF FNDINGS27
4.0 iNTRODUCTION 27
4.1 Discussions of Findings 27
4.2 Credit procedures used by Microfinance Institutions 29
4.3 Benefits of Financial institutions to businesses 32
CHAPTER FIVE 35
SUMMARY DISCUSSION OF FINDINGS, CONCLUSION AND RECOMMENDATION .. 35
5.1 Introduction 35
5.2 Summary of the findings of the study with respect to study objectives 35
5.2.1 Procedures Microfinance Institutions use to provide credit 35
5.2.2 Benefits derived from Microfinance Institutions 36
5.3 Conclusions of the study 37
5.4 Recommendation 38
The government should encourage investors to set up more microfinance institutions in rural
areas so as to bring financial services nearer to small businesses 38
REFERENCES 40
APPENDICES 36
ABSTRACT The purpose of this study was to establish the role played by Microfinance institutions in funding small and medium enterprises. The objectives of this study were to find out procedures Microfinance institutions use to provide credit services, benefits and challenges faced by small and medium enterprises in accessing loans. The research was descriptive in nature involving quantitative methods which was administered through questionnaires. The total sample comprised of 50 respondents: 10 staffs of Pride Microfinance Limited, Katwe Branch and 40 small businesses in Katwe-Mengo-Kisenyi, Kampala. Simple random sampling was used in the study. According to the research findings Small businesses have got several benefits from banks that have led to their growths. However, majority of small businesses have low turnovers, not organized enough to benefit from government programmes. Nonetheless, there is a strong positive relationship between the contributions of microfinance to the success of small businesses. It was concluded that the contribution of microfinance services affect the ratio of the success of small scale businesses in form of profits earned from the sale of stock hence a consisteri re stocking of goods, small businesses need financing to restock. It was recommended that more products tailored to the customers’ needs should be set up. From the study, it was realized that the financial sector in Uganda is narrow with only a few standard products which limit the options available to small scale businesses.
