TABLE OF CONTENTS
DECLARATION .1
APPROVAL
DEDICATION Hi
ACKNOWLEDGEMENT iv
TABLE OF CONTENTS v
LIST OF TABLES ix
LIST OF ACRONYMS x
ABSTRACT
CHAPTER ONE 1
INTRODUCTION
1.1 Background of the study
1.2 Statement of the Problem 2
1.3 Objectives of the study 4
1.3.1 General objective 4
1.3.2 Specific Objectives 4
1.4 Research Questions 4
1.5 Scope of the study 4
1.5.1 Content scope 4
1.5.2 Geographical scope 5
1.5.3 Time scope 5
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1.6 Significance of the Study .5
I .7 Conceptual frame work 6
CHAPTER TWO 8
LITERATURE REVIEW 8
2.0 Introduction 8
2.1 Interest Rates 8
2.1 .1 Types of Interest Rates c
2.1.2 Theories on interest rates 9
2.2 Small Scale Business 10
2.3 The effect of high interest rates on the performance of small businesses 11
2.4 Challenges affecting small scale businesses 13
2.5 Relationship between loan interest rates and performance of small scale businesses 18
CHAPTER THREE 19
RESEARCH METHODOLOGY 19
3.0 Introduction 19
3.1 Research design 19
3.2 Study Population 19
3.3 Sampling method and sample size 20
3.3.1 Sampling method 20
3.3.2 Sample size 20
3.4 Data collection techniques 21
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3.4.1 QLIestio~l~aires ~ 21
3.4.2 Interview method 22
3.4.3 Observation 22
3.5 Data sources 23
3.5.! Primary Data 23
3.5.2 Secondary data 23
3.6 Data processing, presentation and analysis 23
3.7 Data Validity and Reliability 23
3.7.1 Validity 24
3.7.2 Reliability 24
3.8 Limitations to the study 24
CHAPTER FOUR 26
PRESENTATION, INTERPRETATION AND DISCUSSION OF FINDINGS 26
4.0 Introduction 26
4.! Background characteristics of the respondent 26
4.1.1 Age of respondents 26
4.1.2 Gender of respondents 27
4.1.3 Marital status 28
4.1.4 Respondents’ level of education attained 29
4.1.5 Types of businesses undertaken by respondents 30
4.1.6 Time period respondents have been in SSB undertakings 32
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4.2 Sources of finance 558’s~se~33
4.2.1 The effect of interest rates on the performance of small scale businesses 34
4.3 Challenges to the SSBs 35
4.4 The relationship between loan interest rates and the performance of small scale
businesses 37
CHAPTER FIVE 39
SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATION 39
5.0 Introduction 39
5.1 Summary of the study 39
5.1.1 The effect of interest rates on the performance of small scale businesses 39
5.1.2 Challenges facing SSBs 40
5.1.3 The relationship between loan interest rates and the performance of SSB’s 41
5.2 Conclusion 41
5.3 Recommendations of the study 42
5.3.1 The effect of interest rates on the performance of small scale businesses 42
5.3.2 Challenges facing SSBs 42
5.3.3 The relationship between loan interest rates and the performance of SSB’s 43
5.4 Areas for further Research 44
ABSTRACT The research was carried out with a general purpose of assessing the effect of loan interest rates on the peijormance ofsmall businesses in Makindye division, Kampala. The objectives of the study were; to examine the effect of interest rates on the peiformance of small scale businesses, to find out the challenges affecting small businesses and lastly to analyze the reiationshz~ between loan interest rates and the peiformance ofSSB ‘s. The study utilised a sample of 55 respondents who were selected using a combination of disproportionate stratified sampling. The study largely utilisedprimaiy data collected from persons with small businesses and complemented by other data sources especially reviewing ofthe relevant literature. The study findings are presented in various frequency tables and figures as well as interpretation and analysis oft/ic data collectedfrom the questionnaires and interviews. The research revealed that loan interest rates affects negatively on small business petformance and also found out that there was a poor peiformance registered by small businesses in Makindye as a result ofhigh interest rates. The researcher recommended that the BOU should control government borrowing which raises the interest rates and should place a Treasuzy Bills benchmark on government debt to reduce market hnpeifCc/ions or it can atvo reduce the bank rate, MFIs should create more awareness to the public so that those who need assistance may seek their services. This awareness can be created through the mass and electronic media such as television, radio and internet, SSB operators should widen their markets so as to reduce competition this should be done by integrating market info rmation into the planning process because marketing is the life blood ofa competitive marketplace as it is driven towards the needs and desires of customers in the production decisions, SSBs need to employ professionals to manage their businesses this will improve on their peiformance since these will establish and strengthen the internal controLs as regards financial resources to reduce on mismanagement and misappropriations and finally the Government should involve draft policy frameworks for small scale businesses that focus on the legal and regulatomy conditions, capacity building in support of improving the business environment to increase competition and promote the private sector
