Microfinance Intervention and the Growth of Small and Medium Enterprises . Case Study: in Kikuubo-Kampala

Abstract

The main purpose of the study was to establish the extent to which Micro Finance intervention affects the growth of SMEs. The study was guided by the following objectives: to assess the effect of Loans access on SMEs growth, to determine the effect of training on SMEs growth, to assess the impact of savings on SMEs growth and to determine the extent to which other factors affect SMEs growth. The study was carried on using a detailed literature review thereby analyzing what various authors have written about the topic. This was done by looking into different books. Data was collected using a self-administered questionnaire. The study was conducted using 50 respondents from SMEs. The results from the findings indicated that majority of the respondents were females in and were in the age group between 20 - 25 years who had gone to tertiary institutions. The findings revealed the time for processing loans should be reduced and that the grace and payback period are a determinant for them if they are to acquire a loan and that the relationship with the loansor affects the loan acquirement and repayment process. MFI personnel should be thoroughly trained in loan assessment and risk management and that MFIs should train SMEs on how to acquire an appropriate loan. It was seen that clients have access to their savings any time they want especially in lean periods during a loan cycle and that there are easy and convenient deposit and collection facilities in the vicinity that encourages savings provided by this MFI. The regular meetings for borrowers have a negative effect on clients’ businesses performance and that there is need for insurance services to guarantee repayment when clients are faced with shocks. It was also revealed that there are other factors responsible for growth of SMEs and that growth of SMEs mainly depends on other factors. Finally, it was recommended that Microfinance institutions should also establish programs that sensitize communities on improvement of their livelihoods through training and educating the communities on how to save and gain and that the clients are also recommended to attend workshops and other training services that may be availed by the microfinance institution.

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