The Role of Microfinance Institutions on the Growth of Small and Medium Scale Enterprises (Smes) in Kyazanga Sub County, Lwengo District: Case Study of Kyazanga Kwegatta Micro Finance

Abstract

Small and Medium Enterprises (SMEs) play an important role in the socio-economic development of any country. They provide an appropriate channel for the achievement of national macroeconomic objective in terms of employment generation at low investment cost and enhancement of apprenticeship training. The role of Microfinance institutions on the growth of small and medium scale enterprises in Kyazanga sub county in Lwengo district. The objectives of the study where to determine the effect of MFIs on the growth of SMEs capital in Kyazanga Sub county, to examine the effect of MFIs on the growth of SMEs human resource in Kyazanga Sub county, to examine ways of how MFIs can improve on the performance SMEs in Kyazanga Sub County.

The study used a sample of 250 respondents out of whom 100 responded. Data analysis was done using SPSS version 20.0. The study established that the entrepreneurs in the study area accessed different amounts of loan. The study also established that accessibility to microfinance affected the performance of SMEs to a great extent. On the influence of savings and deposits to financial performance of SMEs, the study established that savings allowed the SMEs a chance to borrow from the banks and also measured their revenue generation capacity. The study also established that entrepreneurial development played a key role in the performance of SMEs. The study concluded that the accessibility of credit from credit facilities affects the performance of the SMEs to a very great extent. The study concluded that the some of the SMEs trader have been able to make savings while others have not through their respective MFIs. The study also concluded that the training has improved the management skills of the SMEs owners in financial management, record keeping and business management.

This study therefore recommended that the management of MFIs revise their lending policies and requirements so as to ensure that most of the traders can be able to access credit more easily. The study also recommended that the MFIs use that traders savings as part of collateral since most may not have large tracts of land or the physical collateral needed. The study also recommended that the training on investment monitoring be offered more hours since it was established that the traders had not improved their skills in the area.

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