African Journal of
Business Management

  • Abbreviation: Afr. J. Bus. Manage.
  • Language: English
  • ISSN: 1993-8233
  • DOI: 10.5897/AJBM
  • Start Year: 2007
  • Published Articles: 4082

Full Length Research Paper

Loans and growth of small-scale enterprises in Uganda: A case study of Kampala Central business area

Eric Nzibonera
  • Eric Nzibonera
  • Department of Accounting and Finance, School of Business, College of Business and Management Sciences, Makerere University, P. O. Box 7062, Kampala, Uganda.
  • Google Scholar
Ivan Waggumbulizi
  • Ivan Waggumbulizi
  • Department of Accounting and Finance, School of Business, College of Business and Management Sciences, Makerere University, P. O. Box 7062, Kampala, Uganda.
  • Google Scholar


  •  Received: 26 February 2020
  •  Accepted: 27 May 2020
  •  Published: 31 May 2020

Abstract

The study examines the impact of financial loans on growth of small-scale enterprises (SSEs) in Uganda. The contribution of SSEs in promoting economic growth and development is widely documented. Access to credit finance guarantees financial liquidity and sustainability of SSEs hence enhancing their profitability and growth. A cross-sectional research design was adopted using a quantitative approach, targeting managers of SSEs. Primary data were collected using closed ended questionnaires and analyzed to generate descriptive, correlation and regression statistics. The findings suggest that categories of financial loans, that is; secured loans and working capital loans have a positive and significant effect on growth of SSEs. The effect of group loans is not statistically significant. The implication of the study is that secured loans encourage small-scale enterprise managers to work hard to spur growth and also protect collateral securities from being mortgaged by lenders. Furthermore, working capital loans help SSEs to efficiently manage their day-today operations which ultimately enhance their profitability, survival and growth.

 

Key words: Small-scale enterprises, secured loans, working capital loans, group loans and growth.