An Analysis of Microfinance Services and Growth of Small and Medium Enterprise in Kampala Town Council

ABSTRACT The study sought to establish the relationship between microfinance services and growth of small and medium enterprises in Kampala, Uganda. The study was guided by three specific objectives, that included i) establish the microfinance services accessed by the small and medium enterprises owners in Kampala Uganda; ii) determining the level of growth of small and medium enterprises in Kampala Town Council and (iii) establishing the relationship between microfinance services and growth of small and medium enterprise in Kampala Uganda. This research employed descriptive correlation design to describe the relationship between microfinance services and growth of small and medium enterprises in Kampala, Uganda, the study used a total population of 220 and a sample size of I 42 respondents, and the questionnaire was used as the research instrument. Descriptive statistics used in this study included frequencies, means and PLCC on co!'J'elation or variables. Data analysis using means showed that micro finance services was rated satisfactory ( overall mean=2. 90)and growth of small and medium enterprises in Kampala, Uganda was found to be satisfactory (mean=2.88). Microfinance services and growth of small and medium enterprise are positive and significantly correlated. The researcher concluded that concluding that the microfinance institutions provide financial services in terms of savings services, small loans services which help in the growth of small and medium enterprises in Kampala U gancla, the smal I and medium enterprises in Kampala Town Council perform well in relation to profitability, sales volume and growth in number of customers through offering a variety of quality services to their customers, and improvement in access of microfinance services increases the level of growth of small and medium enterprises in Kampala, Uganda and failure to access microfinance services reduces growth of small and medium enterprises in Kampala, Uganda. From the findings, the following recommendations were made; microlinance institutions in Kampala Town Council should always allow small and medium enterprises borrow a specific amount of money and pay back through regular monthly payments with no collateral required, small and medium enterprises to carry out promotions in order to increase their business net profit margins, should also always carry out sales forecasting every month, and this will increase in growth of number of customers., should use phone calls, e-mails, and personnel visits to communicate with customers about their products, and this will create a friendly relationship with the customers hence increasing in the number of customers and should always make sure that their services and products are reliable to all groups of customers.