The Bank Interest Rates And Performance Of Business Enterprises In Uganda. Case Study Of Nakumatt Supermarket, Kamp Ala - Uganda

Abstract

The Purpose Of The Study Was To Determine The Impact Of Interest Rates On The Pe1formance Of Business Enterprises In Uganda, The Case Study Ofnakumatt Supermarket, Kan1pala, Uganda. The Study Was Based Three Objectives Which Are;

1. To Ascertain The Effects Of High Interest Rates On The Pe1formance Of Business Enterprises In Uganda.

11. To Ascertain The Effects Of Low Interest Rates On The Perfonnance Of Business Enterprises In Uganda.

111. To Determine The Different Types Of Interest Rates That Affect Business Enterprises. The Researcher Used Purposive Sampling To Select The Respondents From Whom To Obtain Valid Information About The Study. This Was Through The Issue Of Questionnaires And Interview Supplement Tools While Gathering The Information. Findings Of The Study Revealed That There Are Two Major Forms Of Interest Rates Which Include High

Interest Rates And Low Interest Rates. Within These, Others Are Embedded; They Include Nominal Interest Rates, Real Interest Rates, Market Interest Rates And Default Interest Rates. However, From All Of The Above, Market Interest Rates Are Most Evident Compared To Others. Findings Have Revealed

The Above Interest Rates (High Interest Rates) To Have The Following Impact On The Performance Of Enterprises: Speculative Investments Rather Productive Activities, Skyrocketing Prices And Wages. More So, Low Interest Rates Have Enhanced Borrowing Hence Improved Purchasing Power Of

Customers, And Long-Tenn Plans And Investment's For Enterprises.

The Researcher Reco1mnends That The Central Bank Should Curb High Interest Rates By Increasing The Central Bank Rate Which Will Help To Reduce Lending By Commercial Banks, Hence Curbing Down The Level Of Liquid Cash From The Public And Lowering Down Interest Rates. Also, The Company Should Invest In Projects Like Research And Development To Develop Innovations Within The Market. It Should Also Carry Out Processes And Procedures To Evaluate Their Performance In Different Economic Conditions And Be Able To Speculate In The Near Future.

Table Of Contents

Declaration ................................................................................................ I

Approval .................................................................................................. Ii

Dedication ............................................................................................. Iii

List Of Tables ............................................................................................... V

Table Of Contents ............................................................................................ Vi

Abstract ............................................................................................... Ix

Chapter One ..................................................................................................... 1

1.0 Introduction ....................................................................................................... 1

1.1 Background Of The Study ........................................................................................................ 1

1.2 Statement Of The Problem ....................................................................................................... 2

1.3 Objectives Of The Study ................................................................................................3

1.3.1 General Objectives ......................................................................................................... 3

1.3.2 Specific Objectives .......................................................................................................... 3

1.4 Research Questions ................................................................................................ 3

1.5 Scope Of The Study ............................................................................................... .4

1.5.1 Contents Scope ................................................................................................. .4

1.5.2 Geographical Scope ......................................................................................... .4

1.5.3 Time Scope ........................................................................................................................... .4

1.6 Significant Of The Study ............................................................................................ .4

1.7 Conceptual Frame Work ........•.................................................................................. 5

Chapter Two ................................................................................................ 7

Literature Review ............................................................................................ 7

2.1 Introduction .............................................................................................. 7

2.2 Definition Of Interest Rates ..................................................................................................... 7

2.3 Types Of Interest Rates ............................................................................................. 8

2.3.1 Simple Interest ............................................................................................................... 8

2.4 Composition Of Interest Rates ................................................................................................ 8

2.4.1 Nominal Interest ................................................................................................................ 8

2.4.2 Market Interest Rates .................................................................................................... 9

2.4.3 Default Interest ....................................................................................................... 10

2.5 Government Intervention ..................................................................................................... 11

2.6 Immediate Effects .............................................................................................. 11

2.7 Mid-Term Effects ............................................................................................. 11

2.8 Longer-Term Effects .............................................................................................. 12

2.9 Savings ................................................................................................. 12

2.10 Margins ................................................................................................ 12

2.11 Uganda's Current Interest Structure ................................................................................. 12

2.12 Inflation (Uganda) ................................................................................................... 14

Chapter Three ............................................................................................... 16

Research Methodology .............................................................................................. 16

3.1 Introduction ................................................................................................. 16

3.2 Research Design ................................................................................................. 16

3.3 Target Population .............................................................................................. 16

3.4 Sample Size ................................................................................................ 16

3.5 Sampling Design ................................................................................................. 17

3.6 Data Collection Instruments ................................................................................................. 17

3.6.1 Observation .......................................................................................................... 17

3.6.2 Questionnaires ........................................................................................................ 17

3.6.3 Interviews ......................................................................................................... 16

3. 7 Research Procedures ............................................................................................... 17

3.8 Data Analysis And Presentation ........................................................................................... 18

3.9 Limitation Of The Study ........................................................................................... 18

3.10 How To Overcome The Limitations ...................................................................................... 18

Chapter Four ................................................................................................. 19

Presentation, Interpretation And Analysis Of Data ............................... 19

4.1 Lntroduction ......................................................................................................... 19

4.2 Findings On The Demographic Characteristics Of Respondents ................................................. 19

4.3 Effects Of Interest Rates On The Performance Of Nakumatt Super Market In Uganda ................ 24

4.4 Different Interest Rates That Have Caused Significant Effects On The Company ......................... 25

Vii

Chapter Five .......................................................................................... 28

Summary, Conclusions And Recommendations ............................................. 28

5.1 Introduction ........................................................................................................ 28

5.2 Conclusions ....................................................................................................... 29

5.3 Recommendations ...................................................................................................... 30

5.4 General Recommendation ...................................................................................................... 31

5.5 Area For Future Researchers .................................................................................................... 31

References .......................................................................................... 32

Appendices .......................................................................................... 34

Appendix I: Research Instruments ........................................................................ 34

Appendix Ii: Time Frame For Research Project ............................................ .40

Appendix Iii: The Proposed Budget ......................................................................... 41