The effect of loan interest rates on the performance of small scale businesses in Makindye Division Kampala
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Date
2019-05
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Kampala International University, College of Economics and Management
Abstract
The research was carried out with a general purpose of assessing the effect of loan interest rates on the performance of small businesses in Makindye division, Kampala. The objectives of the study were; to examine the effect of interest rates on the performance of small scale businesses, to find out the challenges affecting small businesses and lastly to analyze the relationships between loan interest rates and the performance of SSB‘s. The study utilized a sample of 55 respondents who were selected using a combination of disproportionate stratified sampling. The study largely utilized primary data collected from persons with small businesses and complemented by other data sources especially reviewing of the relevant literature. The study findings are presented in various frequency tables and figures as well as interpretation and analysis of the data collected from the questionnaires and interviews. The research revealed that loan interest rates affects negatively on small business performance and also found out that there was a poor performance registered by small businesses in Makindye as a result of high interest rates. The researcher recommended that the BOU should control government borrowing which raises the interest rates and should place a Treasury Bills benchmark on government debt to reduce market imperfections or it can also reduce the bank rate, MFIs should create more awareness to the public so that those who need assistance may seek their services. This awareness can be created through the mass and electronic media such as television, radio and internet, SSB operators should widen their markets so as to reduce competition this should be done by integrating market information into the planning process because marketing is the life blood of a competitive marketplace as it is driven towards the needs and desires of customers in the production decisions, SSBs need to employ professionals to manage their businesses this will improve on their performance since these will establish and strengthen the internal controls as regards financial resources to reduce on mismanagement and misappropriations and finally the Government should involve draft policy frameworks for small scale businesses that focus on the legal and regulatory conditions, capacity building in support of improving the business environment to increase competition and promote the private sector,
Description
A research report submitted to the college of economics and management in partial fulfillment of the requirements for the award of a bachelor’s degree of business administration of Kampala International University