The Effects Of Microfinance Services On The Development Of Small And Medium Enterprise In Makindye Division, Kampala District

ABSTRACT This study examined the extent to which SMEs access financial services and assessed whether accessibility to such services affect their development or not in case of SMEs in Makindye division, Kampala district. Specifically, this study aimed at achieving the following objectives: (i) To exan1ine the level of microfinance services performed by SMEs in Makindye division, (ii) To detem1ine the level of development of SMEs in Makindye division and (iii) To establish the relationship between microfinance services and development of SMEs in Makindye division. The descriptive design was selected in this study because it allowed the researcher to gather numerical and descriptive data to assess the relationship between the variables. The study was conducted among the selected Small and Medium Enterprises in Kampala which is one of the fastest developing districts in Uganda with an increasing number of small scale business enterprises. A sample size of 142 respondents was selected from a targeting population of 220 individuals by using Slovene formula. This study employed the following instruments in the collection of data; a questionnaire survey and interview survey. In this study, the researcher used questionnaires and interviews as primary sources of gathering data and documentary analysis as secondary method. The first two tools were preferred because they were the best in determining the affective domain of the respondents. Findings based on the microfinance services accessed by SMEs, data analysis indicated that microfinance services was rated satisfactory on average ( overall mean=2.85), hence implying that the microfinance institutions provide financial services in tenns savings services and small loans services which help in the development of small and medium enterprises in Makindye Division. Regarding the development of SMEs, the findings indicated that the development of small and medium enterprises in Makindye Division, was generally high and this was indicated by the overall mean of 2.88, hence confirming that the small and medium enterprises in Makindye Division perform well in relation to profitability, sales volume and development in number of customers through offering a variety of quality services to their customers and lastly, Regarding the relationship between microfinance services and the development of SMEs in Kampala Capital City Authority, the findings also indicated a positive and significant relationship between microfinance services and development of small and medium enterprises in Makindye Division, Kampala district, this is because the sig-value was less than 0.05 (Sig=0.000), hence implying that improvement in access of microfinance services increases the level of development of small and medium enterprises in Makindye Division, Kampala district and failure to access microfinance services reduces development of small and medium enterprises in Makindye Division, Kampala district. fhe researcher concluded that the microfinance institutions provide financial services in terms ;avings services, small loans services and insurance services which help in the development of ;mall and medium enterprises. The small and medium enterprises perform well in relation to )rofitability, sales volume and development in number of customers through offering a variety of tuality services to their customers and the improvement in access of microfinance services ncreases the level of development of small and medium enterprises in Makindye Division and 'ailure to access microfinance services reduces development of small and medium enterprises in 11akindye Division, Kampala district. The researcher recommended that the small and medium nterprise owners in Makindye Division should always carry out sales forecasting every month, nd this will increase in development of number of customers.