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| Micro-Credit Financing And The Financial Performance Of Micro- Enterprises In Rubaare Town Council, Ntungamo District In South Western Uganda.
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Mugarura Bimark and Asiimwe Phionah
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Abstract:
The study examined micro-credit financing and the financial performance of micro- enterprises in Rubaare town council, Ntungamo district and it was guided by the following objectives. To examine the contribution of micro-Credit Financing on the financial performance of micro- Enterprises, to identify the effects of Loans on the financial performance of micro- Enterprises, to investigate the effect of micro-Credit Financing on the financial performance of micro- Enterprises. A cross sectional survey design was used. The researcher used both qualitative and quantitative approaches for data collection and analysis to provide thorough and broader findings. The study used a population of 450 respondents comprising of street vendors, carpenters, plumbers, independent mechanics, machine shop operators, shoe makers and small farmers. The researcher used a sample size of 211 and used both purposive and simple random sampling. Questionnaires, interviews and documentary reviews were used in the study. Findings from Table 1 above indicate that 219(98.6%) of the respondents agreed,3(1.4%) of the respondents were undecided whether micro credit facilitate the development of the micro enterprises.Moreso,210(99.1%) of the respondents agreed and 2(0.9%) of the respondents were undecided whether micro credit improves the operations and contribute to the growth of micro enterprises.210(99.1%) of the respondents stated that micro credit triggers and sustains the economic growth of micro enterprises.209(98.6%) of the respondents agreed that micro credit helps to attain new customers and increased sales and 3(1.4%) were un decided. Findings also show that 209(98.6%) of the respondents agreed and 3(0.4) respondents were undecided as to whether micro credit helps to attract new customers.209(98.6%) of the respondents agreed that micro credit helps to secure assets and 3(0.4%) were un decided. Lastly,210(99.1%) of the respondents agreed that micro credit helps to secure and access capital markets and 2(0.9%) were un decided. There were no respondents that strongly agreed, disagreed and strongly disagreed. Findings from the table 2 above reveals that loans result to tension on microenterprises and this was represented by 210(99.1%) of the respondents,2(0.9%) were un decided and their mean was 3.99. Still findings revealed that 207(97.6%) agreed,5(2.4%) of the respondents disagreed that loans do not limit benefits of micro enterprises from market opportunities and the mean for the responses was represented by 3.98.In addition, Findings indicate that 211(99.5%) of the respondents strongly agreed and 1(0.5%) were undecided whether loans were affecting the financial performance of the micro enterprises.209(98.6%) respondents agreed and 3(1.4%) of the respondents were un decided.Furthermore,212(100%) strongly agreed that loans result to an increase in Stock over a period of time. Findings also revealed that 47(22.2%) strongly agreed,165(77.8%) of the respondents agreed that loans were contributing to an increase in the customers for the business products. Findings from the above table 2 indicates that 57(26.9%) of the respondents strongly agreed,100(47.2%) agreed,30(14.2%) disagreed and 25(11.8%) strongly disagreed that micro credit does not lead to better allocation and proper use of financial resources. On the other hand,18(8.5%) agreed,141(66.5%) agreed and 53(25.0%) strongly disagreed that micro credit doesn't lead to profitability of micro enterprises.70(33.0%) of the respondents strongly agreed,142(67%) agreed that micro finances lead to the sustainability of micro enterprises. In addition,35(16.5%) of the respondents,90(42.5%) agreed,48(22.6%) disagreed and 39(18.4%) strongly disagreed that saccos do not lead to better financial performance. Findings also indicate that 41(19.3%) of the respondents strongly agreed,96(45.3%) agreed,42(19.8%) strongly disagreed and 33(15.6%) disagreed that individual group loans lead to the expansion and growth of micro enterprises. The Study concludes that indeed micro credit financing plays a bigger role in facilitating the growth of micro enterprises, improves the operations and contributes to the growth of micro enterprises, triggers and sustains the economic growth, helps to attract the new customers and increased sale and secures assets. Micro credit financing results to tensions, limits benefits of micro enterprises for market opportunities, results to increase in profits, increases sales revenue for micro enterprises and increase in customers for business products. This study recommends the government to improve on micro finance support to financial institutions and formally established small and medium enterprises. To reduce on the interest rates to enable the micro enterprises achieve their own objectives of obtaining loans. To revise the policy of financial lending which seems to be beaucratic hence affecting the performance of the micro enterprises. To increase the financial awareness to enable micro enterprises to access the financial support to increase their businesses. The study also recommends that future studies focus on particular micro credit terms factors to examine their influence on MSMEs' performance. As per findings the study recommends that the micro finance institutions should focus on and improve the micro credit terms especially the duration of loan repayment as this was the main factor found to be significant in the study
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