Enhancing access to financial credit for small and medium enterprises in USAFI market - Kampala Capital City Authority, Uganda

Abstract

The study investigated how access to financial credit can be enhanced for SMEs in the Kampala Capital City Authority, case of USAFI Market and was guided by three research objectives; to assess the determinants of financial credit access for market SMEs in the Kampala Capital City Authority, to establish the challenges associated with financial credit access for SMEs in the Kampala Capital City Authority, and to propose the most feasible strategies of improving financial credit access for SMEs in the Kampala Capital City Authority. The study used a descriptive research design with a quantitative approach. The unit of analysis were SMEs at USAFI market and the unit of inquiry were SME operators at the market. Primary data was collected from 79 participants using the questionnaires and analyzed with SPSS version 20. Results from the study revealed that financial credit access is determined by interest rate charge, loan size, loan period and valuation of loan support, availability of many financial institutions, collateral security, license certificate and financial statement status of SMEs operating at USAFI market. The dominant challenges were lack of collateral security, lack of valid identification (ID), lack of place of abode, absences of business plan, lack of financial management skills, lack of financial management skills, limited portfolio for SMEs in market, lack of accurate information and poor loan screening, land ownership hinders operation efficiency. Strategies were financial literacy, proper record keeping, financial credit information, strategic plans, monitoring and supervision, government concessional loans and reduction on the interest rate reduces the cost of debt to boost performance of SMEs operators at the market. The study recommends that SMEs at USAFI market should prepare and regularly review the business plan, access financial literacy training, legalize land ownership, supervise and monitor business, access information on portfolio and government concession loans in financial institution to enhance their access and utilization of financial credits to achieve growth.