Role of microfinance institutions on the growth of small and medium sized enterprises. A case study of Finca Uganda-head office, Kololo

Abstract

Accessing credit is considered to be an important factor in increasing the development of small and medium sized businesses. the study was conducted to investigate the role of Microfinance institutions in this case FINCA on the growth and development of small and medium sized enterprises guided by the following research objectives: To examine the extent to which interest rates by MFI’s influence the growth of SMEs in Uganda, examine how credit facilities rendered influence the growth of SMEs in Uganda and establish how collateral security effects the growth of SMEs in Uganda.Case study design was used as an approach in the study for collecting data aimed at exploring an in depth analysis and the population under investigation included the SME owner’s using FINCA for financial services plus the FINCA staff involved in the process. Primary and secondary data were used in the research. The primary data was got from FINCA clients (staff and present clients). The information was obtained through self-administered questionnaires and interviews where a total of 45 male and female individuals participated. Secondary data was obtained from published materials, which included journals, textbooks magazines, internal reports and newspapers. The study elicited several conclusions; notable among them is that FINCA offers several services to its clients that are of economic and growth benefit. The study yielded the following recommendations; collateral requirement should be given due attention because it could have significant negative effects on the financial institutions’ lending, the management of lending institutions should ensure that they carry out a research on consumer needs to establish the ideal interest rates to be charged and also the owners of the SME’s should always monitor their loan usage to avoid misappropriation.