UNIVERSITY STUDENTS AND THE BUSINESS COMMUNITY IN MBARARA MUNICIPALITY: A CASE STUDY OF KAKOBA DIVISION

UNIVERSITY STUDENTS AND THE BUSINESS COMMUNITY IN MBARARA

MUNICIPALITY: A CASE STUDY OF

KAKOBA DIVISION

BY

NINSIIMA SHEILLA

11/BSU/BBA/238

A RESEARCH REPORT SUBMITTED TO THE FACULTY OF BUSINESS AND

DEVELOPMENT STUDIES IN PARTIAL FULFILLMENT OF

REQUIREMENTS FOR THE AWARD OF BACHELORS’

DEGREE IN BUSINESS ADMINISTRATION OF

BISHOP STUART UNIVERSITY.

MAY, 2014

DEDICATION

This work is dedicated with love and pleasure to my mother Mrs.

Kebirungi Jane, my grandfather Mr.Muhuza . D. and my grandmother

Mrs. Prisca .K. my uncle Mutatina Andrew , Muntugi , my brother

Takemwa Ronald above all for their endless material, spiritual and

financial support.

1

DECLARATION

I hereby declare from the best of my knowledge that, this work is

from my own efforts and has never been submitted by any other

student from any university.

Signature ……………………………………… Date……………………………………

NINSIIMA SHEILLA

11/BSU/BBA/238

2

SUPERVISOR’S APPROVAL

This is to certify that this report has been submitted with my

approval as the student’s supervisor.

Signature………………………………Date…………………………………..

MR. KAKUBA DENIS

SUPERVISOR

3

TABLE OF CONTENTS

DEDICATION.....................................................i

DECLARATION...................................................ii

SUPERVISOR’S APPROVAL........................................iii

4

This is to certify that this report..........................iii

TABLE OF CONTENTS.............................................iv

LIST OF TABLES...............................................vii

LIST OF FIGURES.............................................viii

ACKNOWLEDGEMENT...............................................ix

LIST OF ABBREVIATIONS..........................................x

ABSTRACT......................................................xi

CHAPTER ONE....................................................1

1.0 INTRODUCTION...............................................1

1.2 BACKGROUND OF THE STUDY....................................1

1.2 STATEMENT OF THE PROBLEM...................................4

1.3 OBJECTIVES OF THE STUDY....................................5

1.3.1 GENERAL OBJECTIVE........................................5

1.4 SPECIFIC OBJECTIVES........................................5

1.5 RESEARCH QUESTIONS.........................................5

1.6 SCOPE OF THE STUDY.........................................5

1.6.1 CONTENT SCOPE............................................5

1.6.2 AREA SCOPE...............................................6

1.6.3 TIME SCOPE...............................................6

1.7 SIGNIFICANCE OF THE STUDY..................................6

5

CHAPTER TWO:LITERATURE REVIEW..................................7

2.0 INTRODUCTION...............................................7

2.1THE REASONS FOR THE GROWTH OF BUSINESS VENTURES.............7

2.2 THE INFLUENCE OF UNIVERSITY STUDENTS ON THE GROWTH OF BUSINESS

VENTURES.......................................................9

2.3 CHALLENGES FACED BY SMALL SCALE BUSINESSES................14

CHAPTER THREE:METHODOLOGY.....................................18

3.0 INTRODUCTION..............................................18

3.1 RESEARCH DESIGN...........................................18

3.2 STUDY POPULATION..........................................18

3. 3 SAMPLING METHOD.........................................19

3.4 SAMPLE SIZE...............................................19

3.5 DATA SOURCES..............................................19

3.6 DATA COLLECTION INSTRUMENTS...............................19

3.7 DATA PROCESSING AND ANALYSIS METHODS.....................20

3.8 LIMITATIONS OF THE STUDY..................................20

CHAPTER FOUR:PRESENTATION, ANALYSIS AND INTERPRETATION OF STUDY

FINDINGS......................................................21

4.0 INTRODUCTION..............................................21

4.1 BACKGROUND INFORMATION....................................21

6

4.1.1 GENDER DISTRIBUTION OF THE RESPONDENTS..................21

4.1.3 MARITAL STATUS DISTRIBUTION OF THE RESPONDENTS..........23

4.1.4 LEVEL EDUCATION DISTRIBUTION OF THE RESPONDENTS.........24

4.1.5 MODES OF SMALL SCALE BUSINESSES OPERATING IN KOKOBA DIVISION

..............................................................25

4.1.6 PERIOD SPENT IN BUSINESS................................26

4.2 REASONS FOR THE GROWTH OF BUSINESS VENTURES IN KOKOBA DIVISION

-MBARARA MUNICIPALITY.........................................27

4.3TO EXAMINE THE INFLUENCE OF UNIVERSITY STUDENTS ON THE GROWTH OF

BUSINESS VENTURES IN KAKOBA DIVISION -MBARARA MUNICIPALITY.. . .30

4.4CHALLENGES FACED BY SMALL SCALE BUSINESSES.................33

CHAPTER FIVE:SUMMARY OF FINDINGS, CONLUSIONS, RECOMMENDATIONS AND

SUGGESTIONS FOR FURTHER STUDIES...............................38

5.0 INTRODUCTION..............................................38

5.1 SUMMARY OF FINDINGS.......................................38

5.2 CONCLUSION................................................41

5.3 RECOMMENDATIONS...........................................41

5.4 SUGGESTIONS FOR FURTHER STUDIES...........................42

REFERENCES....................................................44

APPENDICES....................................................48

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APPENDIX I: RESPONDENTS’ QUESTIONNAIRE........................48

APPENDIX II: RESPONDENTS’ INTERVIEW GUIDE.....................52

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LIST OF TABLES

Table 1: Showing sample size of respondents...................19

Table 2: showing gender distribution of the respondents.......21

Table 3: Showing age distribution of the respondents..........22

Table 4: Showing marital status distribution of the respondents23

Table 5: Showing education level of the respondents...........24

Table 6: showing kinds of businesses operated by respondents.. 25

Table 7: showing period spent in business.....................26

Table 8: Reasons for the growth of business ventures in Mbarara

Municipality..................................................27

Table 9: Showing the influence of university students on the growth

of business ventures in Kakoba division – Mbarara Municipality 30

Table 10: Showing challenges faced by small scale business in

Kakoba Divisions..............................................33

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LIST OF FIGURES

Figure 1: showing gender distribution of the respondents......22

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ACKNOWLEDGEMENT

I thank the Almighty God for making it possible for me to complete

this piece of work. Special thanks for the knowledge, wisdom,

courage and determination he has granted me.

I extend my appreciation to my supervisor who clearly,

systematically, consistently, persisted and guided me from research

report to this practical writing.

I am greatly indebted to my dear parents for their care, love,

prayers, courage and financial support contributed greatly to my

success.

Thanks also go to my respondents who sacrificed their time in

giving me relevant information that backed my research.

My special thanks also go to my friends; Peace, Diana, Kato, Emilly

whose pieces of advice, financial support contributed greatly to my

success.

I wish to express my gratitude to the faculty of development

studies for scheduling the research to all students of business

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administration that has provided us with promising skills and

experience

LIST OF ABBREVIATIONS

$ Dollar

% Percentage

BSM Business Service Management

BSU Bishop Stuart University

c Number of Column

CVI Content Validity Index

GDP Gross Domestic Product

GEM Global Entrepreneurship Monitor

Km Kilometer

MUBS Makerere University Business School

12

NY New York

PBL Print British Limited

RUSCAS Rational Saving Groups

SACCOs Savings and Credit Cooperatives

SBES Small Business Enterprises

Sh. Shilling

SMME Small Medium and Micro Enterprises

SSEs Small Scale Enterprises

UN United Nations

US United States

USA United States of America

USD United States Dollars

ABSTRACT

The main purpose of the study was to assess the contribution of

university students to the growth and development of the business

community in Mbarara Municipality, Mbarara District. The study used

two objectives including; to find out reasons for the growth of

business ventures in Kakoba Division -Mbarara Municipality, to

examine the influence of University students on the growth of

business ventures in Kakoba Division -Mbarara Municipality and to

establish the challenges that have limited the growth of Businesses13

in Kakoba Division - Mbarara Municipality.. It employed simple

random sampling design using both qualitative and quantitative

tools. Qualitative approach included use of interviews and

literature from different sources, while quantitative approaches

involved use of descriptive statistics that were generated with

frequency tables, graphs, and Charts

Findings from the study established that the major reasons for the

growth of business ventures in Mbarara Municipality include

increase in population, good transport network, the presence of

credit institutions, presence of commodities for businesses,

security of the place, presence of trade credits, location of the

municipality, and political stability among the reasons. It is also

concluded that the University students greatly influence on the

growth of business ventures in Mbarara Municipality as students

provide market for the most of the goods and services that foster

the growth of such businesses. And that number of businesses like

computer services, meat roasting, hotels, transport services,

houses, clothing businesses, hawking, restaurants, retail shops,

Saloons and supermarkets had grown in the study area due to the

presence of University students.

The study recommends small businesses owners to employee people

some certain level of education if they are to benefit much from

their businesses in the study area, in addition, the study

recommends small businesses to consider selling other products but

not only those mostly demanded by the university students, also

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that the government to provide support to small scale businesses

since it was found out that people operating businesses in Kakoba

Division are disturbed by seasons like heavy sunshine, too much

rain. Lastly, that the effectiveness of university students on

population growth in Mbarara Municipality and the influence of

education level on the performance of small scale businesses in

Uganda are suggested areas for further studies.

CHAPTER ONE

1.0 INTRODUCTION.

This chapter will includes the background of the study, problem

statement, purpose of the study, objectives of the study, research

questions, scope of the study and significance of the study.

1.2 BACKGROUND OF THE STUDY

University student all over the business world play important roles

in the process of industrialisation and economic growth. As

Ogujiuba et al. (2004) observe, apart from increasing per capita

income and output, SMEs create employment opportunities, enhance

regional economic balance through industrial dispersal and

generally promote effective resource utilisation considered

critical to engineering economic development and growth. There are

indications in Uganda that the SMEs account for about 70 per cent

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of industrial employment (Adebusuyi 1997) and well over 50 per cent

of the gross domestic product (Odeyemi 2003).

Small and Medium Scale Enterprises (SMEs) is accepted globally as a

tool for empowering the citizenry and economic growth. It has been

associated with the rapid economic growth of countries in Asia and

North America. In Nigeria efforts have been made by successive

governments to reduce poverty and accelerate economic growth by

increasing foreign direct investment, diversifying the economy,

enacting policy frameworks which favour small business ownership

and sometimes initiating employment and entrepreneurship

programmes. Specifically this study tends to figure out: how

profitable SME business is; whether infrastructural development

could be attributed to the presence of SMEs; if significant number

of people are employed within the SME sector; whether the SME

market has attracted banks and financial institutions with increase

in loans and incentives; whether there is increase in information

Technology related businesses due to presence of SMEs and if there

is need for the government to encourage and develop more

opportunities for SMEs.

University student and Business Community world over play a key

role in the industrialization and development of countries. They

occupy a place of strategic importance in economies structure due

to their considerable contribution in terms of output and exports

of the countries. They also provide immediate large scale

employment as they need lower investment and offer a method of

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ensuring more equitable distribution of national income. With great

importance attached to Business Community however, Africa’s

Business Community enterprises have little access to finance, which

thus hampers their emergence and eventual growth. Their main

sources of capital are their retained earnings and informal savings

and loan associations, which are unpredictable, not very secure and

have little scope for risk sharing because of their regional focus.

Access to formal finance is poor because of the high risk of

default of small scale enterprises due to inadequate financial

facilities. Small scale businesses in Africa can rarely meet the

conditions set by financial institutions, which see small scale

enterprises as a risk because of poor guarantees and lack of

information about their ability to repay the loans.

SMEs are widely defined in terms of their characteristics, which

include the size of capital investment, the number of employees,

the turnover, the management style, the location, and the market

share. Country context plays a major role in determining the nature

of these characteristics, especially, the size of investment in

capital accumulation and the number of employees. For developing

countries, small-scale enterprises would generally mean enterprises

with less than 50 workers and medium size enterprises would usually

mean those that have 50-99 workers. In Uganda, a small-scale

enterprise is an enterprise or a firm employing less than 5 but

with a maximum of 50 employees, with the value of assets, excluding

land, building and working capital of less than Ug.shs 50 million

(US$ 30,000), and the annual income turnover of between Ugshs.10-50

17

million (US$6,000-30,000). A Medium sized enterprise is considered

a firm, which employs between 50-100 workers. Other characteristics

have not been fully developed.

Defining the Small- and Medium-sized Enterprise (SME). There are

varying worldwide definitions of what constitutes an SME although

they tend to use the same metrics of employment, turnover and

asset base. For example, the European Union defines a SME made up

of enterprises which employ fewer than 250 persons (micro 1–9;

small 10–49, medium 50–249) and which have an annual turnover not

exceeding 50 million euro, and/or an annual balance sheet total not

exceeding 43 million euro (EU, 2005).3 In the USA, the employment

size threshold is 500 people, with small firms employing 100 people

(SBA, 2009). IFAC has chosen to define small and medium-sized

entities (SMEs) as “entities considered to be of a small and

medium size by reference to quantitative (for example assets,

turnover/employees) and/or qualitative characteristics (for

example, concentration of ownership and management on a small

number of individuals). What constitutes an SME differs depending

on the country.” (IFAC 2010)

Sullivan, e'tal (2003) argued that small scale enterprises

worldwide have been recognized as engines of growth and development

and in many countries there has been some considerable effort to

support them so as to create the necessary employment

opportunities, incomes and productive capacity. Besides the

evidence available about the role of small enterprises some of the

reasons for them being preferred as follows: ease of formation,

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http://en.wikipedia.org/w/index.php?title=Arthur_O'_Sullivan&action=edit&redlink=1

capital requirements, flexibility, mobility and a variety of other

factors. Seen from a global perspective, small businesses have a

specific niche in global economic affairs. The global market is

dominated by world class competitors in the form of multinationals

and for the developing countries, small business appears to be the

way to compete.

Like any other developing countries, in Uganda, small scale

enterprises typically operate with limited capital and at the same

time cite lack of access to finance as significant constraint on

their operations. This lack of access is often associated with

financial policies and bank practices that make it hard for banks

to cover the high costs and risks involved in lending to small

firms. To those financial institutions that are lending to these

small scale enterprises, they have registered high cost of

administration in loan processing and monitoring and yet the return

rate is

low because of small amounts borrowed as well as high risks since

these small scale enterprises don’t have collateral securities and

yet default rate is high. As a result, they have tended to lend

at very high interest rates which have become prohibitive and thus

affecting financial performance of Business Community enterprises.

Uganda defines and classifies SMEs into micro businesses with less

than 5 employees and small business as having less than

100,000pounds in turnover and capital (Hill, 2001). In Uganda

majority and strong SMEs tend to be located in urban and peri-urban

19

centres and are usually registered. These SMEs suffer from

constraints that lower their resilience to risk and prevent them

from growing and attaining economies of scale. The challenges are

not only in the areas of financing environment and working capital

but also human resource development, market access and access to

modern technology and information (Opondo, 2003). SMEs contribute

greatly to the economic development of Uganda for example in 2001

Uganda was estimated to have 1,069,848 enterprises classified as

SMEs and forming 90% of Uganda’s private sector (Kasaami, 2008).

SMEs employ approximately 1.5million people equivalent to 90% of

total non-farm private sector workers. Therefore SMEs represent one

of the most viable vehicles for sustainable entrepreneual behavior

and grass root economic growth (Gleb, Ramachandran 2007).

Despite the importance of SSEs, they appear not to have been very

successful in the Saharan Africa. Many studies that have been done

(Wanyama, 1991; Ngobo, 1995; Sewanyana, 1997; Mutazindwa, 1997)

indicate that small businesses have a variety of problems some of

which are managerial and lack of markets. Since the small units

have been identified as important players in the world markets, it

is important that they are supported in their development.

In Uganda Small Scale Enterprises (SSEs) are reported to contribute

about 20% of Uganda's GDP (Tulip and Bitekerezo, 1993). This figure

may be much higher given that Uganda's GDP is constituted by mostly

agricultural production. This is mainly by small holders who may

not even fit in the definition of micro and small businesses.

20

Besides, since a great component of GDP is non-monetized and

largely subsistence, it is possible that the contribution of both

micro and small units is much larger than 20%. It is also reported

by the Ministry of Planning and Economic Development (1992) that

over 80% of Uganda's manufacturing output is by small enterprises.

The sector also employs up to 2.6 million people in Uganda (Uganda

Investment Authority, 1996).

The growth of business enterprises in Mbarara Municipality is very

high as many of the businesses both profit and non-profit

organizations start in the area year after the year. And it has

been in researcher’s minds whether university students in Mbarara

Municipality have any contribution to such effect.

1.2 STATEMENT OF THE PROBLEM

Mbarara Municipality has experienced a steady growth of education

institution since the late 80’s inform of Universities and tertiary

institutions. These higher institutions of learning such as Mbarara

University of Science and Technology, Makerere University Business

School branch at Kamukuzi division and Bishop Stuart University

have given rise to the growth and development of commercial and

non-commercial business ventures. (Sempijja, 2006) Businesses

community are competitive and dynamistic nature. This makes them a

fundamental cause for Economic growth and Development through their

contribution to income redistribution, and Unemployment reduction

in developing economies. However, we are not aware of the

contribution of the University students to the growth and

development of the business community in Kakoba Division- Mbarara21

Municipality. The study will therefore assess the contribution of


community in Kakoba Division-Mbarara municipality.

1.3 OBJECTIVES OF THE STUDY

1.3.1 GENERAL OBJECTIVE



community in Kakoba Division -Mbarara Municipality, Mbarara

District.

1.4 SPECIFIC OBJECTIVES

i. To find out reasons for the growth of business ventures in

Kakoba Division -Mbarara Municipality.

ii. To examine the influence of University students on the growth

of business ventures in Kakoba Division -Mbarara Municipality.

iii. To establish the challenges that has limited the growth of

Business in Kakoba Division - Mbarara Municipality.

1.5 RESEARCH QUESTIONS

i. What are the reasons for tyhe growth of business ventures in


ii. How is the influence on the growth of business ventures in


iii. What challenges have limited the growth of Businesses on the

growth in Kakoba Division- Mbarara Municipality.

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1.6 SCOPE OF THE STUDY

1.6.1 CONTENT SCOPE

The study is to find out reasons for the growth of business

ventures in Kakoba Division -Mbarara Municipality,to examine

whether there is an influence of University students on the growth

of business ventures in Kakoba Division -Mbarara Municipality and

to establish the challenges that have limited the growth of

business in Kakoba Division - Mbarara Municipality.

1.6.2 AREA SCOPE

The study was carried in Kakoba Division- Mbarara municipality.

Kakoba Division boarders with River Rwizi in the south, Kamukuzi

division in the West and Kisenyi slum boarders with Tate it we

along Kakoba teachers college road and Kizungu area along the

Kampala high way. The study selected Kakoba Division as many of

the businesses ventures have come up in the area and the researcher

is not aware of the contributions of the University students’ on

the growth of such ventures.

1.6.3 TIME SCOPE

The study considers information relating to the period of five

years that is 2009-2014. This range of five years was considered by

the study as many of the business ventures have come up in the area

as the growth of higher learning institutions also increase and the

study tried to establish the cause.

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1.7 SIGNIFICANCE OF THE STUDY

The study results are hoped to be of significant in the following

ways;

The findings of this research may add on the existing literature

that helped other interested researchers to formulate related

research questions on related issues of business ventures.

It is hoped that this research may also help the public to discover

the importance of university students on the performance of

business enterprises in Mbarara Municipality in particular and

Uganda as whole.

It is hoped that, this research may provide data that may assist

government planners, policy makers and implementers in order to

come out with proper decisions and policies based on reliable data

about business enterprises.

CHAPTER TWO

LITERATURE REVIEW

2.0 INTRODUCTION

This chapter of the proposal provides views from different scholars

about the study variables and the reviewed information is as

follows;

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2.1THE REASONS FOR THE GROWTH OF BUSINESS VENTURES

According to Tiwari, Rajnish (2006) a business (also known as

company, enterprise, or firm) is a legally recognized organization

designed to provide goods, services, or both to consumers or

tertiary business in exchange for money. Businesses are predominant

in capitalist economies, in which most businesses are privately

owned and typically formed to earn profit that will increase the

wealth of its owners. The owners and operators of private, for-

profit businesses have as one of their main objectives the receipt

or generation of a financial returns in exchange for work and

acceptance of risk. Businesses can also be formed not-for-profit or

be state-owned.

Businesses often have important "intellectual property" that needs

protection from competitors for the company to stay profitable.

This could require patents or copyrights or preservation of trade

secrets. Most businesses have names, logos and similar branding

techniques that could benefit from trade marking leading to the

growth of their business in term of advertisement (Longenecker,

Justin G, 2008). Patents and copyrights in the United States are

largely governed by federal law, while trade secrets and trade

marking are mostly a matter of state law. Because of the nature of

intellectual property, a business needs protection in every

jurisdiction in which they are concerned about competitors. Many

countries are signatories to international treaties concerning

intellectual property, and thus companies registered in these

25

countries are subject to national laws bound by these treaties

(Tiwari, Rajnish, 2006).

Many businesses are operated through a separate entity such as a

corporation or a partnership (either formed with or without limited

liability). Most legal jurisdictions allow people to organize such

an entity by filing certain charter documents with the relevant

Secretary of State or equivalent and complying with certain other

ongoing obligations. The relationships and legal rights of

shareholders, limited partners, or members are governed partly by

the charter documents and partly by the law of the jurisdiction

where the entity is organized (Porteous, Bruce, 2005).

Entrepreneurship has been a leading factor in the success of many

businesses

both large and small. The small scale enterprises are much more

numerous than the

large ones and the tendency has been to believe that they are

automatically entrepreneurial. However this is not the case as the

growth of these businesses would have been taken for granted. Small

businesses are established for various reasons. Some are income

(Elkan, 1988), others to grow big (McCory, 1956), and others are

forced Kinyanjui (1993). Not all these are entrepreneurial

characteristics. This is a limitation for small business success.

In several studies that have been undertaken (Sewannyana, 1997;

Mutazindwa, 1997), there has been evidence that there is a

relationship between entrepreneurship behaviour and business

26

growth. Peter J. and Waterman. R. (1988) surveyed over 100 small

scale enterprises in different areas of business, metal, textile,

trade, carpentry and motor repair, and established that there was a

relationship between entrepreneurship and business growth.

Amongst the key entrepreneurship behaviour patters, she noted a

positive relationship between successful enterprises and vision,

risk taking and the need for achievement. She came to the

conclusion that entrepreneurship behaviour existed amongst

successful companies but also further that it was not a panacea for

business success. Sewannyana (1997) in his study finds that amongst

the small proprietors, who were the subject of his study, the

entrepreneurship behaviour is exhibited in the majority of

proprietors. Unlike earlier thinking, he comes to the conclusion

that the poor performance of small business is attributed to

factors other than entrepreneurship mainly bad financial

management.

Increased market share: This is where a company expands its

activities and not only occupies a large position of the physical

existing markets but also the biggest part of the consumers’ minds

with what is being offered by that company. Increasing market share

may take the form of increasing sales by being able to sell at

lower prices than the competitors, increasing the range of products

and product lines, increasing distribution channels and sales

outlets, boosting various marketing drives such as vigorous

advertising in all media available to essentially place an

27

organization’s products in the minds of the consumers among other

significant activities (Balunywa, 1998).

Brand recognition: This is where the public who are the consumers

of the organizations goods or services should be able to recognize

the company’s products by their brand names. For example if a

mobile company mentions say a phrase “Pay Go standard”, a customer

should be able to know that is an MTN product (Balunywa, 1998).

Customer loyalty: Recognition of a brand name of a company’s

products goes hand in hand with customer loyalty. A company’s

customers being able to steak to a particular company’s products

amidst all competing products from other companies means that

company is growing stronger business-wise and has a competitive

edge in the market (Onyach-Olaa, 1992). For instance, a customer

deciding to steak to MTN or Airtel since the coming of the company

up to now, when the competing telecom companies are all over the

communication industry, with at times better packages and offers to

customers, would generally be referred to as customer loyalty.

Opening of new branches, mergers and acquisitions is also a sign of

growth. : This may mean that the company is enjoying profits which

it uses for re-investments within and outside the original company.

It may expand product lines, acquire liquidating or closing

businesses because it is financially strong enough to do that and

still remain with enough resources to keep it liquid and in sound

operation, open more sales outlets and distributing channels, and

28

be able to increase the personnel to match expanding business. It

should be noted that usually, the more the business branches a

parent company has in the market, the more efficient the

distribution of such a company’s products to the different markets

and the closer to the consumers (Balunywa, 1998).

2.2 THE INFLUENCE OF UNIVERSITY STUDENTS ON THE GROWTH OF BUSINESS

VENTURES

Universities play a functional role in promoting entrepreneurship

education to develop regional and society economies (Binks, Starkey

et al. 2006; Co and Mitchell 2006). Mahlberg (1996) agrees the

remarks by stating that schools and universities have a key role to

play in promoting entrepreneurship since educational institutions

are ideally considered the place in shaping entrepreneurial

cultures and aspirations among students while they are studying to

survive in today’s robust business milieu (Autio, Keeley et al.

1997; Landstrom 2005). This could probably because universities

are seedbeds of entrepreneurship to teach their students the way to

think and behave entrepreneurially (Bygrave 2004). Universities, in

this respect, should position themselves as a hub of

entrepreneurship by making a substantial contributions in nurturing

an entrepreneurial environment that combines factors that

contribute to the development of entrepreneurship (Gnyawali and

Fogel 1994).

As a provider of entrepreneurship training programmes, universities

must do all the best it could to create an entrepreneurially

29

supportive environment that could encourage entrepreneurial

activity in turn would help to develop an enterprise culture among

university students who are tomorrow’s entrepreneurs (Roffe 1999).

Autio, Keeley, Klofsten, & Ulfstedt (1997) in their study on

entrepreneurial intentions of technology and sciences students

across four countries consistently conclude that university

teaching environments are the most influential factors that affect

students’ perceptions towards entrepreneurial career and

entrepreneurial convictions. Hence it is important to present a

positive image of entrepreneurship as career option to draw

Students’ attentions within the university environment by providing

the resources and other facilities available to them. As we have to

always remember that even though individuals have the relevant

entrepreneurial knowledge and skills, if they do not possess

positive image about entrepreneurship, they might eventually not

venture into the field (Alberti, Sciascia et al. 2004)

According to McClelland (1987), innovativeness can be determined by

the willingness to discard old belief and explore new alternatives

and the number of new products or services introduced and frequency

of changes in services or product lines. McClelland further asserts

that the way in which owners of Small Scale Enterprises value and

reward experimentation and the level of

expenditures and number of resources dedicated to research and

development coupled with the number of professionals and

specialists in a business are other determinants of innovativeness.

30

Self-confidence; One must truly believe in themselves to be a

leader and spearhead innovative ideas. This involves willingness to

take risks in a calculated manner and being willing to fail at

times. This relates to a low need for status and power as the

entrepreneur must maintain confidence throughout the duration of a

project even if a high level of status is not immediately obtained.

It will take time to grow the venture to a prominent position.

Self-confidence also means being comfortable enough with one’s self

to accept feedback and having the confidence also means being

comfortable enough with one’s self to accept feedback and having

the confidence and flexibility to change course through unexpected

circumstances. Also, being teachable and open to learning

throughout the growth process of a business is important in

developing the expert skills of any trade or discipline (Kigozi,

2000).

According to Business teacher and Fourier (2004), macro-economic

factors are external factors around a business that affects it

directly. Businesses have limited / no control over such factors.

Roberts (1999), is of the opinion that macro-economic factors are

to blame for the weak SMME sustainability, which includes laws and

regulations, policies, crime and government interface due to the

common perception by SMMEs that government needs to support them.

Jooste (2008), further explains that the weakened South African

currency, volatile market conditions and the global recession, as a

result of a credit crunch which originated in USA (Kiyosaki &

31

Lechter, 2002), are also to blame for the weak SMME sustainability.

‘Disgruntled entrepreneurs’ and ‘uncertainty and crime stifle local

investment’, cited by (Venter et al., 2003), describes the

situation that in general, South African entrepreneurs seem to view

economic uncertainty, crime, taxes, unemployment, exchange rates

and legislation as the biggest threats facing the small business

sector.

Kiyosaki and Lechter (2003), describe that the odds of actually

getting any business funded is about 3%, because many businesses

are not aware that financial institutions only lend money to

businesses with an adequate business system, which includes a

precise business plan with accurate accounting forecasts.

Group Dynamics

Krishna, (2000) as quoted in Torri, (2009) observes that the

traditional perspective of business formation has been based on the

initiative of one or two entrepreneurs. However, the researcher‘s

definition in this study emphasizes that entrepreneurship is a

process, distinct from the entrepreneur as a person. Thus in

defining entrepreneurship as a process, the term is not necessarily

limited to individual behaviour and can therefore be applied to a

group.

Groups are social systems made up of people in interaction. A group

is defined as two or more interacting and interdependent

individuals who come together to achieve particular objectives.

Groups exhibit different behaviour—more than the sum total of each32

group member‘s individual behaviour. Groups differ from mere

aggregates of individuals because the latter have no

interdependence, interaction, or common goal. Teamwork occurs when

groups are able to work efficiently and effectively together to

achieve organizational goals. Any one member in a group can

influence the behaviour of the individuals in the group (Mullins,

2002). Forsyth, (2010) argues that groups are often more effective

than individuals in accomplishing tasks, devising solutions to

problems and achieving innovative goals because a group possesses

more talent, skills and ideas and that there is strength in unity.

Mullins, (2002) however states that this claim is yet to be proven.

Youth group owned enterprises can be seen as ―community

enterprises‖ defined as an autonomous association of persons (youth

in this case) united voluntarily to meet their common economic,

social, and cultural needs and aspirations through a jointly owned

and democratically controlled enterprise (Torri, 2009). The group‘s

perception of entrepreneurship can therefore act as an incentive or

a major barrier to starting up a business. Wameyo, (2011) states

that group investment in our society seems not to work. Group

thinking is the single biggest killer of investment groups‘drive.

It turns off members who brought new ideas for exploration and

gives room to members who brought in emotions to rule on every

emotion. This has a lot to do with what brought the members

together, a claim that this research sought to establish. The idea

that members act ―together, ‖ ―corporately‖ or ―collaboratively‖

should be understood flexibly (Dyer, 1994). Some members may be

33

more active than others, but most or all will have some role in

developing and implementing the entrepreneurial initiative. Most if

not all members will participate in some relatively direct way in

monitoring and directing the enterprise‘s activities. Some will, in

addition, be active, ongoing participants in the productive tasks

of the enterprise. Groups can help facilitate creativity and

innovation by use of task forces, or ad hoc committees, and teams,

particularly entrepreneurial and self-managing teams.

Cohesion is the result of all forces acting on members of a group

to remain in the group (Toseland & Rivas, 2005). High cohesiveness

may help the group. Mullins, (2002) for example argues that a sense

of esprit de corps helps increase group performance. Cohesion can

also have some negative effects on the functioning of a group.

According to Janis, (1972) quoted in Toseland & Rivas, (2005) ―group

think ―is a mode of thinking that people engage in when they are

deeply involved in a cohesive group, when the members‘strivings for

unanimity override their motivation to realistically appraise

alternative courses of action. Factors influencing the amount of

cohesiveness in a group include the task to be performed, group

development and member‘s expectations.

At the core of a group is its specific task, goal or purpose that

the group was formed to achieve (Toseland & Rivas, 2005). If the

purpose for the group ceases to exist, so too will the group,

unless or until another purpose can be established and which is

commonly shared among all the members. The group is likely to

34

achieve high performance if the members find the task to be

achieved enjoyable.

Social integration refers to how members fit together and are

accepted in a group. It builds unanimity about the purpose and goal

of the group, helping members to move forward in an orderly and

efficient manner to accomplish work and achieve goals. Social

integration is determined by the group norms and roles (Toseland &

Rivas, 2005).

Norms are the rules of the group. They guide members on the

behaviors that are acceptable and not acceptable to the group.

Norms may stabilize and regulate behavior in groups and therefore

help to encourage organized and coordinated action to reach group

goals but may also be negative or cause uncomfortable exclusion

from the group. Thus, overly rigid and restrictive norms can

suppress individual members‘initiative, creativity and idea

contribution.

Roles are important for groups because they allow for division of

labour and appropriate use of power. They ensure that someone will

be designated to take care of vital group activities. Depending on

the task, group members will occupy formal and informal roles.

Formal roles include chairperson, treasurer, secretary, vice

chairperson etc. However there are also informal roles such as,

expert in a certain area. If the job description of members is not

clear, this may lead to poor performance.

35

Olmsted, (1959) quoted in Toseland & Rivas, (2005) defines group

culture as the values, beliefs, customs, and traditions held in

common by group members. Culture is displayed in the way members

interact with one another. For example, the way conflict is handled

in a group says much about its culture. The culture that a group

develops has an influence on its ability to achieve its goals while

satisfying members‘social needs. For example, a culture that

emphasizes values of self-determination, openness, fairness, and

diversity of opinion can do much to facilitate the achievement of

group and individual goals. Sometimes members bring ethnic,

cultural, or social stereotypes to the group and thus inhibit the

group‘s development and effective functioning.

There is a tendency to categorize the management skills required to

manage a small business into functional areas. Such a

categorization is supported by the intrinsic belief that small

businesses increase their chances of success when managers are

competent in core functional areas such as strategic planning,

marketing, finance, operations and human resource management

(Giroux, 2007).Thus the survival and growth of a new venture

require that the entrepreneur posses strategic management skills

and abilities and shift from an entrepreneur to a managerial style.

In so doing however, certain entrepreneurial characteristics must

be retained in order to encourage creativity and innovation.

Remaining entrepreneurial while making the transition to some of

36

the more managerial traits is vital for the successful growth of a

new venture (Kuratko and Hodgetts, 2001).

2.4 CHALLENGES FACED BY SMALL SCALE BUSINESSES

Despite the nation’s economic recovery, a number of serious

constraints have hampered the role of small scale businesses to

adjust towards globalization and this has restricted them to making

low quality products for low returns in the markets. The following

factors account for the poor performance of these businesses in the

area of study.

Poor Infrastructure: The major barrier to business success is the

lack of infrastructure and the high costs associated to its

development for the administration and location of the business

activities nevertheless the ones available are also expensive in

terms of rent as some are not easily accessible especially for the

case of roads in more remote areas (Barney, 1991; Peteraf,

1993). Minimal efforts are being undertaken as improvements for the

potential to stimulate business development in Kampala, including a

public transport system that would allow people to move more easily

within the areas of operation for the businesses.

Financial Problems: Small enterprises make an important

contribution to economic output and employment in developing

economies. While estimates vary greatly depending on definitions,

the World Bank suggests that almost 30% of employment in low-income

countries is generated by the informal economy, while an additional

18% is provided by (formal) small and medium enterprises. Together

these two groups contribute 63% of the GDP (Ayyagari, M., T. Beck

37

and A. Demirguc-Kunt, Small and medium enterprises across the

globe: A new database, World Bank Policy Research Working Paper

2007). Finance is lifeblood of any enterprise irrespective of its

size. Small businesses face more problems in raising finance, as

the provider of finance may not find the return on investment

interesting as compared to large enterprise, and also the

entrepreneurs are skeptical about repayment.

Chijoriga and Cassiman (1997) pointed to finance as a key

constraint to the growth of small scale businesses. Ngobo (1995)

further made analysis of finance as a constraining factor for lack

of working capital, wrong choice of financiers, high interests

payments, frauds, corruption, lack of financial control, an absent

of costing systems and delay in release of funds by banks or

financiers. Obviously, the professional approach is missing on the

part of owners/managers and promoters, hence there are no concepts

to monitor and control the financial affairs of these businesses

with time.

Improper business Feasibility: This factor acts mainly at the

initial stages of the project and is based on the decisions of the

entrepreneurs. Many projects and businesses are affected at birth

because of inadequate feasibility reports regarding the demand of

product in various markets, wrong choice of technology, improper

forecasting of financial requirements, delayed in supply of plant

and machinery or in their installation or release of funds by

financiers. No clear vision, goals and objectives. The root of all

these problems may be traced to the lack of expertise in business

38

planning and management on behalf of entrepreneurs and promoters

(Lockett and Thompson, 2001; Jacobides and Winter, 2007).

Lack of Managerial Knowledge: According to Harper (1994), the

formation of small scale businesses the owners can easily run the

business but as it grows and ages, managerial demands rise. These

are in the form of operational managerial requirements like

production, sales and finances and most importantly the ability to

deal with them yet this is a hunch to them. Harper clarifies that

entrepreneurship goes beyond management since entrepreneurial

skills are part of managerial skills.

The majority of entrepreneurs are unaware about the knowledge of

managerial field. Therefore, they are performing the non-managerial

tasks rather than the tasks of managerial functions such as

planning, organizing, leading and controlling (Barney, 1991).

Indeed, in this dynamic world the informal sector needs qualified

professionals to handle the various activities of business affairs

more effectively and efficiently. It is clear that, the sound

knowledge of managements is a key to success which is lacking in

the small scale businesses (Sleuwaegen and Goedhuys, 2002).

Poor Educational Background or Lack of Education: The research

study reveals that most of owners/managers have a very poor

educational background, as majorities are un-educated. In this

scenario, entrepreneurs of the small scale businesses in the region

of study are never comfortable at their business units since they

lack suitable training, and leadership skills to sustain their

39

operations in the various areas of accounting, marketing,

technological processes and development as well as administration

and management. It should be noted that SMEs are never facilitated

at the cost of development hence operational shortcomings

(Fafchamps and Minten, 2002).

Out-Dated Technology: The methods of production which the small

businesses use are old and inefficient. This results into low

productivity, poor quality of products and high costs. The

entrepreneurs lack information about modern technologies and

training opportunities which concerns them. There is little

research and development in the field yet the pace of change has

developed new innovations and introduced new technology that is

basically mechanized and requires less labor as a concern which is

much faster today small scale business units cannot survive and

withstand the global competition since they depend on cheap labor,

adopt simple labor intensive technologies and keep the pace with

changing situations because they cannot afford to purchase the

highly expensive mechanized machines for their productive

activities but rather sustain their competitive advantages(Lockett

and Thompson, 2001).

Poor Marketing Strategy:The small-scale businesses also faced the

acute problem of marketing their products. The problems arises from

such factors as small stocks, lack of standardized products,

inadequate market knowledge, competition from technically more

efficient units, deficient demand, etc. Apart from the inadequacy

40

of marketing facilities, the cost of promoting and selling their

products too is high. The result is large and increasing subsidies

which impose heavy burden on the government budgets.

Increasing Competition: Some businesses possess dynamic

capabilities that give them a comparative advantage in innovations

(Barney, 1991; Lockett and Thompson, 2001; Jacobides and Winter,

2007). Competition from large scale businesses gains them

credibility with licensing and taxation and enhances their access

to rationed resources; can easily out-price and out-sell the small

businesses thus contributing to improved performance (Sleuwaegen

and Goedhuys, 2002). SMEs can benefit from networking effects,

better infrastructure and larger markets relative to their rural

counterparts (Fafchamps, 2003; Fafchamps and Minten, 2002; Bogetic

and Sanogo, 2005; Shields, 2005; McPherson and Mead, 1996; Mead and

Liedholm, 1998).

It is suggests that business performance depends not only on the

returns of specific strategies, but also on the cost of

implementing those strategies. This explains, for example, behavior

and decision making such as diversification, market entry and exit

and innovation, among others. This is usually attributed to the

formal enterprises since it is difficult for competitors to know

the causes of other businesses’ efficiency and they face costs

associated with efforts that exhibit superior performance that

retains their position over others for a given period (Hawawini et

al 2003). This also implies that, within a set of business units

operating in the same industry/sector, there will be intrinsic

41

differences in business performances due to their overwhelming

strategies implemented (Barney, 1991; Peteraf, 1993; Lockett and

Thompson, 2001).

42

CHAPTER THREE

METHODOLOGY

3.0 INTRODUCTION

This chapter entailed the methodology that was used in this

study .This involves the study design, study area, study

population, sample selection and methods of data collection.

3.1 RESEARCH DESIGN

The research study used an explanatory type of research where the

major aim was to accomplish the stated overall objectives of the

study; the researcher considered quantitative method to

appropriately establish the contribution of university students to

the growth and development of the business community in Kakoba

Division -Mbarara Municipality, Mbarara District. Both quantitative

and qualitative research design was used to obtain information.

The qualitative research design and quantitative research design

was descriptive in nature and this enable the researcher to meet

the objectives of the study. A statement was used to assign

variables that may not adequately measure using numbers and

statistics, form of mathematical numbers and statistics assigned

to variables that may not be easily measured using statements or

theme.

The longitudinal research approach was allowed for measurement of

behaviour (involving several other research methods) at a number of

points in time during a finite time span (Galliers, 1992).

43

Longitudinal research measures prevalence at several points in

time, and can provide information on causation, prognosis,

stability, and change (Rutter, 1988, cited in Sanson et al., 2002).

Longitudinal studies were also allowed researchers to differentiate

between change over time in aggregate (group) data and changes in

individuals or populations at risk. While cross-sectional research

can only measure the prevalence of a factor of interest at a

certain point in time, allow investigation of differences between

individuals; Repeated measures allow for the detection of change in

individuals or their environments from one data point to the next

(Hunter et al., 2002)

3.2 STUDY POPULATION

The researcher obtained information from small and medium business

owners and Local leaders in the study area of Kakoba Division. The

researcher involved all these categories in the study since assumed

that such respondents in this category had the information needed

to complete the study in time. A sample size of 50 respondents was

selected from the study area to save both time and money during the

process of data collection.

3. 3 SAMPLING METHOD

The researcher used simple random sampling method to select study

respondents. The method of sampling was used because it allows in

selecting a sample with experience and knowledge about the study

variables and this method was used to select all the respondents in

the study area of Kakoba Division in Mbarara Municipality.

44

3.4 SAMPLE SIZE

The sample size consists of 50 respondents from the study area and

these were selected as in table below.

Table 1: Showing sample size of respondents

CATEGORY SAMPLE SIZEBusiness owners 30Local leaders 04Students 16TOTAL 50

Source: Primary Data 2014

3.5 DATA SOURCES

Both primary and secondary data was the main sources of data to use

in this study. Concerning the primary data method, the study used a

questionnaire. The researcher collected secondary information from

different sources such as: reports from the management of the

market, commercial office as well as the district office. This

information was reviewed by visiting places like public libraries

and internet places and this type of information was used in the

study to supplement the collected data from different categories of

the respondents.

3.6 DATA COLLECTION INSTRUMENTS

The questionnaire tool was inform of both open ended and closed

ended in nature and this was self administered where the researcher

was allowed to fill the questionnaire in the study field as per

respondents’ responses. The questionnaire method of data collection

45

was used because of being cheap and that the method collects

responses with minimum errors as it also take little time when

respondents are providing information.

The study also used an interview guide where by focus group

discussion kind of interview was used as the method used to collect

data from the local leaders in the area of study. The researcher

was personally record the provided responses as per the study

respondents during the process of carrying out an interview and it

was used since it collects information than the questionnaires can

have.

3.7 DATA PROCESSING AND ANALYSIS METHODS

Data processing and analysis was done after collecting the raw data

from the field, editing and checking for accuracy of information,

consistency and uniformity. The collected data was analyzed by use

of both quantitative and qualitative research methodologies such as

tables, and figures will be used in addition to explaining

respondents’ responses during data analysis.

3.8 Limitations of the Study

The study faced with a problem of not finding all respondents in

the study area especially the local leaders. The researcher however

arrange with them to fix for her an appropriate time in order to

collect reliable and valid information from them for the study.

The researcher further face a problem of some respondents not

providing information for the study as information relating to the

study variables, however to this, researcher explain to them that46

the information was only for the academic purpose while making them

to understand the study variables.

The study was expensive in terms of stationary. However the

researcher tries to mobilize financial resource from her friends

for the study to be completed successfully in time with the help of

her supervisor.

47

CHAPTER FOUR

PRESENTATION, ANALYSIS AND INTERPRETATION OF STUDY FINDINGS

4.0 Introduction

This chapter presents and discusses the findings of the study. It

describes the contribution of university students to the growth and

development of the business community in Mbarara Municipality,

Mbarara District using a case study of Kakoba division .The chapter

presents the findings of the study based on the study objectives.

to find out reasons for the growth of business ventures in Kakoba

Division -Mbarara Municipality, to examine the influence of

University students on the growth of business ventures in Kakoba

Division -Mbarara Municipality and to establish the challenges that

have limited the growth of Businesses in Kakoba Division - Mbarara

Municipality.

The study discusses reasons for the growth of business ventures in

Mbarara Municipality, and the influence of University students on

the growth of business ventures in Mbarara Municipality. It begins

by presenting the background information of respondents to evaluate

whether such characteristics influenced variable under study.

48

4.1 Background information

4.1.1 Gender distribution of the respondents

The gender distribution of respondents was in such a way that males

outnumbered the females. According to the study findings most of

the respondents were men as presented in the table below.

Table 2: showing gender distribution of the respondents

Gender Frequency PercentageMale 12 24Female 38 76Total 50 100From the table, the study involved both men and women so as to bide

by gender sensitivity. It was found out that 38(76%) of respondents

were Females while 12(24%) were Males. The Reason why there are

more Females than males could have emanated from the fact that

majority of small businesses are operated by women as Men tend to

Ignore such small businesses.

In other words in Kakoba division, to the researcher’s

establishment men tends to be engaged in bigger businesses that are

outside the market the information is illustrated in the pie chart

below.

Figure 1: showing gender distribution of the respondents

49

24%

76%

MaleFemale

Source: Primary Data, 2014

4.1.2 Age distribution of the respondents.

In order to get a variety of views regarding impact of microfinance

institutions on performance of small and medium enterprises various

age groups were targeted. Respondents matched within the range of

15 years of age up to 55 years and above as shown in the table 3

below.

Table 3: Showing age distribution of the respondents

Age in years Frequency PercentageBelow 25 04 826-35 19 3836-45 17 3446-55 08 16Above 55 02 04Total 50 100Source: Primary data, 2014

From the table above, respondents were divided into different age

group namely; (Below 25) age bracket (25-35) age bracket, (36-45)

age group (46-55) years and above 55 years. The study discovered

that most engaged age group in the small and medium enterprise

50

businesses was 26-35 as it was reported by 19(38%) of total

respondents considered under the study. This could have been so due

to the factor that the most active persons in business and that

such people tend to be focused, energetic, and ambitious.

The second largest age group was (36-45) years, they were 17(34%)

in number and this could have been a result of maturity of people

who feel have to do whatever it takes to cater for their families

and it could be possible since most are not in civil service given

their low levels of education. The study found out that 08(16%) of

respondents were between 46-55, these were of both sexes. It was

possible because the study wanted to capture the view of old

persons who had been in business for a quite long time so that they

could inform the study the mind on the contribution of University

students to the business community

The study also learnt that 02(04%) respondents were above 55 years,

these were in the business given the fact that they were nearing

retirement in civil services hence had to start businesses of their

own. The study found out that 04(08%) were below 25 years of age,

this number was small because most people in this age group tend to

be in school.

4.1.3 Marital status distribution of the respondents.

Marital status of respondents was targeted in the study and mainly

for status variables were examined namely; married, single,

51

widowed, as well as separated/divorced. Married persons were found

to be more followed by Separated/divorced respondents, followed by

Single and widowed were few i.e. 02 respondents.

Table 4: Showing marital status distribution of the respondents

Marital status Frequenc

y

Percentag

eMarried 34 68Single 04 08Widowed 03 06Separated/divorce 09 18Total 50 100Source: Primary data, 2014

From the table 4 above, the study found out that out of 50

respondents that were considered in the study, 34(68%) were

married, 04(08%) were single, 03(06%) had been widowed and 09(18%)

had separated/divorce. The marital status presented above brought

out that majority of business persons were married for instance

more than half of study respondents were married. It implies that

responsibilities like marriage, children and relatives are a reason

for one to venture in to business so that one can make end meet for

the family.

Separated/divorced were second to married respondents in number for

instance 09(18%) this could imply that as informed the study that

the relationship were worthless and straining hence terminated them

to be focused on business as the only alternative for survival.

Further findings by the study indicated 04(08%) of respondents were

52

Single and this could be to the fact that. one prepares to join

marriage life of responsibilities, one has to build the financial

back up in form of supporting business.

4.1.4 Level education distribution of the respondents.

The study examined a variety of education levels so as to

establish the views of differing education background. It examined

mainly 4 levels which include primary, secondary, tertiary and

others like certificates as presented in the table below.

Table 5: Showing education level of the respondents

Education level Frequenc

y

Percenta

geNot educated 02 04Primary 13 26Secondary 22 44Degree 05 10Masters 00 00

Others( like Certificate,

Diploma)

08 16

Total 50 100

Source: Primary Data, 2014

From the study findings as presented in the table above, majority

of respondents who were 22(44%) had acquired secondary education,

primaries were 13(26%), 05(10%) had acquired degrees, there was no

respondent who had reached at masters level, while 02(04%) were

un educated and 08(16%) with certificates and Diplomas. It was

established that the majority of respondents had attended secondary

53

level. This was an indication that respondents agreed that they had

failed to continue with their studies due to reasons like fees and

tuition hence ventured in small and medium enterprises businesses

to earn a living.

Also, it was noted that reasons like lack of knowledge, age and no

school fees were given as justifications by primary level attained

for having not continued with education hence they ended up

beginning small scale businesses. It was found out that 05(10%)

respondents had reached the testing level of education which

included degrees and above they justified their presence in

business as more important than being employed while 08(16%) had

others like certificates and diplomas in business and others un

educated

4.1.5 Modes of small scale businesses operating in Kakoba Division

The study as its specific objective, explored the modes of small

scale businesses operating in Kakoba Division and they include;

food staffs, saloon, Clothing’s, general merchandise (shops),

restaurants and pubs, hardware shops and financial as elaborated in

table below

Table 6: showing kinds of businesses operated by respondents.

Kind of business Frequency PercentageFood staffs 11 22Clothing’s 7 14General

merchandise

25 50

54

Restaurants and

pubs

03 06

Hardware shops 02 04Financial

business

02 04

Total 50 100Source: Primary Data, 2014.

From the table above, it is showed that 50% responses cited general

merchandise as a commonest kind of business operated in Kakoba

Division then 14% of clothing, hardware shops was revealed by 04%,

financial businesses like SACCOs were cited by 04% respondents as

well. The study learnt general merchandise business are in local or

literally meaning shops which deal in a variety of domestic and

consumable items like; soap, cooking oil, salt, sugar, matches,

plastic (basins cups), flasks and saucepans, beans and flour,

needles, “mandazi”, sodas and juices, sweets and some tablets among

others. It was also noticed that many persons had ventured in

general merchandise due to the fact that anybody can operate it

both the schooled and unschooled and it has items that are asked

demanded frequently in a day. Second to that was food staff

business or food vending. It had 22% responses from the study

respondents. The study revealed that the business deals in fresh

agricultural products including; maize, beans, cassava, matooke,

Irish potatoes, green vegetables (dodo), rice to mention but a few.

55

4.1.6 Period spent in business.

It was put to respondents to reveal the period spent in business

and ranges were below 3 years, 3-5 years and above 5 years period

as per table below.

Table 7: showing period spent in business.

Period (in

years)

Frequency percentage

Less than 3 19 383-5 18 36Above 5 13 26Total 50 100From the table above, it is revealed that majority of respondents

were new/beginners in the business and had spent either 3 or less

than years in the business. To this, 38% respondents fell in this

category new small scale business operators. This category was

included those with even months only or a year of operation in the

business. Such respondents helped the study to establish the

weaknesses and strength that are associated with beginning a

business. The second to that was that of 3-5 years experience in

the business and 36 % respondents. These had stayed in business and

had gotten the challenge of interfacing with shocks and booms in

the business as the study established.

The other category was of the persons with above 5 years of

experience in business. They were the minority and constituted 26%

respondents. They were instrumental in the study as they expressed

their mind on business methodology in and out given their

56

seniority; they included persons with hard wares, persons with

restaurants and those with general merchandise businesses.

Clothings were another kind of business operated in Kakoba Division

as the study found that 14% responses agreed to the business.

Clothings business handles garments for old and children as well as

men and women. It had few dealers, the researcher established due

to the fact that it requires some accelerated capital to start and

maintain hence few persons venture into it the other kind of

business learnt was saloon business. It was cited by 06% responses

of respondents. The study got informed that saloon business

attracts due to the fact that once the skill is acquired, it does

not require exorbitant capital amounts to start. Female people

mostly dealt in saloons that specialize in women’s hair designing

and plaiting while men concentrated on hair cutting and designing

most of the times.

It was also revealed from the study that restaurants and pubs were

another kind of business operating in Kakoba Division. It is clear

from table above that 08% responses conquered to this view. It was

illustrated that restaurants provide paid for meals and drinks to

clients while pubs provide paid for drinks and at times snacks to

clients. It was further added that if properly managed the two are

important businesses since customers are ready.

Last but not least were other business that were found to operate

in Kakoba Division a such as; hardware shops, chapatti selling

57

among other few businesses that were cited by 06% responses of

respondents in the Kakoba Division.

4.2 Reasons for the growth of business ventures in Kakoba Division

-Mbarara Municipality

Respondents indicated many factors regarding to the reasons for the

growth of business ventures in Mbarara Municipality and these

factors were indicated as shown in the following table.

Table 8: Reasons for the growth of business ventures in Mbarara

Municipality

Statements SA A NS D SD

Increase in population growth 70% 30% 00% 00% 00%

Presence of development of financialinstitutions

70% 30% 20% 00% 00%

credit from neighboring institutions/creditors/suppliers

40% 30% 30% 20% 00%

Increasing market share and demand forproducts

30% 50% 00% 20% 00%

Cheap labour 50% 30% 20% 00% 00%

Business recording system 70% 30% 00% 00% 00%

Government support 30% 50% 10% 20% 00%

Saving culture 40% 30% 30% 20% 00%

Customer care management 30% 30% 20% 10% 10%

Others (nature of business, no rent,entrepreneur skills etc)

40% 50% 10% 00% 00%


58

From the table above, as the reasons for the growth of business

ventures , It was revealed by 70% of respondents strongly agreed

to this and 30% agreed respondents indicated that it was due to

increase in population. The findings informed the study that this

could be due to the increase in institutions which have lead to the

increase in the demand of goods and services, 100%a strongly greed

respondents cited good transport net work, to the researcher it was

justified by the increase in the number of financial institutions

in Mbarara Municipality.

From to the above was development of financial institutions in the

area. It was revealed by 70% of respondents strongly agreed to

this and 30% agreed, that financial institutions like savings and

credit cooperatives (SACCOs) as well as rotational saving groups

(RUSCAS) were fundamental in boosting small scale business and

ensuring their sustainability in Kakoba Division -Mbarara

Municipality,. The role financial institutions both formal and

informal, the study learnt ranging from educating to financial

support like credit and savings. The study established that

financial institutions like SACCOs were in proximity to businesses

hence made it easy to attract savings on a daily basis, a reason

that has led to growth of business ventures.

The study also learnt that credit from neighboring institutions was

also responsible for their reason for growth of business ventures

in Kakoba Division. From the table above 40% respondents agreed to

this and 30% strongly agreed, 30% of the respondents were not sure

59

of conquered to the view that supplementary credit a long side from

existing within institutions helped in small scale business

sustainability. The study got informed further that the credit got

is used in purchasing of stock and general running of the business.

Hence neighboring institutions were applied for supplementing on

the credit with in Kakoba Division -Mbarara Municipality, for

business ventures.

Market share availability to some respondents was a factor to

reckon with as far as small scale business sustainability was

concerned. According to the table above 50% of respondents agreed

to this and 30% strongly agreed, 20% of the respondents disagreed

with response. Believed the market for their products and services

was thanks to their existence in business. It was also added by the

study respondents that, the available market is enough reason for

growth of business ventures in Kakoba Division.

The study took a step and established reason for growth of business

ventures in Kakoba Division -Mbarara Municipality, a number of

reason were at play as explored here after. Cheap labor was cited

as a big reason for growth of business ventures responsible for

reason growth of business venture. Cheap labor was available in

forms like unskilled and skilled labor. According to the table

above, 30% agreed to this and 50% strongly agreed, 20% of the

respondents were not sure of response. 80% of respondents pointed

out the reason. Labour was paramount in businesses like;

restaurants and pubs, hardware, saloons among others. It was added

60

that the cost of paying wages for labour was in reasonable and

affordable figures hence a fact that play a profound reason for

growth of business ventures in Kakoba Division -Mbarara

Municipality,. Further findings also indicated that most businesses

in the Kakoba Division -Mbarara Municipality, are operated by their

owners’ incorporation with their family labor.

In addition, government support and security ,30% agreed to this

and 40% strongly agreed,20% disagreed of the respondents agued of

presence of government support , they were only 10% were not sure ,

respondents who indicated that the reason for the growth of

business ventures was due to Security of the place, this to the

researcher could have been the massive theft, fire outbreak that

have caused to the loss of people’s property and destruction of

businesses, other reasons like trade credits, location, and

political stability while in support good business book keeping

system with 70% strongly agreed and 30% agreed are reason for

business growth venture.

The saving culture was also pointed out as a practice that ensured

sustainability reason for businesses ventures in Kakoba Division -

Mbarara Municipality,. It was mentioned by 40% respondents agreed

to this and 30% strongly agreed, 30% of the respondents that

savings help a lot in providing capital to plough back or perhaps

expand in business. It was further illustrated that savings spare

one the burden of applying for credit and the stress to pay back

the loan with all the interests involved. Therefore it was put that

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saved moneys helped a lot to sustain business ventures of some

study respondents in Kakoba Division -Mbarara Municipality.

Customer care management was also hinted on as a reason for growth

of business ventures in Kakoba Division -Mbarara Municipality. It

is clear that 30% of respondents strongly agreed, while those that

agree were 30%, 20% were not sure, 10% disagreed with the statement

and those that strongly disagree were 10% were in agreement with

the view that the skill with which they are handling customers has

enabled customers to admit the services and products and their

loyalty (customers’) is guaranteed. The study further learnt that

where customers are disrupted and complaining it tarnishes the

business name and leads to loss of market share a bad move in

business.

A bunch of other reason were also mentioned to have led in the

growth of business ventures in Kakoba Division -Mbarara

Municipality, Such reason had 40% respondents agreed to this and

50% strongly agreed, 10% of the respondents were not sure in

backing. The list has among others; enough land that has allowed

easy expansion of businesses and agricultural produce for

commercial purposes. Adoption of business recording system (book

keeping) whereby business transactions are managed arithmetically

to ascertain gains and losses as well as assets and liabilities

others like free business space for operating in (no rent dues

paid). All in all, a combination of reason not in isolation has

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tremendously helped growth of businesses ventures in Kakoba

Division -Mbarara Municipality, as put by respondents.

4.3 To examine the influence of University students on the growth

of business ventures in Kakoba Division -Mbarara Municipality.

Table 9: Showing the influence of university students on the growth

of business ventures in Kakoba division – Mbarara Municipality

Statement SA A NS D SDEntrepreneurial cultures and aspirations

among students have encouraged hard work

among university student to start up

business activities.

30% 50% 05% 10% 05%

University teaching environments are the

most influential factors that affect

students’ perceptions towards

entrepreneurial career and entrepreneurial

convictions

20% 40% 15% 20% 05%

University teaching have encourage

innovativeness in introduced of new

products or services to towards the growth

of business

10% 60% 05% 10% 15%

University student have encourage Teamwork

that occurs among groups to enable to work

efficiently and effectively together to

achieve organizational goals

20% 50% 15% 10% 05%

University student participate in some

relatively business activates direct way

in monitoring and directing the

10% 30% 25% 20% 15%

63

enterprise‘s activities.Social networking among university

students

30% 50% 05% 10% 05%

The management skills required to manage a

small business into functional areas.

20% 60% 00% 10% 20%

Self-confidence also means being

comfortable enough with one’s self to

accept feedback

10% 50% 15% 10% 05%


Table above indicates that 50% of the respondents agreed that

demonstrations are university student s who encourage hard work

culture towards the growth of business ventures , 30% strongly

agreed, 10% disagreed, 5% strongly disagreed and 5% not sure. A

bigger percentage portrays that demonstrations are entrepreneurial

cultures and aspirations among students have encouraged hard work

among university student to start up business activities.

From table above, 40% of the total respondents agreed that they

attend University teaching environments, 20% strongly agreed, 20%

disagreed 15% not sure and 5% strongly disagreed. This indicates

that University teaching environments are the most influential

factors that affect students’ perceptions towards entrepreneurial

career and entrepreneurial convictions.

Finding from the table above portrays that 60% of the total

respondents agreed that they encourage innovativeness at least once

a year, 15% strongly disagreed, 10% strongly agreed, 10% disagreed

64

and 5% 13.3% not sure .This indicates that University teaching have

encourage innovativeness in introduced of new products or services

to towards the growth of business. School (2006) further suggested

that Business incubators are a powerful tool for supporting the

entrepreneurial process and increasing the survival rates of young

innovative start-up companies. Lack of Business development

services can greatly affect the development of youth

entrepreneurship.

From table above, 50% of the total respondents agreed that

University student has encourage Teamwork that occurs among

themselves to growth of business venture, 20% strongly agreed, 15%

were not sure, 10% disagreed and 5%strongly disagreed. This

indicates that University student has encouraged Teamwork that

occurs among groups to enable to work efficiently and effectively

together to achieve organizational goals. Schoof (2006) has

suggested that entrepreneurship education is crucial in assisting

young people to develop entrepreneurial attributes and behaviors

for them to recognize entrepreneurship as a career option. The

provision of entrepreneurship education as revealed by the findings

of the study was still quite low as only 27.6% had access to it

before commencing their businesses.

Table above portrays that 30% respondents agreed that University

student participate in some relatively business activates of the

business venture, 25% not sure, 15% disagreed, 15% strongly

disagreed and 10% strongly agreed .This indicates that the

65

University student participate in some relatively business

activates direct way in monitoring and directing the enterprise‘s

activities.

From table above, 50% of the total respondents agreed that they

encourage Social networking among university students, 30% strongly

agreed, 10% disagreed, 5% not sure and 5% strongly disagreed. This

is in line with the finding, according to Schoof (2006) access to

Business development services such as mentoring, support Networks,

business clubs and incubators by young people enhances the chances

of sustaining their enterprises beyond start up stage. However,

young entrepreneurs often lack the support services which are

fundamental to transforming fragile individual start-ups into

successful small and medium-sized businesses.

Table above portrays that 60% respondents agreed that the

management skills required managing a small business into

functional areas of business venture, 20% strongly agreed, none of

the respondents were not sure, 10% disagreed and 15% strongly

disagreed. This finding is in line with Schwartz (2006) asserts the

importance of education and having specific knowledge for acquiring

various management skills that would encourage individuals to be

curious about problems, options or ways of doing their work,

accordingly acting innovatively. Making a SME successful must be

considered as an invention-innovation-diffusion process that

tackles: the businesses mix of the given size, the SME as an

66

entrepreneurial achievement, and entity of

values/culture/ethics/norms (Georgellis, Joyce & Woods, 2000).

Table above portrays that 50% respondents agreed that Self-

confidence also means being comfortable enough with one’s self to

accept feedback toward the relatively business activates for

business venture, 15% not sure, 10% disagreed, 10% strongly

disagreed and 5% strongly agreed

4.4 CHALLENGES FACED BY SMALL SCALE BUSINESSES

Table 10: Showing challenges faced by small scale business in

Kakoba Divisions

Statements SA A NS D SD

High taxes and regulations 82% 00% 00% 00% 18%

Competitions 00% 70% 00% 00% 30%

Lack of storage facilities 40% 30% 20% 10% 00%

Inflation 00% 90% 10% 00% 00%

Transportations cost and poor transport 30% 70% 00% 00% 00%

Limited markets or low sales 00% 60% 10% 20% 10%

Electricity load shedding 10% 70% 20% 00% 00%

Perish ability of commodities 00% 70% 00% 00% 30%

Poor marketing skills 40% 30% 30% 00% 30%

Untrustworthy customers 50% 30% 20% 00% 30%

Challenges of language barrier 40% 60% 00% 00% 00%

Use of family members in business 10% 50% 10% 20% 10%

Others (rent, poor records keeping,poor financial services, fluctuation of

00% 90% 00% 05% 05%

67

price)Source: Primary Data 2014

From the table above, respondents informed the study about the

challenges faced by small scale business due to University

students. Regarding this, most of the selected respondents

indicated that by 82% of the respondent strongly agreed and 18%

strong disagreed, indicated that small scale businesses are not

faced with challenges due to university students. The other reached

at challenges was high taxes. It was put to the respondent that

taxes were in various forms and above all high. Further more taxes

like license, indirect taxes on commodities, ground rent, and

market dues were all high and menace to the expansion of business

in kakoba Divisions. From the table, 80 % of the business units

noted that taxes and regulations is the most challenge to their

businesses these are usually so high yet they are also price takers

and have no influence in determining the prices of their products.

One would however recommend them to follow the law of demand and

supply but still this is under the control of price flows and

ceilings. Rather it would be better if the GoU revises its policies

as regards business so as to ensure incentives and tax holidays are

provided some products.

Competition is another limitation that is faced by the businesses.

According to analysis, 70% of the respondents agree that this is a

challenge brought about by those businesses that possess dynamic

capabilities, credible with licensing, taxation and enhances their

access to rationed resources such businesses can easily out-price

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and out-sell the small businesses thus contributing to improved

performance for development. SSBs can therefore reduce on the

effect of competition by networking with medium and large

businesses, better infrastructure and larger markets.

Lack of storage facilities is also a limitation by the business

units in Kakoba divisions. It is clear that 40% of respondents

strongly agreed, while those that agree were 30%, 20% were not

sure, 10% disagreed with the statement .This is especially to those

that hardly afford the costs to rent tied shops and rather resort

to street retailing and hawking the fact that they have little

startup capital that cannot sustain them to posses’ stores for

their products. Suggestions are mostly referred to Government to

improve on the infrastructural development in the form of huge

stores managed by the government to be rented at subsidized amounts

in the favor of the business fraternity.

Inflation contributed to 90% agreed with the statement, this is in

reference to the persistent increase in the prices of the product

that the SSBs deal with. This limits their decisions on which price

level to sell their products since this is attributed with high

taxes. Inflation to them can only be reduced by widening the market

base for the large and medium businesses abroad so as not to

compete with the small scale businesses. In this way they will be

generating foreign incomes that will help improve the value of a

shilling against a Dollar and this will endure small scale

69

businesses to increase in the provision of employment opportunities

to the labor force.

It was mentioned that poor transport was challenges to expansion of

businesses. Respondents amounting to 70 % agreed and while 30%

strongly disagreed ; added that the poor road networks exacerbate

the issue of transport fess and this ends up torching on the would

be profits of the business. I was added that many sectors in

business need transport, those who get products from deep rural

areas like food stuffs can tell better, cost of transporting

hardware items from big center to kakoba Division also is high

hence poor roads escalate the transport costs. More so poor

transport means also disturb business like vehicles which are in

bad mechanical conditions find it hard to move around poor roads

most especially in rainy season

Transportation costs with a percentage of 70% are attributed to

poor roads for accessibility purposes in the process of widening

their markets. This has increased on their costs since access to

rural areas is difficult and this to the business fraternity in the

area of study would only be solved by construction of better road

networks to the industrialized areas where the SSBs obtain their

products.

The other challenges taken note of were poor marketing skills.

Respondents 60% agreed added that there ways of marketing are

substandard hence this attracts a small base of customers and at

70

the end small profits. The study learnt that some small scale

business operators lack good business language; fail to explain

well about to clients and these impacts on the growth of the

business negatively in the long run. Low sales were also indicated

by the respondents with 60% agreed, among the challenges faced by

small business in Mbarara Municipality due to University students.

It was said by the respondents that most of the university students

have little income and as such buy few things from the business in

the area. The could imply that most of the university students are

dependants who do not have enough money for purchasing many of the

commodities from the shops apart from the most essential goods.

From the table above, it is further indicated that electricity

problem is a challenges that limits business growth and expansion

in Kakoba Division. It was established by the study that

electricity problems range from high costs per unit consumed to the

nagging constant loading shedding at awkward times. It was found

out from 70% of respondents agreed , while 10% strongly agreed ,

20% were not sure with the statement, that electricity is ever on

and off and some businesses can hardly run out electricity for

instance salons, soft drinks shops and processing businesses as

well as entertainment business like soccer and video places

respondents added that as if black outs are not enough irregular

power has spoil peoples’ equipments like TV sets, radio, saloon

gadgets hence a threat to expansion of small businesses in Kakoba

division.

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The study on addition found out that perishability of commodities

itself limited small scale business expansion in Kakoba Division.

As indicated in the table above, 70% of respondents agreed, while

30% strongly disagreed, believed that dealing in perishable amidst

insufficient markets was a problem. Perishables like vegetables,

cassava, tomatoes basically agricultural products are stock not to

rely on so much in business due to the fact that their duration is

short and sometimes comes quick before they are sold off.

The other factor taken note of was poor marketing skills.

Respondents 40% respondents agreed to this and 30% strongly agreed,

30% of the respondents were not sure, added that there ways of

marketing are substandard hence this attracts a small base of

customers and at the end small profits. The study learnt that some

small scale business operators lack good business language; fail to

explain well about to clients and these impacts on the growth of

the business negatively in the long run.

Respondents also cited that there is an issue of untrustworthy

customers. To this, 50% respondents agreed to this and 30% strongly

agreed, 20% of the respondents were not sure of responses.

Respondents pointed out that untrustworthy customers are two kinds;

one, those who take advantage of business operators mistake like in

counting, two, those that are termed as bad debtors. The study

learnt that both the two kinds of untrustworthy customers are

menace to business expansion as they piddle in the process of

capital accumulation for business expansion.

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However, Respondents with 60% agreed and 40% strongly agreed that

small businesses are faced with challenges in Mbarara Municipality.

Such respondents went ahead and said that due to most of the

university students in the study area, there is a challenge of

language barrier faced by the businesses owners in running their

businesses in the study area. During the discussion with some of

the study respondents, it was revealed that students who do not

speak and or understand Runyankore – Rukiga or Ruganda bring a

challenge to the businesses in the area. This was so because most

of the small businesses operators do not understand English that

was cited to be used by most of the people from regions in Uganda

other than Western when dealing with business owners.

The other challenges limiting business expansion was said to be use

of family members in business or relatives. As indicated in the

table above 50% of respondents agreed that for slow expansion that

family members are responsible for slow expansion in small scale

business. They added that such persons sometimes have no heart for

business and can eat on the business slowly and it starts to

shrink. Therefore it was argued that tough measures are healthy

while dealing with relatives in business of expansion is to be

seen.

A cluster of other challenges was in addition brought to the

researcher’s attention while in data collection as factors limiting

small scale business expansion in Kakoba division. Such challenges

highlighted were; limited market, high costs of rent, poor record

73

keeping, and fluctuation of prices, generally high cost of living

and interest rates on credit from financial institutions.

Respondents 90% strongly agreed revealed that these factors as a

hindrance to quick expansion of small scale businesses. High

interest rates at present it was said were discouraging credit,

general cost of living was pending was pending in the profits that

would be used for expansion, high rent was reducing on capital

for expansion price fluctuation were responsible for losses or

small markets depending on the direction of fluctuation hence such

factors dangerous to business growth and expansion.

Seasonal purchase of goods from the businesses in the study area

was reported by the study among the challenges faced by small

businesses in the study area. Respondents revealed that students

commonly buy much of the commodities from business when the

semesters are beginning as tend to reduce on the goods to purchase

the time go by. Some people said that during holiday’s business

that commonly supported by university students fail to operate and

this was also seen as a challenge. The above findings from the

study respondents concerning the challenges faced could mean that

some of the business owners in Mbarara Municipality tend to sell

only commodities purchased by university students. But if they also

consider the other people around before they start their businesses

will help to sustain their business even when the students are in

their holidays.

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CHAPTER FIVE

SUMMARY OF FINDINGS, CONLUSIONS, RECOMMENDATIONS AND SUGGESTIONS

FOR FURTHER STUDIES

5.0 Introduction

The main purpose of the study is to assess the contribution of


community in Mbarara Municipality, Mbarara District. However, the

study considered three research objectives in order to achieve its

main purpose including to find out reasons for the growth of

business ventures in Kakoba Division -Mbarara Municipality, to

examine the influence of University students on the growth of

business ventures in Kakoba Division -Mbarara Municipality and to

establish the challenges that have limited the growth of Businesses

in Kakoba Division - Mbarara Municipality. Research objectives were

formulated and the results ought to be the expounded in this

chapter citing special references to other researchers findings

reviewed in the related literature that is chapter two. In this

regards the chapter contains summary of findings, conclusions,

recommendations and suggestions for further studies as these were

mostly done in accordance to the specific study objectives.

75

5.1 Summary of findings

The study was informed that the reasons for the growth of business

ventures in Mbarara Municipality include increase in population as

this took a lead among others reasons. The findings informed the

study that this could be due to the increase in institutions which

have lead to the increase in the demand of goods and services,

Other reasons like good transport net work, the presence of credit

institutions, presence of commodities to be sold in businesses,

security of the place, presence of trade credits, location of the

municipality, and political stability were also given by the

respondents among the reasons for the growth of businesses in

Mbarara Municipality.

However, entrepreneurship has been a leading factor in the success

of many businesses

both large and small. The small scale enterprises are much more

numerous than the

large ones and the tendency has been to believe that they are

automatically entrepreneurial. However this is not the case as the

growth of these businesses would have been taken for granted. Small

businesses are established for various reasons. Some are income

(Elkan, 1988), others to grow big (McCory, 1956), and others are

forced Kinyanjui (1993). Not all these are entrepreneurial

characteristics. This is a limitation for small business success.

But Sullivan, Arthur and Steven M. Sheffrin (2003) argued that

small scale enterprises worldwide have been recognized as engines

of growth and development and in many countries there has been some

76


considerable effort to support them so as to create the necessary

employment opportunities, incomes and productive capacity. Besides

the evidence available about the role of small enterprises some of

the reasons for them are being preferred as follows: ease of

formation, capital requirements, flexibility, mobility and a

variety of other factors.

The study findings also established that the University students

influence on the growth of business ventures in Mbarara

Municipality. This is because, all study information revealed the

same. Qualitative results during an interview with the respondents

established that due the university student from Mbarara University

of Science and Technology, Bishop Stuart University, and Makerere

University business school many of the new entrepreneurs have come

up in the area. Respondents said that the students provide market

for the most of the goods and services that has foster the growth

of such businesses.

The other findings from the study indicated that businesses like

computer services, Meat roasting, Hotels, transport services,

houses, clothing businesses, hawking, restaurants, retail shops,

Saloons and supermarkets have grown in the study area due to the

presence of University students. These findings from the study

could mean that people in Mbarara Municipality are beginning

businesses ventures to capture the growth in market due to

institutions coming up in the area.

77

The above study findings can be compared with Tiwari, Rajnish

(2006) who indicated that a business (also known as company,

enterprise, or firm) is a legally recognized organization designed

to provide goods, services, or both to consumers or tertiary

business in exchange for money. Businesses are predominant in

capitalist economies, in which most businesses are privately owned

and typically formed to earn profit that will increase the wealth

of its owners. The owners and operators of private, for-profit

businesses have as one of their main objectives the receipt or

generation of a financial returns in exchange for work and

acceptance of risk. Businesses can also be formed not-for-profit or

be state-owned.

The study also indicated that the major challenge of businesses

venture in kakoba Division include among others; poor transport in

the area as commodities cannot easily reach, limited market, high

taxes, electricity load shedding, perishability of commodities,

poor marketing skills, use of family members in business,

untrustworthy customers, high amount of rent paid by the business

owners, poor records keeping, poor financial services, and

fluctuation of price.

Low sales was also indicated by the respondents among the

challenges faced by small business in Mbarara Municipality due to

University students. It was said by the respondents that most of

the university students have little income and as such buy few

things from the business in the area. Seasonal purchase of goods

78

from the businesses in the study area was reported by the study

among the challenges faced by small businesses in the study area.

Respondents revealed that students commonly buy much of the

commodities from business when the semesters are beginning as tend

to reduce on the goods to purchase the time go by. Some people said

that during holiday’s business that commonly supported by

university students fail to operate and this was also seen as a

challenge.

However, Gerhard Fink (2005) said that small businesses often face

a variety of problems related to their size. A frequent cause of

bankruptcy is undercapitalization. This is often a result of poor

planning rather than economic conditions it is common rule of thumb

that the entrepreneur should have access to a sum of money at least

equal to the projected revenue for the first year of business in

addition to his anticipated expenses. For example, if the

prospective owner thinks that he will generate $100,000 in revenues

in the first year with $150,000 in start-up expenses, then he

should have no less than $250,000 available. Failure to provide

this level of funding for the company could leave the owner liable

for all of the company's debt should he end up in bankruptcy court,

under the theory of undercapitalization (Charreaux, 1996).

These results are in line with Kazooba who maintains that marketing

research establishes new market and existing market

characteristics. On satisfaction of these, the market share expands

which in turn calls for the expansion of Trade credit. Regarding to

79

http://en.wikipedia.org/wiki/Undercapitalization

http://en.wikipedia.org/wiki/Court

http://en.wikipedia.org/wiki/Entrepreneur

http://en.wikipedia.org/wiki/Undercapitalization

http://en.wikipedia.org/wiki/Bankruptcy

Mahadea (1996), Good records keeping is fundamental to the

regulation of Trade credit. Record keeping is seen as customer

record establishment and as the result trustful customers are

productively sieved from doubtful ones. This reduces the levels of

credit defaults.

Also, Nayak Committee report (2001), Increase on the flow of credit

Scheme is essential. This meant that trade credit needs to be

enlarged to dimensionally expand business operations which in turn

increase on the profit margin. Regarding to Murply (1996) research

needs to be carried on marketing strategies to establish the

supplier - buyer behaviors. He adds that marketing behavior affects

business activities.

5.2 Conclusion

The study concludes that the major reasons for the growth of

business ventures in Mbarara Municipality include increase in

population, good transport network, the presence of credit

institutions, presence of commodities for businesses, security of

the place, presence of trade credits, location of the municipality,

and political stability among the reasons.

It is also concluded that the University students greatly influence

on the growth of business ventures in kakoba Division -Mbarara

Municipality as students provide market for the most of the goods

and services that foster the growth of such businesses. And that

number of businesses like computer services, meat roasting, hotels,80

transport services, houses, clothing businesses, hawking,

restaurants, retail shops, Saloons and supermarkets had grown in

the study area due to the presence of University students.

5.3 Recommendations

From the above study findings as revealed by the respondents during

data collection, the study recommends the following as follows;

Small businesses owners to employee people some certain level of

education if they are to benefit much from their businesses in the

study area. This is because, most of the people in small businesses

do not know English that is spoken by university students and this

reduce on their sales as students buy from people they can explain

well their needs.

In addition, the study recommends small businesses to consider

selling other products but not only those mostly demanded by the

university students. This can be clearly done if market research is

well conducted about the good to be sold in their businesses. By

doing such, the problem of seasonal sales will be reduced in small

scale businesses.

The study further recommends the government to provide support to

small scale businesses since it was found out that people operating

businesses in kakoba Division are disturbed by seasons like heavy

sunshine, too much rain. This can be done by constructing permanent

businesses place in the study area especially by rebuilding their

business places.

81

That business venture enterprise owners should employ workers

who are qualified in certain fields like records keeping for

improved performance. This can be done through the process of

selection and recruitment process that will help in the

selection of people with skills and knowledge that will improve

on their performance due to increased output.

Good and well established infrastructures can help in the

performance of business venture enterprises and therefore

better performance. Most of the businesses get their products

deep in rural areas where many of the infrastructures inform of

roads are poor. It is recommended that government should

improve such infrastructures if small scale business

enterprises are to improve their performance for sustainable

growth in their areas of operation.

The study further recommends that business venture enterprise

owners to always perform internal audit in their business

operations process periodically. The internal audit will help

them to clearly identify the mistakes usually made while

reducing on their business operations.

It is also recommended that business venture enterprises should

operate on budgets. This will track all the costs even most of

the suppliers of the trade credits will support such of the

small scale business enterprises that operate under the budget

after seeing the forecasted cash flows (inflows and out flows)

82

in the drafted budget for controlled unnecessary costs in such

small scale business enterprises.

5.4 Suggestions for Further Studies



community in kakoba Division -Mbarara Municipality, Mbarara

District. But in relation to the discussions of the study, the

following are recommended areas for further studies.

The effectiveness of university students on population growth in


The influence of education level on the performance of small scale

business in Uganda.

The relationship between financial institutions credits on the

survival of small and medium enterprises in kakoba Division -


The influence of book keeping on the performance of small and

medium enterprises in kakoba Division -Mbarara Municipality

83

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89

APPENDICES

APPENDIX I: RESPONDENTS’ QUESTIONNAIRE

Dear Respondent,

I am Ninsiima Sheilla a student of Bishop Stuart University

offering Bachelor’s Degree in Business Administration and as part

of the requirements for the completion of the Degree Program. The

information provided will only be used for academic purposes. Hence

you are requested to answer the questions as freely as possible.

SECTION A: BACKGROUND RESPONDENTS

1. Gender

a). Male

b). Female

2. Age of the respondent

a). Below 25 years

b). 26-35 years

c). 36-45 years

d) 46-55 years

e). above 55 years

3. Marital status

a). Married

b). Single

c). Widowed/er

d). Separated/divorced

90

4. Education level

a). Primary

b). Secondary

c). Degree

d). Masters

e). Others (Specify)

----------------------------------- (f) Not educated

5. Kind of business operating.

(a) Food staffs (b) Clothing’s (c)

General merchandise

(d) Restaurants and pubs (e) Hardware shops

(f) Financial business

6. For how long have you been in your business?

a). Less than 3 years

b). 3-5 years

c). Above 5 years

SECTION B: REASONS FOR THE GROWTH OF BUSINESS VENTURES IN KAKOBA

DIVISION -MBARARA MUNICIPALITY

On a scale of 1-5, tick in the appropriate box on how you strongly

agree or disagree with the statements given.

Sca

le

1 2 3 4 5

Strongly

agree

Agree Not sure Disagre

e

Strongly Disagree

Statement SA A NS D SD91

There is increased in population growth and

therefore growth of business There is presence of Development of financial

institutions in kakoba Division which have

attracted businessThere is presence of Good transport networkIntellectual property that needs protection

from competitors for the company to stay

profitableIncreasing marketed share and demand for

products in kakoba has lead to growth of

business in KokobaCheap labor in kakoba has favoured growths of

businessBusiness recording systems have led favoured

growth of businessGovernment support extended to business can

explain the growth of business Saving culture among the people living in

kokoba is responsible for the thinking of

businessCustomer care management among business owners

has lead to business growth.

92

SECTION C: THE N INFLUENCE OF UNIVERSITY STUDENTS ON THE GROWTH OF

BUSINESS VENTURES

Statement SA A NS D SDEntrepreneurial cultures and aspirations among

students have encouraged hard work among

university student to start up business

activities.University teaching environments are the most

influential factors that affect students’

perceptions towards entrepreneurial career and

entrepreneurial convictionsUniversity teaching have encourage

innovativeness in introduced of new products or

services to towards the growth of businessUniversity student have encourage Teamwork that

occurs among groups to enable to work

efficiently and effectively together to achieve

organizational goalsUniversity student participate in some

relatively business activates direct way in

monitoring and directing the enterprise‘s

activities.

93

Social networking among university studentsThe management skills required to manage a small

business into functional areas.Self-confidence also means being comfortable

enough with one’s self to accept feedback

SECTION D: CHALLENGES FACED BY SMALL SCALE BUSINESSES

Statement SA A NS D SDHigh Taxes and regulations by the government is

challenges faced by small scale business Competition is a among challenges small scale

business is facing in kokoba divisionLack of storage facilities due to expensive cost

of renting is major challenges to small scale

business in kokoba divisionInflation is the major challenges facing small

94

scale problem due high prices of goods and

servicesPoor transport due to poor road net work around

kokoba divisionLimited market (low Sales) due to fact that the

population of Kokoka Division lack enough

capital to purchase goods and servicesElectricity load shedding is major challenges

to the problem communityPerish ability of commodities due to poor sales

turns.Poor marketing skills is challenges to the

business community due to fact that some people

do not keep book of accounts Challenge of language barrier is major problem

when selling goods and services

95

APPENDIX II: RESPONDENTS’ INTERVIEW GUIDE

Dear Respondent,

I am NINSIIMA SHEILLA a student of Bishop Stuart University

offering Bachelor’s Degree in Business Administration and as part

of the requirements for the completion of the Degree Program. The

information provided will only be used for academic purposes. Hence

you are requested to answer the questions as freely as possible.

THANK YOU IN ADVANCE

1. Gender of the respondent

2. Age of the respondent

3. Marital status

4. Education level

5. Do you understand the term business growth?

6. What are the main factors making most of the business people

to operate in this area?

7. Do you think University students influence on the growth of

business ventures in this area, If yes how?

8. Of what is the influence is University students on the growth

of business ventures in this area?

9. Do you think business people are faced with challenges in

running their businesses in this area?

10. What can be the measures to challenges faced business

people in running their businesses?

11. What is your conclusion about University

students and growth of business ventures in this area.

THANK YOU VERY MUCH

96

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UNIVERSITY STUDENTS AND THE BUSINESS COMMUNITY IN MBARARA MUNICIPALITY: A CASE STUDY OF KAKOBA DIVISION

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