Factors Affecting the Success of Small and Medium Enterprises (Smes) in Kakoba Division, Mbarara City

Abstract

ABSTRACT: SMEs drive economic development through jobs, income, and poverty reduction, yet face constrained growth from limited finance, skills gaps, weak markets, and poor institutional support. This study examined the factors affecting the success of Small and Medium Enterprises in Kakoba Division, Mbarara City. Specifically, the study assessed the influence of access to finance, entrepreneurial skills, government support, and market access on SME success. The study adopted a cross-sectional research design using a mixed-methods approach. The target population comprised 520 respondents, including SME owners, business association leaders, the Division Commercial Officer, and managers of SACCOs and microfinance institutions. A sample of 226 respondents was selected, of which 217 successfully participated in the study. Data were collected using structured questionnaires and key informant interviews, and analyzed using descriptive statistics, Pearson correlation analysis, and multiple regression analysis. The findings revealed that access to finance, entrepreneurial skills, government support, and market access significantly influence SME success. Correlation results showed positive and significant relationships between SME success and access to finance (r = 0.721, P < 0.01), entrepreneurial skills (r = 0.764, P < 0.01), government support (r = 0.612, P < 0.01), and market access (r = 0.738, P < 0.01). The regression results further indicated that the four factors jointly explained 70.9% of the variation in SME success (R² = 0.709). Among the predictors, entrepreneurial skills had the strongest influence on SME success (β = 0.372), followed by market access (β = 0.318), access to finance (β = 0.301), and government support (β = 0.179). SME success in Kakoba Division, Mbarara City depends on internal entrepreneurial capabilities and external factors. The study recommends stronger training, better financing access, market linkages, and greater awareness of government support programs.