Business Constraints and Growth Potential of Micro and Small Manufacturing Enterprises in Uganda

Abstract

Ugandan micro and small enterprises (MSEs) still perform poorly. Studies associating poor performance of manufacturers with lack of finance and low investment ignore micro enterprises. Those focusing on MSEs are either exploratory in nature or employ a descriptive analysis, which cannot show the extent to which business constraints explain the performance of MSEs. Thus, this paper tries to examine the extent to which the growth of MSEs is associated with business constraints while controlling for owners’ attributes and firms’ characteristics. The results reveal that MSEs’ growth potential is negatively associated with limited access to productive resources (finance and business development services), high taxes and lack of market access.