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

Abstract

Since the 1990s, studies utilizing descriptive statistics have documented factors in the business environment, which hinder the performance of Ugandan micro and small enterprises (MSEs). Based on secondary data, this paper assesses the trend of critical factors since 1994 to 2010. The paper also utilizes the primary data from MSEs to examine the effects of these factors on the growth potential of MSEs, while controlling for the owner’s and the firm’s attributes. Results from the trend analysis reveal that the business environment has been deteriorating over time. Results from the regression analyses reveal that MSEs’ growth potential is negatively associated with limited access to productive resources, high taxes and lack of market access.