TABLE OF CONTENTS
Cover page - - - - - - …… - …… - ……i
Declaration - - - - - - - - - - ii
Approval - - - - - - - - - - - iii
Dedication - - - - - - - - - - iv
Acknowledgement - - - - - - - - - v
Table of contents - - - - - - - - - - vi
List of tables - - - - - - - - … - - ix
Acronyms - - - - - - - - - - - x
Abstract - - - - - - - - - - …xi
CHAPTER ONE - - - - - - - - - - 1
INTRODUCTION 1
10 Background of the study 1
11 Statement of the problem - - - - - - - …… - 2
12 Research objectives 3
13 Research questions 3
14 Purpose of the study 3
15 Scope of the study 3
16 Significance of the study 4
CHAPTER TWO 5
LITERATURE REVIEW 5
20 Introduction 5
21 Meaning of SMEs 5
22 Factors affecting the growth of SMEs - - …… - - - - …6
221 Performance indicators of SMEs - - - - - …… - 13
23 Meaning of insurance - - - - - - - - - 15
24 Contribution of insurance companies to the growth of SMEs - - - 16
25 Factors inhibiting the purchase of insurance by SMEs - - - - 19
26 Relationship between insurance companies and growth of SMEs - - …22
27 Conclusion - - - - - - - - - … - 23
CHAPTER THREE 25
RESEARCH METHODOLOGY 25
30 Introduction - - - - - - - - - …25
31 Research design 25
32 Survey Population - - …… - - - - - ……25
321 Sample size 25
3
22 Sample design 26
33 Data Sources 26
34 Data collection 26
35 Measurement of Variables 27
36 Validity and Reliability of instruments - - - - - - 27
37 Data analysis 28
38 limitation of the study - - - - - - - - 28
CHAPTER FOUR - - - - - - - - …… - 29
DATA ANALYSIS, PRESENTATION AND INTERPRETATION… - - …29
40 Introduction - - - - - - - - - …29
41 Response rate - - - - - - - - - - 29
42 Personal data - - - - - - - - - - 29
43 Findings on factors affecting SMEs growth - - - - - - 31
44 Findings on contributions of insurance companies to the growth of SMEs - - 34
45 Findings on factors inhibiting the purchase of insurance cover - - ……35
46 Findings on relationship between insurance companies and the growth of SMEs…36
CHAPTER FIVE - - - - - - - - - 38
DISCUSSION & SUMMARY, CONCLUSION AND RECOMMENDATIONS - 38
50 Introduction - - - - - - - - - …38
51 Discussion of the findings - - - - - …… - ……38
52 Conclusion - - - - - - - - - …41
53 Recommendation - - - - - - - - … - 42
54 Areas for further research - …… - - - …… - - 42
REFERENCES 43
APPENDIX I …… - - - - - - - - … - 48
APPENDIX II - - - - - - - - - …52
LIST OF TABLES
Table 1 Targeted Sample Size - - - - - - - - …26
Table 421 Showing findings on gender of the respondents - - - - …29
Table 422 Showing findings on age range of the respondents - - - - 30
Table 423 Showing findings on educational level of the respondents - - - 30
Table 424 Showing findings on the respondents' length of service - - - …31
Table 431 Showing findings on innovation - - - - - - …31
Table 432 Showing findings on competition - - - - - - …32
Table 433 Showing findings on management skills and actions - - - ……32
Table 434 Showing findings on lack of credit by SMEs - - - - ……33
Table 435 Showing findings on technological change - - - - - 34
Table 441 Showing contribution of insurance companies to the growth of SMEs - …35
Table 451 Showing factors inhibiting purchase of insurance cover by SMEs - - 36
Table 461 Showing relationship between insurance companies and the growth of SMEs…37
ACRONYMS
GDP - Gross domestic product
LTD - Limited
MOE - Ministry of education
MUK - Makerere University Kampala
NIC - National Insurance Corporation
SMEs - Small and Medium enterprises
UIA - Uganda Investment Authority
UIC - Uganda Insurance Commission
CHAPTER ONE
INTRODUCTION
10 Background
The substantial growth of small and medium enterprises (SMEs) activity clearly marks SME as one of the most remarkable economic phenomena SME is a business that is privately owned and operated with a small number of employees and relatively moderate volume of sales The definition of SMEs varies from country to country depending on the level of development and the strength of the economy The lower limit for small scale enterprises is set at between five and ten workers and the upper limit is set at between fifty and one hundred workers The upper limit for medium scale enterprises is set between one hundred and two hundred and fifty workers (Hallberg, 2000)
In Uganda there are approximately 1,069,848 SMEs currently in operation and they comprise over 90% of the private sector They contribute to employment, provision of basic goods and services, and generation of export and tax revenues for national socio-economic development Their Gross Domestic Product (GDP) contribution to the economy is 75% and they employ about 2,500,000 nationals The location of these SMEs is mostly in urban areas with 80% located therein They operate business like restaurants, accountants, hairdressers, conveniences stores and guesthouses (Hatega, 2007)
On the other hand insurance is a contract by which one party undertakes in consideration of a payment called premium to secure the other against pecuniary loss by payment of a sum of money in the event of destruction or damage to property, fire, accidents or death of a person Economy, investment and finance reports (2010) defines insurance as a policy from a large financial institution that offers a person, company, or other entity reimbursement or financial protection against possible future losses or damages An insurance contract is an agreement by which the insurer promises, from a premium or assessment, to make a payment to a policy holder or a third person if an event that is the object of a risk occurs SMEs often face a variety of problems related to their size Frequent causes are bankruptcy, theft, fire, death, automobile accidents and workers injuries
For example, National Insurance Corporation Limited (NIC) is an insurance company in Uganda The company is a leading provider of insurance and risk management services with 19 branches spread throughout the country (Robinson, 2009) NIC was established by Act of Parliament in 1964 The basic function of NIC insurance is to provide security and protection against risks to business NIC has also undertaken several projects aimed at empowering the development and growth of SMEs in Uganda Amongst these projects include; organizing public workshops and seminars aimed at enhancing techniques of small scale traders, for example the 2001 conference on marketing insurance, Publishing literature on insurance services covering issues like the need for business to be insured, business growth and financial discipline in business which are of importance to SMEs businessmen and supporting of SMEs in development and training of young businessmen in how to survive competently in the market place (Mutesasira, Osinde, and Mule 2001)
However, besides NIC contributions to the growth of SMEs, it's unfortunate that most of the SMEs are badly run due to lack of knowledge and skills in insurance policies, (Ocici, 2007),lack of professional and networking, limited knowledge of business opportunities, poor compiled records and accounts and low level of technical and management skills (UNCTAD 2002) In addition, high premium cost is also a major effect on growth of SMEs It is therefore against this background that the researcher deems it worthy to find out by analyzing the relationship between contributions of insurance companies to the growth of SMEs
11 Statement of the problem
Despite the contribution of insurance corporations to the growth of SMEs in economic development, failure and slow growth still exists and the public doubts its management (Ocici, 2007) Research suggest that 80% of the businesses affected by major incident close down within 18 month, and 90% of those who lose data close down within 2 years This is due to the failure of small businesses to have adequate insurance cover and proper business continuity plans (cover sure, 2007) However literature has shown that insurance companies are not willing to insure SMEs and it was the aim of this research to establish whether a relationship between these two variables exists
12 Objective of the study
The main objective of the study was to investigate the contribution of insurance companies in the growth of SMEs in Uganda
The study also sought:
1 To examine major factors that affects the growth of SMEs
2 To assess the contribution of insurance companies to the growth of SMEs
3 To investigate the factors inhibiting the purchase of insurance cover by SME operators
4 To determine the strength of the relationship between insurance companies and growth of SMEs
13 Research question
1 What are the major factors affecting the growth of SMEs?
2 What contributions do insurance companies responsible for the growth of SMEs?
3 What factors inhibit SME operators from purchasing insurance cover?
4 How strong is the relationship between insurance companies and growth of SMEs?
14 Purpose of the study
The study established the contribution of insurance companies and the performance of SMEs in Uganda
15 Scope of the study
Geographical scope
The study focused on Insurance companies in Uganda- National Insurance Corporation Limited (NIC) which is an insurance company in Uganda The company is a leading provider of insurance and risk management services with 19 branches spread throughout the country (Robinson, 2009) NIC was established by Act of Parliament in 1964
Content scope
The study focused on the efforts that are made by National insurance company to raise the growth of SMEs Contribution that insurance companies play in the growth and development of SMEs and the relationship between insurance companies and SMEs was also studied The study targeted the employers and employees of NIC
16 Significance of the study
• This research will be undertaken as an academic requirement by Makerere University before the degree of Bachelor of Commerce can be awarded The researcher places prestige in the successful completion of the study
• It's only through research that ideas and approaches will be developed and tested This research will generate information to be used as basis for further research in to the contribution of insurance in other business segments
• The study will increase public awareness on the operations of National Insurance Corporation hence making it convenient for the public when dealing with the corporation
• This research will provide data to policy makers that will assist towards formulating for appropriate policy for policy makers operation This will permit specific plans and policies geared towards promoting SMEs
