IMPACT OF MICRO- FINANCE LOANS ON THE GROWTH OF SMALL & MEDIUM

SIZE ENTERPRISES (SMEs) IN SOUTH SUDAN:

A CASE STUDY OF KICK START SAVINGS AND CREDIT COOPERATIVE

JUBA CITY, SOUTH SUDAN.

BY

ATITI JACKLINE

BB(ACCOUNTING AND FINANCE)

A RESEARCH REPORT SUBMITTED TO THE

DIRECTOR OF RESEACH FOR PARTIAL FULFILLMENT OF THE

REQUIREMENTS FOR THE AWARD OF BACHELOR DEGREE IN BUSINESS

ADMINISTRATION IN ACCOUNTING AND FINANCE OF MAKERERE

UNIVERSITY KAMPALA(UGANDA)

DECLARATION

I Atiti Jackline, declare that this research report is my original work and that it has never been

presented for a degree award at any other university.

Signature: ………………………………………………

Atiti Jackline.

Date: ………………………………………………….

APPROVAL

Signature: …………………………………

……………………………………………

Name of the supervisor

…………………………………………..

Title of the Supervisor

Date: ……………………………………..

This research report has been submitted for examination with my approval in partial fulfillment

of the requirement for the award of a Bachelor Degree in Accounting and finance of Makerere

University.

DEDICATION

I dedicated this simple yet valuable piece of work to my beloved Dad VICTOR ONJE and my sweet mum SARAH ONJE, my lovely sisters Aguli Elizabeth, Lina Konyo, Rosy Samia, Susan Nunu, Ndio Winnie and my helpful brothers, Gita John, Salah Nalson, Bati Nyamiri, Yango, Siliy Julius, Ayiko Gideon and not forgetting my Sweetee Hassen Desire and my sweet baby Gloria for having supported me in academic up to this far, and to all my friends for their encouragment.

ACKNOWLEDEMENT

I here by extent my heartfelt and gratitud to the almighty GOD for havinh seen me through the Dissertation and making it successful for foregone conclusion. In the manner, I humbly extent my

vote of thanks to the aministration of Makerere Univeristy for having given us this opportunity to carry out this exercise.

ABSTRACT

The research was about the impact of micro-finance loans on the growth of small and medium

enterprises in south sudan.

The objectives of research were:

The examine the challenges that face SMEs in assessing micro-finance loans.

To fine out the contribution of loans to the development of SMEs

The research used both secondary and primary data. primary data was collected uing

questionnaries and interviews while secondary was collected through the use of documenttary

review the is, extracting data from textbooks journals and already existing research reports.

The research questionnaire based on the topic and issued it to the respondents to fill and

collected them later.

The rearch used data control mehtods for reguler checks to avoid chances of double counting. editing was done on contnuous base to ensure accuracy, uniformity and compleneness. codes were assigned to the respondents to make analyis and tabulations. then the data collected was then entered into a computer package called microsoft excel for easy analyis and interpreptation.The rsearch also used graphs to present information in a wwy it is easy to interpret undrstand and interestingly looked at.The research found out that SMEs, faced legal frame work in South Sudan for their attempt to assessMicro-finance loans. This was evidenced in table 32 where by 31.3% of the respondents disclosed that they faced problems in getting passports to present to the government for the loans processsing. The SMEs faced limited services by micro-finance institutions as given in table 32. Micro-finance institutons require considered people who were located near their premises for easy montoring. Lack of gurantee had also been a big problem to SMEs to assess loans. Micro-finance institution rquired guatantee for an individul to be given a loan.The research found out the following challenges that faced Microfinance institutions in their attempt to operate in south sudan. Failures to meet the deadlines by thier clients as dicloseed 62.7% by the respondents. This created problems on running the business.Another challenge was high level of illiteracy which affected the operation of Mirrofinance institutions in south sudan as discoseed by 20% otf the respondents. This created inefficiency in the operation.The ongoing demolition of the market created problems in getting more customers for the product.The research also found out that the microfinace instituions contributed the following to the development of SMES. The MFIs extented loans for the development of SMEs as reflected by 88.9% of the respondants. This loans helped the SMEs to start up their business and keep it growing. SMEs also gave training to the clients as disclosed by 11.1% of the respondents.This

training was given so that the clients do not make losses in their business and hence would be able to pay the loans in time.Mirofinance is more like assets to the developing countries. The services the give to thr clients tailoured to meet the needs and aspirations of local people and emphasess towords poor and growth of SMEsHowever the majority of microfinance in soith sudan faced with several challenges which may include the following failures to meet repayment deadline, scarcity of skilled labour due to competition and lack of legal frame work among others. This challenges if left to continue will only lead to down fall of microfinanceOn the other hand clients are faced with a number challenges ranging from security , failure to meet criteria ,poor infrastrures and kwoledge of FSSL services. The survey however conclude that despite the numerous challenges facing both FSSL and microfinance the remain with postive contribution towards SME

I therefore recomend micro finance institutions to give more effort in finacing SMEs for their role to be felt. Likewise, SMEs themselves should be receptive of few finacing ideas of the

SMEs and be prepared to make finacial commitments to ensure growth. Guidlines should also be put for MEIs to finace SMEs and lastly,it is the researcher's suggession that MFIs should find the

will and researchers to contribute to the development of SMEs The researcher suggested that future research should be directed to finding out the courage of microfinace institutions in south sudan.

CHAPTER ONE

Micro-finance loans refers to debt evidenced by a note which specifies among other things the principles amount interest rates and thew date of repaymet on the other hand growth refers to the increase in the amount of goods and services produced by an economy over time. the study aims at finding out the contribution of the micro-finance loans to the growth of the small and medium size enterprises in South Sudan. The charpter of the back ground of the study. The's Athieno (2011) Find out that many LDCs adopt a definition of SFMs that covers all firms that have employees below 250. Therefore, this includs the micro-firms. under this definition the majority of all business in develop countries are considered as SEMs cubing 2012. This charpter cotains the statment of the problem, objectives of the study research questions the scope of the study and finally the significances of the study.

1.1 Background to the study

Small businesses are generally regarded as the driving force of economic growth, job creation,

and poverty reduction in developing countries. They have been the means through which

accelerated growth and rapid industrialization have been achieved and political development

catalysts in both developed and developing economies. Mwangi(2011).Maalu, et. al. (2005)

discussed the role of Micro and Small Enterprises in the economy and noted the important role it

has played and continues to play.

In addition to the employment creation and income generation, the study noted other important

roles in the economy such as production of goods and services and development of skills. A

study by African Development bank group (2012) on the impact of micro finance services on the

growth of SMEs in South Sudan found a strong positive relationship between micro finance

services and growth of SMEs. The South Sudan Government’commitment to foster the growth of

MSEs emerged as one of the key strategies in 2005 after the signing of CPA( Comprehensive

peace Agreement) between Government in Khartoum and Juba. It was reinforced as a priority in

2012-2014 Interim Country Strategy Paper (ICSP) for the Republic of South Sudan (RoSS) for

the period 2012-2014following the country’s independence on 9 July 2011 and it subsequent

official admission as member of the Bank Group on 1 June 201 in Arushareport, a document that

set out the mechanisms for removing constraints to growth of MSE sector in the country.

In 2012, the government published the MSE policy report. This report was reviewed in 2002,

leading to a new policy framework that provides a balanced focus to MSE development in line

with the national goals of fostering growth, employment creation, income generation, poverty

reduction and industrialization.(Kenya Agency for the Development of Enterprises and

technology (2005). Vision 2030 had also emphasized the importance of Micro and

SmallEnterprises in Kenya. Micro and Small Enterprises are noted as a crucial catalyst

foachieving the vision 2030.

1.1.1 Growth of Small Medium Enterprises

One of the most important themes that come up in discussions about business is thesubject of

growth. Majority of studies on growth have been undertaken based on the law of Proportionate

Effects or Gibrat’s law. Gibrat’s law states that firm growth rate isindependent of firm size. The

studies have therefore categorized businesses into three categories: small, medium and large

enterprises. The available studies on growth have also used varied metrics to measure growth.

Howard (2006) laid out a frameworkdescribing how businesses grow. While he identifies seven

stages of organizationagrowth, the first three stages are of particular importance and interest to

small businesses Howard (2001). The first stage is that of new venture, which is when a small

business isjust beginning. Markets and products are being developed in this stage. The second

stageis expansion and can focus on increased sales, revenues, market share, and ultimately

thenumber of employees. Howard,( 2006). The third stage is professionalization, andfocuses on

formalizing the goals, processes and functions of the organization and isconsidered to be closely

related to expansion. Howard,( 2001). Stage four isconsolidation, and focuses on issues faced by

firms once they have made the transition toprofessionally managed organizations with working

systems in place, focusing more onmanaging its corporate culture. Diversification is the fifth

phase, focusing on developingnew products for markets for which the organization is already

providing goods andservices. The sixth stage is integration, focusing on developing an

infrastructure tosupport multiple business units. The final stage is that of decline and

revitalization andfocuses on rebuilding the organization at all levels, to ensure continued

survival. Howard (2006).Business growth is typically defined and measured using absolute or

relative changes insales, assets, employment, productivity, profits and profit margins. Therefore,

salesgrowth need not correspond to or underpin other dimensions of growth in which

policymakers might also be interested; for instance, sales can increase while employment and/or

profits fall. This is partly related to contextual or structural issues such as sector or age of

business but also to the strategic choices made by principal decision makers in thefirm. Sales and

/or employment growth is a better measure of new and small businessperformance than

accounting based measures such as profits, return on investment ormarket share. Sales dates are

usually readily available and business owners themselvesattach high importance to sales as an

indicator of business performance. In practice, salesgrowth is also easier compared with some

other indices and is much more likely to berecorded. Sales are a good indicator of size and

therefore growth. Sales may also beconsidered a precise indicator of how a firm is competing

relative to that market.

Business owners themselves often treat sales as key motivator and indicator ofperformance

rather than, for example, job creation. Koech (2011).The small and medium enterprises (SMEs)

sector has continued to play an important role in the economy of South Sudan. The sector’s

contribution to the gross domestic product (GDP) increased from 3.8% in 2005 to about 5% in

2007. The (SME) or informalsector provided 78% of total employment and contributed over

57% of the new jobscreated in 2005/2006 according to the economic survey of 2007. The

Economic Surveyof 2012 estimated that the contribution to the GDP by this sector currently

stands at over5%. The sector therefore plays a key role in employment creation, income

generationand is the bed rock for industrializing the country in the near future. In South Sudan,

there areabout 2.2million micro, small and medium enterprises [Strategic Business

Advisers(Africa) Limited. SME banking sector report 2007] of which 88% are non-registered.

1.1.2 Micro-Finance Services

The concept of micro-financing arose out of the need to provide to the low-incomeearners who

were left out by formal financial institutions. The practice of micro-creditdates back to as early

as 1700 and can be traced to Irish Loan Fund System whichprovided small loans to rural poor

with no collateral. Over the years, the concept ofmicro-finance spread to Latin America, then to

Asia and later to Africa. The today use ofthe expression micro-financing has its roots in the

1970s when organizations, such asGrameen Bank of Bangladesh with the micro-finance pioneer

Mohammad Yunus, werestarting and shaping the modern industry of micro-financing. Mwangi

(2011). In Kenya,micro-finance movement gained momentum in the late 1980s as a result of

exclusion oflarge proportion of the population from the formal financial institution mainly

banks.Micro-finance emerged with the aim of filling the gap left by banks in providing credit to

Individuals, micro, small and medium enterprises which were on the rise during

thisperiod.Ogindo (2006). In the early 1990s with the opening up of political space andensuing

economic disturbances, the need for credit by individuals, micro, small andmedium enterprises

increased and this led to the recognition of micro-finance institutionsin Kenya. Among the

pioneer MFIs in Kenya are Equity Building Society.

The availability of business funding in Southern Sudan have been boosted with the launch of the

Microfinance Development Facility by the Bank of Southern Sudan (BoSS) on Monday

December 10, 2007 in Juba. It plans to award a total of US$1,000,000 to microfinance providers

in the first quarter of 2008.

The facility is supported by the World Bank administered Multi-Donor Trust Fund (MDTF)

within the framework of the Private Sector Development Project (PSD).

The applicants will be evaluated on the basis of among other factors good governance, well

defined quality strategy, good business plans and the ability to build the capacity of the

microfinance clientele.

In selecting the awardees, the BoSS will also take into account the outreach to underserved

population particularly the youth, women ex-combatants and underserved States.

Another competition designed to catalyze awareness of entrepreneurship and promote business

innovation is shortly to take place. The plan offers opportunity for Southern Sudanese

entrepreneurs to compete for start-up grants of $15,000. Each year 20 such grants will be

awarded to the top applicants.

The Acting Manager of the World Bank Juba Sub-Office, Fred Yankey, recognized the huge

development challenges facing Southern Sudan. “But it is pleasing to note that Southern Sudan

has also a huge potential of becoming a strong economy where people can have access to a

myriad of goods and services like the one we are launching today” he commented.

The BoSS representative OthomRogoAjak said the microfinance facility will be an important

instrument in bridging the gap between the poor and the rich.

The representative of the Ministry of Finance and Economic Planning, Kun Ding underlined the

importance of good management of the Microfinance Development Facility if it is to benefit the

people of Southern Sudan.Explaining the background to the project, the Director of the Public

Sector Development in the Ministry of Commerce, Trade and Supply Mary AkechTaban said the

PSD project was initiated 23 months ago and it had since progressed steadily with the technical

support of the World Bank.The World Bank Task Team Leader of the project Mr. Magdi Amin

commended the commitment of the Ministry of Commerce

Trade and Supply and indeed the entire Government of Southern Sudan for striving to extend

services to the people. He said this project would give opportunities for the people to raise

dignified families.

The development of the private sector is enshrined in the Interim Constitution of Southern Sudan

which states that “all levels of government in Southern Sudan shall facilitate the development of

the private sector, particularly indigenous entrepreneurs to establish and develop a viable private

sector capable of participating effectively in reconstruction and development of Southern

Sudan.”

1.1.3 SMEs scenario in South Sudan

Small and Medium Enterprises (SMEs) is an important sub sector for the South Sudan economy

like many other developing countries since it employs about 85% of the South Sudanese

workforce. Thecurrent constitutional framework and the new Micro and Small Enterprise Act

2007 (MSE Act 2007) provide a new window of opportunity through which the evolution

ofSMEs can be realized.

Lack of access to credit is a major constraint inhibiting the growth of SMEs sector. The issues

and problems limiting SMEs acquisition of financial services include lack of tangible security

coupled with inappropriate legal and regulatory framework that does notrecognize innovative

strategies for lending to SMEs. Limited access to formal financedue to poor and insufficient

capacity to deliver financial services to SMEs continues to bea constraint in the growth and

expansion of the sector. Formal financial institutionsperceive SMEs as high risk and

commercially unviable. As a result, only a few SMEsaccess credit from formal financial

institutions in the country.

Various types of assistancehave been provided to SMEs to boost their growth and development

by making themmore profitable. Several Organizations including business associations,voluntary

organizations and other non-governmental organizations have set up programsto enhance the

factors that influence development of SME especially as it relates to enterprise growth and

development. Despite the large number of assistance programs, thegrowth and development of

SME has not been satisfactory. Ventures have collapsed assoon as assisting organizations pull

out of the project and remaining ones have remainedsmall.

1.2 Research Problem

The concept of business growth is still a grey area as there is yet to be a conclusiveapproach and

definite indicators of business growth despite the fact that it is everyentrepreneur’s wish to have

their businesses grow. Thus the subject of business growthis a fertile area for a study in the South

Sudan context. Kemei (2011). Reviews examiningimpacts of microfinance have concluded that,

rigorous quantitative evidence on thenature, magnitude and balance of microfinance impact is

still scarce and inconclusive.

Itis widely acknowledged that no well-known study robustly shows any strong impacts

ofmicrofinance (de Aghion and Morduch (2010).Various studies have been done in South Sudan

on SMEs and how they are influenced bymicrofinance services. Mutuku (2010) studied on the

impact of microfinance institutionson MSMEs in South Sudan and found out that they had a

great impact on employment creationand poverty alleviation. Mbugua (2010) studying on the

impact of micro finance serviceson financial performance of SMEs found that micro finance

services enhancefinancial performances of SMEs. Ngugi (2009); Kioko (2009); Makena (2011)

studiedon the financial challenges faced by SMEs and found that inadequacies in access

tofinance are key obstacles to SMEs growth. Kemei (2011) studied on the relationshipbetween

microfinance services and financial performance of SMEs. The findings werethat positive and

significant relationships have been established between MFIs loans andSMEs performance.

Kimoro (2011) in a study on the impact of microfinance services onwomen empowerment found

that microfinance has led to expansion of freedom of choiceof women. A survey of the financial

constraints hindering growth of SMEs byKoech(2011) found that the factors affecting growth

were capital market, cost, capitalaccess, collateral requirements, capital management and cost of

registration.Coopper(2012) studied on the impact of microfinance services on the growth of

SMEs in Juba and found a strong positive impact. No study had focused on the effects

ofmicrofinance services on the growth of SMEs in South Sudan. The researcher felt that

therewas need for a study on this area and thus this study intended to bridge this gap and focuson

the effects of microfinance services on the growth of SMEs in Central Equatoria. Toachieve the

research objective, the study was guided by the following research question:how do

microfinance services influence the growth of SMEs?

1.3 General Objectives of the study

The objective of the study was to find out the effect of micro finance services on thegrowth of

SMEs in Juba County in South Sudan.

1.4. Specific Objectives

Specifically the study attempt:

• To identify the products offered by Kick –Start Saving and Credit Cooperative to

entrepreneurs.

• To assess the impact of products and services offered by Kick –Start Saving and

Credit Cooperative entrepreneurs

• To know the challenges facing entrepreneurs in accessing the products.

• To find out the challenges Kick –Start Saving and Credit Cooperative faces in

providing services to entrepreneurs.

1.5 Research Questions

To be able to meet the above objectives, the study adopts the following key guiding question:

• What are the products offered by Kick –Start Saving and Credit Cooperative to

entrepreneurs?

• What is the impact of products and services offered by Kick –Start Saving and Credit

Cooperative entrepreneurs?

• What are the challenges facing entrepreneurs in accessing the products?

• What are the challenges Kick –Start Saving and Credit Cooperative faces in providing

services to entrepreneurs?

1.5 Scope of the study

1.5.1 Study Scope

Microfinance Institutions are scattered in the entire geographical landscape of South Sudan more

special in big towns. For the purpose of this study, Kick –Start Saving and Credit Cooperativeis

analyzed, looking at its contributions to the growth entrepreneurs in SMEs and the benefits

derived from the product and services of these Credit cooperative.

1.5.2 Geographic Scope

The study was carried out in the SMEs that are located in Juba City of South Sudan simply

because the majority of SMEs are in Juba where business seems to be booming.

1.5.3 Time Scope

The research study was focused on eight years period starting from 2010 to 2014. This is because

it was along this period that the cooperative was formed as well as the government of South

Sudan under which the SMEs were established and started operation under South Sudan

company laws.

1.6Significance /Importance/ Contributions of the Study.

The study is significant in the following ways:

The findings of the study is going to enable micro finance institutions to betterunderstand their

role in the growth of SMEs in South Sudan in order to implement better andeffective programs.

The study will also exposed possible areas of improvement in micro financing activities in South

Sudan.

The findings of the study are of importance to the government. It is going to assist insetting up

specific management policies that enhance effectiveness and sustainability of SMEs in South

Sudan. Potential investors in the micro finance sector as well as entrepreneurswilling to start

SMEs shall find this study relevant to them. The findings will shed lighton the future of micro

finance institutions and SMEs thus enabling potential investors tomake sound decisions.

The study is also of significance to scholars in understanding the level of SMEs development in

South Sudan which play a significant role in providing ancillary services tomulti-national

corporations. Finally, this study will contribute to the future development ofthis area of research,

particularly in a developing country like South Sudan.

CHAPTER TWO

LITERATURE REVIEW

2.0 INTRODUCTION

here, The charpter lokss at literal information of the impact of micro-finance loans on the growth

ot the SMEs It should be noted the different attempts has been made by diifferent Authorsto

review relevant literature on this topic. In this case the the study willfocus on the challenges

facing SMEs in accessing micro-finance loans the challenges facing the operatons of the micro-

finances institutions and the impact of finance institution loans on the growth of SMEs.

Even though there are now perhaps thousands of microfinance programs serving millions of

people, impact evaluations are not as common as they ought to be. As a field, we still lack

continuing hard information about what works well and what does not, and what impacts

microfinance has on micro entrepreneurs in South Sudan. This section covers and defines key

terms as used in the study. This chapter covers the definitions and the need for impact

assessment studies in relation to Microfinance Institutions and entrepreneurs in small and

medium enterprise; current and major authors view on the techniques used in impact assessment.

Methodological issues in undertaking Impact studies depend on a mixture of research methods

chosen and give the degree of reliability and rigidity to data collection for the study. The design

of the impact assessment in relation to triangulation of information from different sources has

immense impact on the reliability and credibility of the study. This section also mentions tools

available for Impact studies and the importance of using these tools as guidance and not as a

template. The design of study in relation to selection of research method and tools to undertake

studies is basically due to resources available in terms of cost and capacity. This has been the

major limitations in undertaking studies especially for Micro Finance Services in the entire

nation.

In most developing countries microfinance has been used as one of the tools for development, as

such most development project has microfinance as one of its components. The impact of these

microfinance projects in relation to the partner institutions and their clients, sometimes called

beneficiaries has been up for discussions among policy makers, developing partners and the

practitioners. Microfinance is hailed as a tool for poverty alleviation and is one of the major

strategies to achieve the Millennium Development Goals (MDGs). This is because access to

financial services assists poor households in meeting their basic financial needs, protects them

against risks, and reduces their vulnerability to shocks, by building assets. Ultimately, this

financial service develops their social and economic empowerment. It is further argued that

financial services for the poor can help them turn their savings into sums large enough to satisfy

a wide range of businesses, consumption, personal, social, and asset-building needs (Project

Parivartan 2006). It also enables them to take advantage of economic opportunities, to build

assets, and to reduce their vulnerability to external shocks that adversely affect their living

standards, (Mejeha and Nwachukwu 2008, Ramirez 2006, Woroniuk and Schawk 1998).

Some of the main pertinent issues have been the low capacity of the participating microfinance

institutions to undertake such exercises which are mostly carried out by their developing

partners. There are issues related to the development projects themselves, the question of

sustainability and whether these projects have had any positive and meaningful impact on the

lives of the clients or it create a dependency and rather reduced their opportunity to come out of

their poverty traps. Other school of thought has also questioned the methodologies used by

microfinance institutions and microfinance projects in evaluating their impact, which vary

greatly, Goldberg (2005).

2.1.1 MICROFINANCE

Micro finance, according to (Khawari, 2004) is “generally an umbrella term that refers to the

provision of a broad range of services such as deposits, loans, payment services, money transfers

and insurance to poor and low-income households and their micro-enterprises”. Schreiner and

Colombet (2001, p.339) define microfinance as “the attempt to improve access to small deposits

and small loans for poor households neglected by banks.” Robinson (2001) microfinance refers

to small scale financial services for both credits and deposits- that are provided to people who

farm or fish or herd; operate small or microenterprise where goods are produced, recycled,

repaired, or traded; provide services; work for wages or commissions; gain income from renting

out small amounts of land, vehicles, draft animals, or machinery and tools; and to other

individuals and local groups in developing countries in both rural and urban areas.

CGAP (2003) defines it as the supply of loans, savings and other financial services to the poor.

Microfinance is the provision of credit and other financial services like savings and insurance to

micro, small and medium scale enterprise (UNDP, Microstart Guide, 1997).

2.1.2 APPROACHES TO MICROFINANCE

According to Ledgerwood (1999), there are two approaches to microfinance. The first is what is

termed the minimalist approach which looks at financial intermediation only. The second is an

integrated approach which considers financial services as well as their interrelationships with

social intermediation such as health, education, training and development. Microfinance tend to

be economic in nature, such as its effect of facilitating development of businesses, increasing

income, and decreasing dependence on outside help, these impacts have close ties to matters of

global public agenda of making basic amenities accessible by the poor, in this case bridging the

gap between the rich and the poor. Microfinance initiatives can easily go hand in hand with

health services and outreach programs which lead to better economic prosperity. Local

microfinance institutions can become the source of not only financial services but also a place to

get information about basic needs of their clients. MFIs may have its main objective of providing

financial services only but may offer limited social intermediation occasionally. In this case, the

MFI is using a minimalist approach. On the other hand, an MFI uses an integrated approach

when it takes a more holistic view of the clients. It is a combination of both financial and social

intermediation, enterprise development and social services. An MFI chooses a minimalist or

integrated approach depending on it main objectives and the circumstances (demand and supply)

in which it is operating.

2.1.3 MICRO CREDIT

Micro credit is the practice of offering small, collateral free loans to members of co-operatives

who otherwise would not have access to the capital necessary to begin small business.

(Hobnssain 2002). Microcredit is thus one of the critical dimensions of the broad range

offinancial tools for the poor. An empirical research and further study show that the poor have

the capacity to use loans effectively for income-generation, to save and re-pay loan. Simanowitz

and Brody (2004, p.1) argue that “micro-credit is a key strategy in reaching the MDGs and in

building global financial systems that meet the needs of the most poor people”. Littlefield,

Murduch and Hashemi (2003) report “micro credit is a critical contextual factor with strong

impact on the achievements of the MDGs. Micro credit is unique among development

interventions: it can deliver social benefits on an ongoing, permanent basis and on a large scale.

2.1.4 MICRO INSURANCE

Micro insurance is a component of microfinance. It is defined in terms of client and not

insurance furnished by a small institution. Churchill (2006) defines micro insurance as the

protection of low-income people against specific perils in exchange for regular monetary

payments (premiums) proportionate to the likelihood and cost of the risk involved. As with all

insurance, risk pooling under micro insurance attempts to allow many individuals or groups to

pool risks and redistribute the costs of the risky events within the pool. Microfinance institutions

have played an active role in reducing or protecting against this vulnerability through providing

credit for increasing income earning opportunities and through providing savings services to

build up resources that can be drawn down in cases of emergencies.

CHAPTER THREE

RESEARCH METHODOLOGY3.0 INTRODUCTION

In the last chapter, previous literature on Impact of Microfinance on entrepreneurs was reviewed

and those related to the research topic were analyzed to suit the research topic. The chapter also

captured definitions of various terms in relation to Microfinance. This chapter of the dissertation

explains the methods adopted in gathering data for the study. Two sources of data were used for

this dissertation; these were primary source of data and secondary sources of data.

3.1 RESEARCH DESIGN

The research design for the topic under study was descriptive and analytical. This research

design adopted help in the analysis of the dissertation which is a case study of an Impacts of

Microfinance Institution on entrepreneurs in Small and Medium Enterprise in the Juba South

Sudan. The rationale of the case study was to focus the discussion on how Microfinance is

actually impacting on entrepreneurs in small and medium enterprises and suggest solution to

challenges found where necessary in the cause of the research. Case study was used because it is

accepted as the most viable, convenient and meaningful research tool and technique for gathering

data for thesis, essays and researches (Merriam, 1998, cited in Emmanuel.2008 p.40).

3.2 METHODS OF DATA COLLECTION

The data collected will be based on interviews and questionnaires sent by the researcher to the

respondents of which quick feedback will be expected from the respondents. The questionnaires

will be administered by the researcher undertaking the study at the premises of respondents and

the premises of the company. The administration of questionnaires to respondents at their

premises is to ensure that respondents will have enough time to answer the questions without

rush. The questions will painstakingly be explained to respondents to ensure better understanding

that probably led to the provision of required answers. The researchershall spend an average of

12 minutes on each respondent and will use three weeks to administer all the questionnaires. The

types of questionnaires used will be closed and open ended format. The closed ended format will

give respondents options to choose from whiles the open ended format will be used so that

respondents could provide their own answers.

3.3 SAMPLE AND SAMPLE PROCEDURE FOR DATA COLLECTION

For a reliable result, interviews will be conducted and questionnaires be used. The sample size

used will be of clients of Kick Start Saving and credited cooperatives. The manager SACO will

be interviewed and shall fill questionnaires to enable the researcher know much about the

operations of the company. Random sampling will be used for data gathering from clients of the

company and non -random sampling be used to gather data from the branch manager.

3.4 DATA ANALYSIS

The data will be analyzed based on the data collected. Analysis from this research will copiously

Be explained with critical and analytical comments and also, well-illustrated in graphical and

tabular forms for easy understanding and followed by a summary of analysis. Microsoft office

Word, Excel and Statistical Package for Social Scientist (SPSS) will be used to process data

collected into tables, bar charts, Pie charts and other charts to make easier understanding and

interpretation.

3.5 ANTICIPATED LIMITATION AND DELIMITATIONS.

• Inadequate literature on impact of microfinance on the growth of SMEs enterprise in

South Sudan is anticipated to be a bigger challenge to this study. However, the researcher

will use literatures from other developing countries to overcome the challenges.

• The study will also be affected by non-responsiveness from some of the Small and

Medium Enterprises owners which shall be contacted especially those small firms who

were very much sensitive to avail their growth information. The researcher will therefore

obtain an introduction letter to Makerere Biz Tech College department of the research to

convince the despondences that their responses were treated confidentially.

• High illiteracy rate among the SMEs in South Sudan will affect the quality of information

that will be obtained. The researcher will minimized obtaining information from illiterate

individuals which ensured that the information quality obtained were not diluted

• Time limitations together with financial constraints will not permit an in-depth

investigation given the intensity of research. The researcher will mitigated this by trying

to work within the limits of the budget to make the study a success.