ROLE OF SMALL SCALE BUSINESSES IN THE PROVISION OF EMPLOYMENT TO THE LABOR FORCE (A Case Study Of Shauriyako Trade Center In Kampala District)
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ROLE OF SMALL SCALE BUSINESSES IN THE
PROVISION OF EMPLOYMENT TO THE LABOR FORCE (A Case Study Of Shauriyako Trade
Center In Kampala District)
TABLE OF
CONTENTS
Declaration
Approval
Dedication
Acknowledgement
Table Of
Contents
List Of
Tables
List Of
Figures
Acronyms
CHAPTER ONE:
1.0
INTRODUCTION
1.0
Background
1.1
Statement of the Problem
1.2
Objectives of the study
1.2.1
Specific objectives
1.2.2
Research questions
1.3 Purpose
of the study
1.4 Scope of
the study
1.5
Significance of the Study
CHAPTER TWO:
2.0
LITERATURE REVIEW
2.0
Introduction
2.1
Definition and nature of SSBs
2.2
Advantages Of Small Scale Businesses
2.3 Nature
And Categorization Of Activities Of Ssbs In Shauriyako Trade Center
2.4 Reasons
For Small Scale Enterprenuerial Businesses In The Area Of Study
2.4.1
Government Policies
2.4.2 Trade
liberalization policy
2.4.3
Foreign Aid Donations
2.4.4 Low
start-up capital
2.4.5
Population growth
2.5
Challenges Faced By Small Scale Businesses
2.5.1 Poor
Infrastructure
2.5.2
Financial Problems
2.5.3
Improper business Feasibility
2.5.4 Lack
of Managerial Knowledge
2.5.5 Poor
Educational Background or Lack of Education
2.5.6
Out-Dated Technology
2.5.7 Poor
Marketing Strategy
2.5.8
Increasing Competition
2.6
Solutions Undertaken To Enhance Small Scale Businesses
2.6.1
Traditional guarantee Associations
2.6.2
Financial sector development
2.6.3
Diversification and markets expansion
2.6.4
Corporate governance
2.6.5 Human
and Cultural Capital Development
2.7
Conclusion
CHAPTER
THREE:
3.0 METHODS
AND PROCEDURES
3.0
Introduction
3.1.1
Research design
3.1.1 Study
area and Target population
3.1.2
Sampling method
3.1.3 Sample
size and sample selection
3.2.1 Key
Informants
3.2.2 Focus
groups
3.2.3 Data
Collection
3.2.4
Observation
3.2.5
Questionnaire
3.4 Editing
3.4.1 Coding
3.5 Problems
encountered during the field research
CHAPTER
FOUR:
4.0 DATA
PRESENTATION AND INTERPRETATION OF FINDINGS
4.0
Introduction
4.1
Background information of respondents
4.2 The
different classifications and activities of the Small Scale Businesses
4.3 The
challenges that limit the contribution of small scale businesses towards
development:
4.4 The
impact of employment opportunities provided by the SSBs to household welfare:
33
CHAPTER
FIVE:
5.0
CONCLUSIONS AND RECOMMENDATIONS
5.0
Introduction
5.1
Conclusions of the study
5.3 Areas
For Further Research
References
Appendices
CHAPTER ONE:
INTRODUCTION
1.0
Background
Small scale
enterprises are a major component of the Ugandan business sector that sustained
the economy through the hard times when all the different sectors of the
economy were in disequilibrium. In 1986, Uganda undertook economic reforms
through the IMF/World Bank funded Structural Adjustment Programs (SAPs). Like
in many developing countries these reforms were meant to change the Economy
from an inefficient, import dependent economy to one that is more diversified,
efficient and export oriented (Ajibefun and Daramola, 2003).The small scale
businesses had a role to play in support of the production and import sectors
to achieve the goals of the SAPs at the time.
In Uganda,
Small Scale Businesses have been a critical source of support to the struggling
economy that formerly depended on the agricultural sector and remittances. The
Small Scale Businesses (SSBs) led to an increase in the employment levels to
70% of the non farm labor force, thereby contributing to 80% of the
manufactured output and 20% of total Gross Domestic Product (World Bank 2009).
This reduced poverty amongst the people in the rural and urban areas of the
country which encouraged government to undertake more action in support for
such investments since they needed less capital per job created, offering a
rather inexpensive way of accommodating the labor force for equitable wealth
distribution.
The
Government of Uganda (GoU) introduced several economic measures to restructure
the economy as a way to increase the role of both the public and private
businesses. The deregulation of the economy was aimed at altering the incentive
structures faced by the small scale sector. Such policies include the payment
and trade liberalization, interest rate liberalization, and appropriate pricing
of public goods and the reduction of government involvement to enhance
production and performance. Most of these policies directly and indirectly
affect producers and employees in an economy.
The GoU is
currently centered on minimizing its intervention in economic activities so
that it encourages private sector participation for increased production and
incomes thereby leading to economic self sufficiency and reliance. The
efficient role played by the small scale businesses in the utilization of
resources as labor has led to poverty reduction for broad based economic
growth.
The large
informal sector which is mostly comprised of the small scale businesses offer
great potential for employment generation therefore a good target for policy to
eradicate poverty. By creating employment opportunities for the unskilled
labor, they could increase incomes as a way to reduce poverty. However this
potential can only be achieved if the small scale businesses highly absorb the
labor force to boost production.
According to
the Background to Budget 2008/09, Uganda’s economy was composed of the Small
Scale Business sector that were categorized into wholesale and retail trade
estimated to be 46%, manufacturing at 31% as restaurants and Hotels constitute
7% during Financial Year (FY2007/08).Small Scale Businesses have played a great
role in the provision of employment opportunities to the labor force since they
are many in numbers, owned and operated with low volumes of working capital.
In many
developing countries, the growth of Small Scale Businesses (SSBs) is a wide
spread concern due to their contribution to Economic growth and Development
because they compose the larger informal sector that is significant in the
provision of employment in an Economy. It should be noted that Small Scale
Businesses are highly diverse in terms of division of labor through which they
create opportunities for productive work that leads to an increase in the labor
participation rate thereby contributing to poverty reduction, economic growth
and development.
According to
the Uganda Bureau of Statistics (UBOS 2007), between 2002 and 2006, the
proportion of workers in self employment increased from 13% to 22% for the non
agriculture activities in which the employment population ratio for men
increased overwhelmingly to 82% compared to 79% for women thereby enabling more
people to find jobs in SSBs not only out of the need to increase and diversify
incomes but in the face of reducing Poverty through employment provision. It
was reported in 2006/2007 by Uganda Bureau of Statistics (UBOS) that the total
number of businesses registered in Kampala was nearly 26,000 of which those
employing 5 or more persons were 17,084 hence showing a growth of over 60% of Small
Scale Businesses.
The
Government of Uganda (GoU) with the support of International development
partners as the World Bank through the Foreign Direct Investments (FDI) to
promote the informal sector as a way to reduce unemployment (a key variable for
measuring the performance of an Economy). This has led to the influx of
unemployed work force to Kampala which is the major trade center in the
country; households increased their willingness to participate in the labor
market by setting up Small Scale Businesses to meet the social and economic
responsibilities associated to their families leading to competition.
It is
against this justification that Small Scale Businesses in Shauriyako Trade
Center have been set up to provide substantial and sustainable employment
opportunities trigger development and economic growth.
1.1
Statement of the Problem
Small Scale
Businesses are competitive and dynamistic nature. This makes them a fundamental
cause for Economic growth and Development through their contribution to income
redistribution, and Unemployment reduction in developing economies. However,
there are no clear indicators that unemployment rates have reduced.
Unemployment consistently remains a key concern that needs the attention of
major economic decisions to focus on the promotion of small scale businesses
activities.
1.2
Objective of the study
The study
attempted to examine the nature of SSBs that provide employment to the labor
force in Shauriyako trading centre in Kampala District.
1.2.1
Specific objectives
i. To
identify the different activities of the small scale businesses in which the
labor force is employed.
ii. To
identify how the SSBs contribute to development and growth of developing
economic.
iii. To
identify the size of businesses that provides employment to the labor force.
1.2.2
Research questions.
The study
investigated the following questions;
i. What
reasons have led to the growth of Small Scale entrepreneurial businesses in the
region of study?
ii. What
challenges have limited the activities of the Small Scale Businesses in their
role to provide employment opportunities?
iii. Is
there space for the expansion of the SSBs?
1.3 Purpose
of the study
The purpose
of the study is to identify the various activities in which the Small Scale
Businesses absorb the labor force.
1.4 Scope of
the study
The study
was confined to Small Scale Businesses since they engage the labor force in
various activities that require little capital to sustain the possibility of
retail, wholesale shops, hardware and general merchandise, restaurants to
mention but a few as a way to reduce unemployment levels
The study
focused on the reasons for the growth of SSBs towards the provision of
employment to the labor force. Through this the role of SSBs with the support
of government and other International partners is recognized thereby
encouraging small scale trade for employment and improved household earnings.
1.5
Significance of the Study
The study
shall help the policy makers to recognize the importance of Small Scale
Businesses and industries in the provision of employment to the labor force for
economic development. This shall further guide them to make trade policies to
enhance the performance SSBs as regards their activities to accommodate the
mushrooming population that is attributed to high birth and fertility rates as
well as rural urban migration within the country.
To students
and other scholars who intend to widen their knowledge in the study of the role
of Small Scale Businesses, this study shall be a basis of reference since it
focuses on the causes of the establishments, how the unique characteristics of
the Businesses have facilitated their role in the provision of employment,
challenges they face and the solutions that are being undertaken to harness
their activities.
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