Leasing competence, lease structure and perceived performance of SMEs in Uganda

Abstract

Small and medium-sized enterprises (SMEs) make up approximately 90 per cent of Uganda’s private sector and contribute two-thirds of national income. In Uganda, leasing has bridged the current financing gap experienced by SMEs, and efforts have been made to improve the leasing competences of SME Managers yet many more SMEs close shop annually. This empirical study sought to establish the relationship between leasing competence, lease structure and perceived performance of SMEs. The research adopted a cross sectional study combined with quantitative approach. A sample one hundred and thirty two (132) SMEs located in Kampala district was conveniently selected. The data was collected using a questionnaire filled in by SME managers and analyzed using SPSS11.0 and excel software. It was found that there is a significant positive relationship between leasing competence and lease structure, which means that the higher the leasing competence of lessee manager, the more favorable the negotiated lease structure of the lease contract. The study results also showed that there a significant positive relationship between leasing competence and perceived performance. This means that leasing competence of lessee manager leads to improved perceived performance of SMEs. The analysis revealed that there is a significant positive relationship between lease structure and perceived performance, meaning that the more favorable lease structure, higher the perceived performance of lessee SMEs. Regression of leasing competence and lease structure on perceived performance showed that only the latter has a significant prediction on SME performance.