Survival of small and medium businesses in Uganda: A time to event analysis

Abstract

The objective of this study was mainly to investigate factors responsible for survival of Uganda’s small and medium businesses. The investigations were based on the records of the businesses from the survey done by Uganda Bureau of Statistics. Business survival was measured from the year when the business started operations to the year when the survey was conducted (2010) excluding those started before 1987. A time-to-event approach in a Cox Proportional Hazard model was adopted in the analysis. In the results, a total of 212,511 businesses were considered to have exited operations by the time of the survey. A median survival period of 4.85 years (range, 1 – 23) estimated indicates a low survival rate of Uganda’s businesses. From the multivariate assessment, the rate of exit of businesses was significantly (p<0.05) higher for businesses located in the central, those employing more number of employees, owned by non-Ugandans, not of sole proprietorship and those considered not to be innovative (owning a computer, using a computer and using internet). The findings of this study point to a need to scale up measures aimed at ensuring that the survival levels of businesses in the Country improve like significantly encourage the use of ICT and reduce ICT related costs, creation and gazzetting of areas mainly for businesses like creation of industrial parks and organizing similar businesses in the same locality for easy movement of factors of production; and training the citizens mainly in skills development.