Analysis on risk management in small and medium enterprises : a case study of Kampala city

Abstract

Small and Medium Enterprises (SMEs) have strongly grown in Uganda’s economy especially in the manufacturing industry and have contributed greatly to the Gross Domestic Product (GDP) and it has also created a number of employment opportunities. According to Uganda Investment Authority (UIA) in their quarterly survey, it is estimated that SMEs create over 120,000 job opportunities.

However, many have not had a smooth course as they have faced various difficulties during their existence such as limited finance, low levels of technology, limited market for their products, natural hazards and many others and hence many have ended up failing and collapsing. Manufacturing industries are under tremendous pressure due to the free market economy, rapid technological development, and continuous changes in customer demands Islam et al. (2006). One of the major reasons attached to this failure is lack of risk management practices. Leopoulos (2006) suggests that SMEs need to develop an ability to deal with the increasing risks.

This report aims to assess the level of knowledge owners/managers and employees of SMEs have as regards risk management in their organizations, analyze the risks SMEs in Kampala face and how they manage them and also provides solutions on how to better these practices as way of increasing their survival. The study was conducted using primary and secondary data. A simple random method was also used and a descriptive research design.

It has been noted that most managers and employees are not aware of the concept of risk management and do not efficiently manage their risks due to lack of information something that has forced some of them out of business.

The report is comprised of five chapters. Chapter one looks at the introduction which gives a brief about the research that is; the background, problem statement, purpose of the study, scope of the study as well the research objectives and questions. Chapter two reviews literature on the topic of risk management in SMEs by different scholars and other sites. Chapter three entails the methodology showing how the study was conducted, tools that were employed in data collection, data presentation, interpretation and analysis as well as limitations. Chapter four consists of the findings of the study and the interpretation of these findings and finally chapter five comprises of conclusion and the appropriate recommendations to the SMEs.