Liberalization policy reforms and youth entrepreneurs’ access to financial services in Kampala, Uganda

Abstract

The general objective of the study was to assess the impact of liberalization policy reforms on youth entrepreneurs’ access to financial services in Kampala, Uganda basing on the following specific objectives; The study investigated the nature of financial services provided to the youth entrepreneurs by financial institutions, to examine how financial services affect enterprises initiated by the youth entrepreneurs, and to assess the challenges faced by youth entrepreneurs in the process of accessing financial services from the financial institutions. Descriptive survey research was used to get clarity and define the problem at hand clearly The study used mixed-method research combining quantitative and qualitative research approaches. The sample size of 92 youth entrepreneurs with registered businesses in Kampala CBD was being determined by the sample calculation formula by Taro Yamane’s (1970) formula. Furthermore, a sample of five bank managers of the selected five financial institutions (Centenary Bank, DFCU Bank, Equity Bank, Housing Finance Bank and BRAC) was included as key informants in this study. Data was collected by questionnaire guide and key informant interview guide. Quantitative data was analyzed using descriptive statistics with a help of Statistical Package for Social Scientists (SPSS), and qualitative data was analyzed using thematic analysis. Findings revealed that youth entrepreneurs in Kampala, Uganda have largely benefited from financial services, particularly microfinance training and savings products. However, there is significant room for improvement in the quality and accessibility of these services. Entrepreneurs frequently used loans for marketing and advertising, with loan failures primarily due to competition and poor business planning rather than high interest rates. Key challenges include lengthy loan applications, high interest rates, collateral demands, and a lack of financial literacy. Financial institutions need to enhance their programs to be more flexible, personalized to youth entrepreneurs, and educational to better support young entrepreneurs and foster a more inclusive business environment.