THE BANK INTEREST RATES AND PERFORMANCE OF BUSINESS ENTERPRISES IN UGANDA. CASE STUDY OF NAKUMATT SUPERMARKET, KAMPALA-UGANDA BY NAMUTEBI MAGRET BBA/44102/143/DU A RESEARCH REPORT SUBMITTED TO THE COLLEGE OF ECONOMICS AND MANAGEMENT SCIENCES IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF BACHELORS DEGREE IN BUSINESS ADMINISTRATION OF KAMPALA INTERNATIONAL UNIVERSITY SEPTEMBER 2017 DECLARATION- I Namutebi Magret, declare that this report is my original work and has never been presented anywhere for any award of any other university. Signature ..=:t~ ............ ........ Date ... \.9-...~. -~ ~ .-:-..?.-.<?! .1 ............. NAMUTEBIMAGRET BBA/44102/143/DU J . APPROVAL This is to ce1iify that this report has been done under my supervision and submitted to the college of economics and management sciences for examination with my approval. Signed: .............................................. MR TUKUNDANE ADONIA (supervisor) Date ................................................. ii DEDICATION This report is dedicated to my loved parents Mr. Kasenge Vicent and Mrs. Nalongo Namakula Resty, Mr. Mabirizi yosam and my siblings for the love and feel of belongingness, the courage they have bestowed to me which has elevated me to the completion of this course. iii ACKNOWLEDGEMENT Whereas a repmi is an individual task, I still believe however without any support it is impossible to accomplish successfully. 1 would therefore acknowledge the almighty God for the strength, wisdom and understanding together with courage granted to me in completion of my research report. I would like to acknowledge my supervisor Mr. Tukundane Adonia, for the guidance, support, courage and advice bestowed to me even to the accomplishment of this report and to come up with a meaningful conclusion. Also I would like to acknowledge the management ofNakumatt for even allowing me to conduct my research in their company, may the lord bless them. I would like to acknowledge my parents for the love and care throughout my three years even hoping that God will entirely bless them for the sacrifice rendered toward my academic journey. I would also like to acknowledge family members that is, my grandmother Nakibuuka Jane, my brothers James, Yasin, Robert and my sisters Sylivia, Jemimah and Aminah, for availing themselves for me to feel the importance of belongingness at all times, may the LORD GOD bless them. More so I would extend my sincere thanks to my friends who have rendered their time and resources even to supporting me throughout my research report that is, MabiriziYosam Komuhimbo Juliet, Nakabuga Magret,Magoba Jackie ,Namisango Moureen to mention but a few, may God bless them abundantly. iv LIST OF TABLES Table I : Showing distribution of respondents by gender. ........................................................... 18 Table 2: Showing the age of the different respondents within the organization ......................... 19 Table 3 : Showing the education back ground of the respondents ............................................... 19 Table 4 : Showing the duration of employment of respondents in the organization .................... 20 Table 5 : Showing the marital status ofrespondents .................................................................... 20 Table 6 : Showing how interest rates affect organizational performance in Nakumatt supermarket. .................................................................................................................................. 21 Table 7 : Showing the respondents to the different types of interest rates affecting the organization ................................................................................................................................... 21 Table 8 : Showing the respondents to the average level of interest rates and their impact on business perfonnance that has prevailed over the last three consecutive years ............................ 22 V TABLE OF CONTENTS DECLARATION ................................................................................................................................... i AP PROVAL .......................................................................................................................................... ii DEDICATION ..................................................................................................................................... iii ACKNOWLEDGEMENT .................................................................................................................... iv ABSTRACT ......................................................................................................................................... ix CHAPTER ONE ................................................................................................................................... 1 1.1 Background of the Study ................................................................................................................. 1 1.2 Statement of the Problem ................................................................................................................ 2 1.3 Objectives of the Study ................................................................................................................... 3 1.4 Research Questions ......................................................................................................................... 3 1.5 Scope of the Study ........................................................................................................................... 3 1.5.1 Contents scope .............................................................................................................................. 3 1.5.2 Geographical Scope ..................................................................................................................... .4 1.5.3 Time Scope ................................................................................................................................... 4 1.6 Significance of the Study ................................................................................................................ 4 1.7 conceptual frame work .................................................................................................................... 5 CHAPTER TWO ................................................................................................................................... 7 LITERATURE REVIEW ...................................................................................................................... 7 Definition of Interest Rates ................................................................................................................... 7 Types of Interest Rates .......................................................................................................................... 7 Simple Interest. ...................................................................................................................................... 7 Composition of Interest Rates ............................................................................................................... 8 Nominal Interest .................................................................................................................................... 8 Market Interest Rates ............................................................................................................................. 9 Default Interest .................................................................................................................................... 10 Government Intervention .................................................................................................................... 10 Immediate Effects ................................................................................................................................ 11 Mid-term Effects ................................................................................................................................. 11 Longer-term Effects ............................................................................................................................ 11 Savings ................................................................................................................................................ 11 vi Margins ................................................................................................................................................ 12 Uganda's current Interest Structure ..................................................................................................... 12 INFLATION (UGANDA) ................................................................................................................... 14 CHAPTER THREE ............................................................................................................................. 15 RESEARCH METHODOLOGY ........................................................................................................ 15 3. I Research Design ............................................................................................................................ 15 The researcher employed both qualitative and quantitative methods of data collection analysis, which all enabled him to collect a wide range of information concerning interest rates and performance in Nakumatt supermarket. ......................................................................................................................