Financial Inclusion and the Growth of Small Medium Enterprises in Uganda: Empirical Evidence from Selected Districts in Lango Sub Region

Marus Eton (  emarus@kab.ac.ug ) Kabale University Faculty of Arts and Social Sciences https://orcid.org/0000-0002-9057-8484 Fabian Mwosi Barham University College, Kabale Uganda Constant Okello-Obura Makerere University College of Computing and Information Sciences Abanis Turyehebwa Kabale University, Kabale Uganda Gilbert Uwonda Gulu University Faculty of Business and Development Studies


Introduction
Financial inclusion (FI) has gained immense recognition in many upcoming economies as well as at the international level in as far as policy is concerned (IMF, 2017). The 2010 G20 Summit in Seoul endorsed the Financial Inclusion Action Plan (FIAP).Financial inclusion (FI) is the process of access to and usage of diverse, convenient, affordable nancial services (Nwanko and Nwanko, 2014). This is viewed as the ability of some individuals to access and use basic nancial services like savings, loans and insurance, which is designed in a manner that is reasonably convenient, exible and reliable. FI has taken a center stage on economic growth and development in an effort to create wealth amongst citizens of developing countries (IMF, 2018). FI is an important nancial literacy program, which creates the communities ability to improve on the usage of any kind of nancial service from formal nancial institutions, which affects the citizens standards of living, and economic fundamentals which are the major indicators to nancial inclusion (Terzi, 2015).
The de nition of Small Medium Enterprises (SMEs) differs from country to country. In some countries the criteria for classi cation is based on capital and in other countries it is based on the number of employees. Garikai, (2011) de nes SMEs by capital invested, number of workers employed and sales turnover. The number of employees working in that business and assets value also classi es SMEs. In the context of Uganda, SMEs are regarded as an engine of economic growth, development and transformation through innovation and wealth creation (NDPII 2015(NDPII /16-2019. The promotion of SMEs has been a key area of government intervention. SMEs dominate much of the country's economy, for example 10% are active in manufacturing sector, 33% in commerce, 49% in service and 8% in other elds(UIA, 2016), and all these are contributing to approximately 90% in employment which is close to (2.5 million people) of the entire private sector employment and 80% of manufactured products accounting for 20% of GDP (UBOS, 2016; UIA2016).The development of SMEs in Uganda is one of the policy agenda of the government in order to boost economic growth and development. The key areas of government interventions is the creation of Micro nance support center, Uganda which offers programs that support the growth and expansion of SME through access to cheap and affordable nance. (Kristiningsih and Trimarjono, 2014 ;Ojokuku and Sajuyibe, 2014) argues that SMES globally are seen as an engine of economic growth and development and its success has a direct effect on the economic growth and development in both developing and developed economies as they have the potential to create jobs. OECD, (2010a) posits that not all SMEs have the ability to be innovative, however small businesses are often the driving force behind the new radical innovations that are very signi cant in the economic growth and development. SMEs are also able to exploit the opportunities available at their disposal which had been neglected by already established rms.
Eton marus et al.., (2018) notes that SMEs should receive full backing legal protection and stimulus from all stake holders so that it can sustain economic growth and development which would lead to job creation, therefore driving investment into the economy as well as generate revenue to government through taxation. SMEs are rmly attached to the local environment which may represent their source of expertise, networks, business opportunities, and access to funding which would be very important to consider factors that supports its existence at a macro level and therefore one needs to know how policies which are developed in a country can work and how the SMEs adopt these policies which shapes there doing business at the territorial and regional level (OECF, 2016e). The failure by SMEs to deliver good products and services in time to the customers at all levels as a result of challenges such as inadequate funding for their businesses therefore results in to a debate on whether they are well prepared in creating a sustainable economic growth and development in a country (Bowen, Morara and Mureithi, 2009). The study conducted by Abanis et al.., (2013) establishes that SMEs performance in Uganda was largely hampered by inadequate funding characterized by high cost of nance. However, Lack of competition amongst formal nancial institutions for nancial services reduces access to nancing for SMEs. Increased competition and market diversi cation consequently plays a major role in promoting nancial inclusion and productivity of SMEs in the country. Love and Martinez Peria, (2015) establishes a positive impact on FI depends on the coverage of credit bureaus. A strong competition amongst the nancial institutions and low information asymmetries would facilitate nancial inclusion amongst SMEs. The key characteristics of an economy which promotes favourable conditions for SME investment and nancial inclusion are economic diversi cation, adequate infrastructural development and healthy competition across all sectors.

Statement of the problem
The growth, development and survival of SMEs are affected by various factors that may exist in their operations and management of the businesses. SMEs are created and nurtured in various ways and supported by various stakeholders using different laws and regulations which supports their creation.
The operations of SMEs in sub Saharan Africa, Uganda and in lango sub region in particular has contributed to economic growth across the country (UBOS, 2016) and there are many successful entrepreneurs in the country. The increase in the number of many nancial institutions in the region would indicate an increase in the access to nance which would mean more support to the growth of businesses. However, SMEs in the region are still disproportionately affected by inadequate nancing. Adcorp, (2014) observes that the mortality rate of SMEs among African countries remains very high with ve out of seven new businesses failing in their rst year. This is too high which needed an intervention to reverse the trend. SMEs in developing countries are stagnating and if not supported by developing good policies they will not survive for a long time yet their contribution to economic growth would be enormous (Reeg, 2013 (Aguera, 2015). At a macro level, nancial inclusion can result in to a diversi ed base of deposits creating a resilient nancial system and increased stability (Garcia, 2016). IMF revealed that within a country's level, nancial inclusion is affected by the limitations arising from numerous macroeconomic outcomes which includes stability, equality and economic growth (Sahayet al… ,2015). Information and communication technology has greatly improved digital nancing. The delivery of nancial services through digital means of service provision has been increasingly emphasized by governments, development partners and service providers themselves as a good step towards nancial inclusiveness (Gabor and brooks, 2017). The provision of services like mobile banking has provided with easy an electronic transfer payment to the nancially excluded people and this method can help reduce theft, nancial crimes related to cash transaction and reduce the risk of loss. Digital nancing appears to be a better solution to those nancially and socially excluded (GSMA, 2017).
Financial Inclusion Alliance (FIA) , (2018) states that the usage of Smartphone's and broadband internet are now important for supporting access to secure and affordable nancial services such as money transfers, credit and saving, payments both domestic and international. Alaxandre and Eisenhart(2013) observes that mobile technologies has provided a true imperfections of the nance. The development and the adaptation of digital innovations through partnership for nancial inclusion would accelerate the delivery of nancial services. Improved nancial inclusion propels and plays a vital role in promoting access to credit, use of mobile and automatic teller machine (ATM), savings and easy access to payments (Dor eitner and Roble, ,2018). The high increase in nancial inclusion can be associated with increased investment level, employment opportunity, higher income level and lower poverty level and that economic growth can only be sustained if a good number of people have access to formal nancial services (Umar, 2013). In order to increase nancial inclusiveness to majority population nancial service providers should lower down the costs of operating accounts, particularly citizens from rural areas (Eton, Mwosi, Ogwel, Edaku and Obote, 2018). There are high transaction costs in lowly populated areas coupled with rigid and complex methods of assessing the risk pro le of clients in rural areas and these has been a challenge for the formal nancial institutions with a business model to sustainably offer adequate and effective nancial services to rural populations (FAO, 2016a).
Across-country evidence suggests that at a macro level, the nancial institutions have developed a wide range of products and services being offered with a greater outreach and depth, this can reduce inequality amongst the population and increase economic growth and development (Sarma and Pais, 2011). Similarly Martinez, (2011) establishes that nancial inclusion helps to increase the pace of inclusive growth and development which has to be sustainable with effective and e cient distribution mechanisms of scare resources for the wellbeing of the society. CBN, (2012) observe that nancial service mobilizes greater household saving, leverage capital for investment and expands the class of entrepreneurs. Such nancial services may include Loans, overdraft, Pension, insurance services and modes of payments. Sharma, (2016) notes that access to and usage of nancial services has proved to be a major driver to economic growth and development. According to (Damodaran, 2013), nancial inclusion helps to channel the ow of money in the economy so that both the rich and the poor access it with ease. Financial inclusiveness at household level may support more effectively the macroeconomic policy frameworks. IMF, (2018b) establishes that nancial inclusion at a household level is associated with higher revenue and expenditure of Gross Domestic Product and it would equally increase the size of the scal multiplier and therefore would indicate that the output elasticity to interest rates will be higher for the countries with greater household nancial inclusion. FI therefore covers cost effectiveness and meaningful nancial services for those who are under privileged and those who nd it a challenge to access nancial services and most of them are rural dwellers. Ibor, O ong and Mendie, (2017) argues that much efforts should be made by all stakeholders to increase nancial access points to more rural areas and develop infrastructural services which promotes nancial inclusiveness. Government should also develop policies for expansion of nancial services to those who are nancially excluded in rural areas.

Small Medium Enterprises
Aga notes a correlation between technological uptake and a higher business failure rates in Uganda. Notably, the constraints SMEs are faced with could also include weak operational capabilities and limited resources (Sok, Snell, Lee, and Sok, 2017) and particularly in Africa with higher challenges such as technology, innovation, and human capital are a big obstacle to business enterprises (Akeyewale, 2018).
The study conducted by Tinarwo, (2016), also established that some of the challenges hampering the growth of SMEs were stiff competitions, lack of markets, unfair treatment exhibited by local authorities and lack of government support, inadequate information and communication technology and training, which has greatly affected most of our SMEs. Dugassa, (2012) establishes that inadequate training and market size has been a major challenge amongst the SMEs in the region. Lack of training makes the SMEs to produce substandard products, which eventually affect the marketing of their products.
Therefore, training of the SMEs would help sort out these mess and solve such a challenge. Katua, (2014) argues that government should open up institutions speci cally to support the training of entrepreneurs that would offer them relevant skills that would improve on the performance of SMEs. Sempala and Mukoki, (2018) observes that there is need to train enterprise owners, managers and other operators in order to equip them with the relevant skills and knowledge specially those tailored towards impacting various business management practices. Eton, Okello-Obura, Mwosi, Ogwel, Ejang and Ogia, (2019) argues that training institutions should strengthen the information and communication technology training programs by a aligning them to the required job demands as dictated in the eld of business.
Gombarume and Mavhundtse, (2014) posits that SMEs had the challenge of accessing cheaper loans from the formal nancial institutions and this has been a limiting factor in the growth sector. Inadequate access to cheaper credit is recognized world over as a major challenge facing SMEs and these therefore constraints the growth of the existing SMEs. Shah, Nazir, Zaman and Shabir, (2013) opines that it's very di cult to access nancial services from formal nancial institutions due to their unrealistic demand for collateral; loan guarantees securities and high interest rates. Prohorovs and Beizitere, (2015) posits that access to nance and nancial services has been some of the major factors constraining the growth and development of SME. Fowowe, (2017) establishes that the inadequacy of capital is believed to be one of the major factor affecting SMEs to reach their full potential. Credit availability is very signi cant for the growth and survival of SMEs (Eton, Mwirumubi and edaku, 2017). They also revealed that policy makers should advocate for nancial sector policies that supports nancial intermediaries that design relevant products and services for SMEs which are exible and affordable and thus creating favourable environment that supports creativity and innovation. Government should avail funds to SMEs at low interest rates since SMEs are the driving force in the economy which should be supported (Taiwo, Temitope and Agwu, 2016) The cost of electricity is abnormally higher in Uganda as compared to other countries in the region which affects the SMEs businesses (Turyahikayo, 2015). The increasing cost of electricity eventually affects the price of the products where the consumer bares the nal burden. Reliability of electricity is also a challenge in doing business in Uganda, business owners complain a lot and until now no substantial answer can be given. World Bank, (2010) establishes that electricity is still a challenges faced by SMEs in Africa followed by access to capital. Enterprises in Uganda are still small with limited resources at their disposal and they are left with only option of leveraging on the synergy of resources to complement each other. Fujita and Thisse, (2013) observes that accessibility of resources and their availability to SMEs can help them maximize the bene t and market share as a result of economies of scale as well as internationalization. Sorasalmi and Tuovinen, (2016) argues that SMEs are confronted with diverse challenges which include technological knowhow and hostile business environment that affects their survival as compared to developed economies. Kamukama, (2013) observes that technological advancement is growing at a faster rate and therefore SMEs should recognize and appreciate technology to compete favorably in the market. The success of any SMEs would depend on the ability to innovate in order to meet consumers taste and preferences and this will increase market coverage, which means a rm may have competitive advantage over others (Idris, 2016). The level of competition is increasing on daily basis therefore, SMEs need to be creative and innovative and focus on improvement of their products and services, quality, quantity, and this would motivate employees (Farrokhian and Soleimani, 2015). SMEs with effective technological capabilities can easily adapt to the changing market environment whose consumer tastes and preference are rapidly changing (Ajonbadi, 2015). According to Murrithi, (2017) the study establishes that inadequate information is an obstacle facing SMEs in Africa and this challenges affects Uganda as well. The information related would include marketing, laws regulating to their operations and any other information, which can be of help to their businesses. Eton, Mwosi, Mutesigensi and Ebong, (2017) argues that information is critical since nancial institutions would want information related to personal characteristics and credit worthiness of information on guarantors which are very essential in giving out loans. Based on the above, researchers have established that SMEs have failed to achieve their long-term targets in the economy. For example, (Ali, Rashid, & Khan, 2014) establishes a negative impact of small-scale industries on poverty output in Pakistan. They recommended simpli cation of lending procedures, enforcement of credit rights and reduction in credit costs. Beck, Demirguc, & Levine (2003) demonstrates that SMEs are not robust in reducing poverty. The authors could not establish a causal link between SMEs growth and poverty. The growth impact is rather spread across both large and small rms. Similarly, (Straka, Birciakova, & Stavkova, 2015) show that the argument for SMEs contribution to household income is a relative one in Pakistan. Households' opinion that SMEs contribute to standards of living depends on the environment in which households live and work.

Financial Inclusion and Small Medium Enterprises
Financial Inclusion (FI) refers to a change in ones mindset as an economic agent on how to see money and pro t and aims to eliminate any barrier in accessing and utilization of nancial services and this is supported by the existing infrastructure. Its noted that more than half of the world economic challenged adults do not have bank accounts and this therefore leave them vulnerable to exploitation, theft and this results in to heavy losses (World Bank, 2012).Promoting FI in a global perspective would widen economic inclusion and this will improve on the nancial condition of the population and thus uplift the standard of living of those disadvantaged SMEs who are nancially excluded (Khan, 2011). Financial inclusiveness would encourage the sustainability of SMEs through enhancing their access to cheaper sources of nance which would be vital in supporting their growth (Batance et al…..,2018). The intermediation between savings and investments with e cient nancial inclusion are most likely to improve the e ciency of SMEs and facilitate a better nancial system (Aduda and Kalunda, 2012).While we have noted that under utilizing capital is one of the causes of growth constraints amongst the SMEs, they are very important in the investment strategy and expansion of small and macro enterprises amongst the rural therefore increasing nancial inclusiveness of the citizens (Aldaba, 2011).SMEs are nancially constrained and the relaxation of credit constraints or accessibility to nance amongst the SMEs compared to larger rms will most likely lead to employment and the gains in the labour productivity therefore contributing to economic growth and development (Ayyagari et al., 2016).Its observed that the establishment and growth of SMEs will lead to employment and labour productivity across the country which leads to access to formal nance. World Bank, (2018) also notes that the gains found from implementation of policy reforms geared towards boosting the growth of SME by establishing credit bureaus across the country will improve nancial inclusiveness of the citizens. Beck and Cull, (2014) observes that nancial inclusiveness is signi cant for the growth of SMEs in sub-Saharan Africa.
There are various factors that affect the level of a country's nancial inclusiveness and nancial development, including the quality of the formal nancial institutions, availability of relevant information, income per capita, governance and the regulatory framework (Park and Mercado ,2015). Most SMEs in Sub-Saharan Africa do not even attempt to apply for a bank loan due to challenges of complicated collateral requirements, high interest rates, and complicated documentations. UNIDO, (2015) opines that the cost associated with capital transaction is always too high which greatly affect the performance of SMEs. World Bank, (2016) establishes that high concentration, weak competition and the prevalence of public ownership in the nancial intuitions are speci cally some of the key constraints in nancing SMEs. Financial inclusiveness supports the principle of nancial stability which provides a strong risk management and nancial facilities. It would also close the nancial inclusion gap within the SMEs and these can bring a signi cant gain in the growth. However a very low nancial inclusion in the region suggests important untapped potential for the growth of increased access to nance by SMEs. Popov and Rocholl, (2016) posits that increased constraints to nancing during recession may put more pressure on employment by SMEs than by large rms. Kazimoto, (2014) observed that governments and other stake holders should therefore avail nancial facilities and access to nance at a reasonable interest rate and use up to date information and communication technology in business and marketing and these can be through improved network and training. Legas, (2015) establishes that SMEs in Africa face a lot of challenges and among them includes nancial inclusion, non-favorable laws, regulations, and poor infrastructure, which affects the growth of SMEs. The government should take the responsibility of providing SMEs with a conducive environment for their growth and development, seeking for international and local opportunities for its SMEs, develops fair and encouraging policies and making it easy for SMEs to access nancial facilities at a fair and affordable rate (Fariza, 2012).

Methodology
The cross sectional research design was used. Cross sectional studies are cheaper, quicker and easier to administer with minimal control effects (Cohen et al… , 2010). The study used both qualitative and quantitative approaches. Data was collected using primary and secondary methods. The target study population of 1900 was used in the study and a total of 320 respondents were determined using Krejcie and Morgan table, 1970. The respondents comprised of SMEs in the categories of Manufacturing, Services, Production and merchandize who are operating in the districts of Lira, Apac and Dokolo. A structured and closed ended questionnaire were developed using a ve likert scale ranging from 1-5, which indicated (strongly disagree 1 to strongly agree 5 respectively). Questionnaires are less biased and increase the quality of data being collected. A Simple random sampling was used in the selection of the respondents, while purposive sampling was used in the selection of a speci c type of SMEs. Systematic and strati ed samplings were used to select fractions and select study samples from the selected study area.
Data set from the study were collected from respondents who were SMEs entrepreneurs. Respondents were told the purpose of the study and encouraged to give in their opinions objectively. Descriptive analysis was used and supplemented by inferential statistics. Factor analysis was adopted while Correlation analysis was used to determine the strength of the relationship between the study variables. Regression analysis was conducted to provide a linear prediction in the growth of SMEs as a result in changes in nancial inclusion.

Results
Overall participation indicates that 62.9% were male while 37.1% were female. This implies that the study was dominated by male more than female. The dominance of men than women derives from the fact that men have higher access to nancial services than women do. Men have the required collateral security compared to women, who struggle to identify potential guarantors. Most of the participants (57.7%) belonged 30 -39 years age bracket, followed by 33.3% who belonged to 18 -34 years age bracket. Little participation was observed among those with 50 years above. The statistics imply that the adults, followed by the youths dominated the study. This variation in participation of ages at which Ugandans accumulate nancial wealth to engage in business. Most of the youths do not have adequate nancial capital to start business. Participation according to education level indicates that majority had secondary education (45.0%) followed by those whose education was above secondary (37.1%) while 17.9% had primary education. The dominance of participants with secondary education derives from the effects if Lord's Resistance Army war that crippled the education of many. However, participants whose education was above secondary suggests the trend of turning away from white-collar jobs' expectations to blue-collar. In terms of experience, 46.7% had over 10 years' experience in business, followed by those with 5 -9 years' business experience (36.1%). The statistics suggests that the study participants had noticeable experience in business. Marching this experience and their level of education suggests some stability in growth and expansion of SMEs in the region. The study also indicates that most of the participants operate merchandize (36.8%), followed by those who provide services (29.2%), followed by manufacturers (18.2%) and least of all production (15.8%). The variation in participation based on the nature of business derives from the fact that merchandize and services businesses require lower capital to establish and operate than manufacturing and production.

Factor analysis
The researchers raised many claims in the instrument, some of which were highly correlated. To eliminate redundancy, factor analysis was adopted to remove the highly correlated while leaving out those that were unique yet accounting a greater portion of the original variable list. Source: Field data, 2020 The system extracted three factors accounting for about 58% of the originally. The extracted variables were used in further analysis. High factor loadings were evident in: becoming popular (r =.786), accumulating some property like land (r =.717), maintaining a close contact with customers (r =.707) and networking (r =.706). Source: Field data, 2020 The extracted variables account for about 67.4% of the original variables. High factor loadings were evident in: unrealistic demands for collateral securities (r =.716), competition from foreign rms (r =.683), stiff competition from domestic rms (r =.669), small market size (r =.698), and unfair treatment from market authorities (r =.676). Three factors components were extracted, accounting for 68.4% of the original variables. In the rst component, the largest factor loading was evident in: making it easy to make deposits with nancial providers (r =.812) while the least factor loading was evident (r =.708).

Objective one: contributions of SMEs
To understand the contributions of SMEs, this paper adopted descriptive measures of mean and standard deviation. Mean scores above 3.5 indicated challenges that affect SMEs the most, mean scores below 3.5 indicated challenges that affect SMEs the least while mean scores from 2.5 to 3.4 indicated challenges that affect SMEs moderately. increasing household income is no longer a motivator to SMEs. It is more of a short-term goal than a long-term goal in business and particularly, SMEs. Generally, the statistics suggest that participating in SME business offers important gains. Actually, a close examination of the standard deviation does not show signi cant deviations in participants' opinions. Nearly all the participants seem to support the claims raised in the study.

Objective two: Challenges faced by Small and Medium Enterprises
To understand the challenges faced by SMEs, this paper adopted descriptive measures of mean and standard deviation. Mean scores above 3.5 indicated challenges that affect SMEs the most, mean scores below 3.5 indicated challenges that affect SMEs the least while mean scores from 2.5 to 3.4 indicated challenges that affect SMEs moderately. Participants indicated stiff competition from foreign rms as the problem that mostly challenges the operation of SMEs in Lango (Mean = 4.41; Std. = .835). Most of the good and services produced and sold in the sub-region provide same consumer tastes, designs and preferences that as imported goods. In the wood manufacturing rms for example, they assemble wall-units, o ce counters, beds, chairs, tables and doors out of imported softwood. Such products made in Uganda cannot beat the utility a consumer is likely to maximize if one bought a similar imported good. Our markets are ooded with imported commodities offered at very low prices while providing expected consumer tastes. Participants indicated competition from domestic rms (mean = 4.29; Std. =.761) is the second challenge to SMEs' operation in the region. Nearly, the goods, and services produced and sold by SMEs are more of a duplication of imported commodities. We have some manufacturing rms in Lira, producing oil cooking oil and toilet paper. The numbers of companies in Uganda that produce goods are many. Participants also pointed to small market size (mean = 4.13; Std. =.977). Least affecting challenges pointed to expensive loans (mean = 3.35; Std. =1.015), high in ation rates (mean =3.66; Std. =1.091) and unrealistic demand for loan guarantees (mean =3.76; Std. =1.059). Participants regarded expensive loans as affecting SMEs the least. However, going for loans is optional. Secondly, apart from those who operate on loaned money, the need for guarantors is an optional problem. Thirdly, high in ation rate increases the costs of borrowing. This is also optional and affects a limited set of SMEs. Whereas the mean scores indicate 'competition from foreign rms' as key among the challenges of SMEs businesses, standard deviation suggests 'stiff competition from foreign rms'.

Objective three: Relationship between nancial inclusion and SMEs
To understand how nancial inclusion supports the growth of SMEs, it was important to understand the state of nancial inclusion in Lango sub-region. This paper adopted descriptive measures of mean and standard deviation to examine the state of nancial inclusion in Lango sub-region. Mean scores above 3.5 indicated challenges that affect SMEs the most, mean scores below 3.5 indicated challenges that affect SMEs the least while mean scores from 2.5 to 3.4 indicated challenges that affect SMEs moderately. The statistics indicate that most of the participants nd it easy to make payments to their nancial service providers (mean = 4.23; Std. =.839), they have easy access to Automatic Teller Machines (mean = 4.21; Std. =.865), and nd it easy switching from one bank to another (mean =4.21; Std. =.909). These statistics imply that nancial inclusion has simpli ed their business operations. However, participants seem not to nd it easy using available nancial services (mean =2.53; Std. =1.342). The statistics imply that some of the nancial services are technical and not user-friendly, or they are user friendly but users lack acquaintance to using them. Generally, the results indicate a high level of nancial inclusion in Lango sub-region (mean =3.96). This seems to suggest that most of the SMEs have bene ted from governments' efforts to promote nancial inclusion. The results indicate that participants nd nancial inclusion relevant in their business operations. A scrutiny of standard deviations does not show signi cant deviations in participants' opinions on the issues raised in the study relating to the contributions of nancial inclusion.
To understand how nancial inclusion supports the growth of SMEs in the region, the paper adopted linear regression. Linear regression is a mathematical function that shows the relationship between the independent variable ( nancial inclusion) and the dependent variable (SMEs). The model summary shows that the relationship between nancial inclusion and SMEs growth (r =.362) is weak. The statistics suggest that a change in nancial inclusion is associated to a weak change in  The Analysis of Variation (ANOVA) shows whether the independent variable accounts for the changes in the dependent variable. Using the regression sum of squares, the statistics indicate a smaller regression sum of squares (8.843) than the residual sum of squares (58.808). The statistics suggest that nancial inclusion is not adequate in explaining the changes in the growth and operations of SMEs in the region. However, (p-value =.000) indicates that there exists a linear relationship between nancial inclusion and growth of SMEs in the region. The study sought to determine the challenges affecting Small Medium Enterprises. The ndings show that SMEs suffer stiff competition from foreign rms; they also suffer competition from domestic markets, and have a small market size. Most of the SMEs engage in production of goods that are similar to imported goods such as cooking oil, timber products, detergents to mention but a few. They have no option than to strive for a market share, which turns small in the end. The ndings agree with (Ocioo, akaba and Worwal-Brown, 2014; Tinarwo, 2016; World Bank, 2016) who support the view that SMEs suffer from stiff competition and are weak competitors in both domestic and foreign markets, a factor that is more driven by their lack of innovative ideas. However, the ndings slightly disagree with (Dalberg, 2011; Fjose, grunfeld, & Green, 2010) who demonstrated that SMEs in developing countries lack nancial capital for growth and expansion. The disagreement was slightly correct because SMEs still suffer nancial challenges, but the case of Lango demonstrates severe challenges from competition, both foreign and domestic example is imported cooking Oil vs locally manufactured oil.
The study examined how nancial inclusiveness supports the growth of Small medium enterprises in region. Financial inclusion eases payments to service providers, access to ATM services, and switching from one bank to another. These services make transaction very easy. The ndings agree with ( (Damodaran, 2013). The ndings justify government's action to promoting nancial inclusion across all social and economic sector in the country. However, participants indicate some di culty in using some of these nancial services. The fact that some of the SME owners are not highly educated, they nd it di cult to interact with some of these nancial services. The study found that nancial inclusion plays a signi cant role in SMEs growth. However, the role-played appears low, which suggests an in uence other factors in the relationship. The ndings supports (Ayyagari et al., 2016) who assert that SMEs are constrained nancially and nd it hard to access credit compared to large rms. Though they might have access to credit, they often fall short of such requirements like guarantors, collateral security and business pro le, which agrees with (Eton, Mwosi, Mutesigensi, Ebong, 2017).Most of the SMEs lack such information that nancial providers need to assess their credit worthiness. While such process requirements save nancial providers from loses and properly manage credit provision, SMEs view them as bureaucratic with tough regulations (Park and Mercado, 2015).We therefore, argue that much as nancial services appear to be available to SMEs, the cost associated to acquiring and servicing them affect their nancial performance (UNIDO, 2015). In addition, the platform on which some of the nancial services are provided are too technical for SME owners to operate. The ndings however, disagree with (GSMA, 2017) who asserts that nancial service providers allow for easy transfer of payments from SMEs to suppliers and service providers, reduce theft, nancial crimes and the risk of loss. Unlike SMEs in urban areas, SMEs in rural areas are highly vulnerable to nancial risks and theft. Financial inclusion is likely to increase the level of investment, employment opportunity and poverty reduction, which are the core functions of SMEs in the economy. Finally, the study established a weak relationship between nancial inclusion and SMEs growth; however, the relationship was statistically signi cant.

Conclusion
The study sought to establish the relationship between nancial inclusion and SMEs growth in Lango sub-region. SMEs are important to economic growth at macro level since they provide employment and improve household income. At micro level, SME owners are able to build networks with important people, which helps them source quality human capital, access cheap sources of raw materials and capital.
Additionally, networks help SME owners to maintain contact with suppliers and customers. This paper presents a new look at SMEs as contributors to the economy: they promote networking in addition to their traditional contribution to employment and household income. Despite the contributions of SMEs, this paper demonstrates that SMEs struggle to out compete their rivals at both local and international markets, which narrows down their market size. This conclusion differs from previous studies that present expensive loans as the greatest obstacle to SMEs operations. This perhaps not generalized the outcome on expensive loans as least among the challenges to SMEs growth because of its lack of categorization of nancial products and nancial providers, which is likely to present contradicting results. The major outcome of the study is that nancial inclusion is signi cant in supporting SMEs growth however, is generally weak. The weakness stems from the cost of acquiring and servicing nancial services, the di culty in using some of the nancial services, and the way nancial providers treat nancial users, lacking some degree of respect and dignity.

Recommendation
The study took a cross-sectional survey to collect data on nancial inclusion and SMEs growth in northern Uganda. There is need for a longitudinal study on nancial inclusion with a focus on nancial providers and their impact on SMEs growth. Financial providers should continue sensitizing the public on the available nancial services beyond credit services, which are common and known. Since the world is turning digital, nancial service providers should encourage their clientele to use digitalized nancial services, which are cheap, secure and risk averse. Bank of Uganda, which are the supervisors of nancial intermediaries, should monitor these institutions on costs of loans. Lastly, SMEs should innovatively produce goods that stand the competition at both domestic and foreign markets.

Declarations
Contribution to the study This study contributes to the existing literature on nancial inclusion and SMEs growth but explicitly contributes unique evidence in northern Uganda. The study provides testable relationships between nancial inclusion and SMEs growth that extends research on nancial inclusion in developing economies. This study was not funded by any organization or person other than the authors

Con ict of interest
There is no con ict of interest in this study.