# The mediating effect of access to finance on the relationship between debt management skills and the performance of micro and small enterprises (MSEs) owned by Moslem Women in Western Uganda

## TL;DR

This study shows that access to finance helps Muslim women in Uganda turn better debt management skills into improved business performance.

## Contribution

It identifies access to finance as a key mediator between debt management skills and business outcomes for Muslim women entrepreneurs.

## Key findings

- Access to finance partially mediates the relationship between debt management skills and business performance.
- Financial literacy and Sharia-compliant finance are crucial for improving business outcomes.
- Combined interventions in training and financial access are needed for sustainable growth.

## Abstract

Micro and small enterprises (MSEs) are pivotal to economic development, yet their growth is often constrained by limited financial capabilities and restricted access to finance. Among Muslim women entrepreneurs in Mbarara City, Uganda, these challenges are compounded by gendered financial barriers and adherence to Islamic financial principles. While financial literacy and debt management skills are known drivers of performance, the mechanisms through which these skills translate into tangible business outcomes remain underexplored. This study investigates whether access to finance mediates the relationship between debt management skills and the performance of Muslim women-owned
MSEs.

A cross-sectional design was employed using purposive sampling to select 170 Muslim women-owned MSEs in Mbarara City. Data were collected through a structured questionnaire and analyzed using Partial Least Squares Structural Equation Modeling (PLS-SEM) in SmartPLS 4. The study assessed the measurement and structural models for reliability, validity, and predictive accuracy, and mediation was tested using the Sobel and bootstrapping methods.

Findings revealed a significant
partial mediating effect of access to finance on the relationship between debt management skills and business performance (Sobel z = 8.6661,
p < 0.001). Approximately
52.9% of the total effect of debt management on performance operated indirectly through access to finance, while 47.1% was direct. The model explained
97.0% of the variance in performance and
94.4% in access to finance, with strong reliability and validity indicators (Cronbach’s α = 0.938–0.968; AVE = 0.940–0.956). The model fit indices (SRMR = 0.016; NFI = 0.901) confirmed an excellent fit. Overall, debt management skills significantly enhanced both access to finance (β = 0.313,
p < 0.001) and performance (β = 0.342,
p < 0.001).

Access to finance significantly amplifies the impact of debt management skills on business performance, underscoring its critical mediating role. The findings affirm that financial competence alone is insufficient without corresponding access to financial resources.

Integrated interventions that combine financial literacy training especially in debt management, budgeting, and Sharia-compliant finance with enhanced access to affordable, gender-sensitive financial products are essential to bridge the capability resource gap and promote sustainable growth among Muslim women-owned
MSEs.