Disaggregating Financial Management Practices and SME Performance: Evidence from Agro-Processing Firms in Emerging Markets

Abstract

Small and medium enterprises are essential drivers of economic growth and employment in emerging markets but often struggle with weak financial management practices. This study investigates the influence of financial management strategies, financial reporting and analysis, inventory decisions, financing structures, and working capital management on the performance of agro-processing enterprises in Uganda’s Ankole sub-region. A quantitative cross-sectional survey was conducted with 192 formally registered enterprises. Structural equation modeling was used to examine the relationships between financial management practices and business performance. The results show that financial reporting and analysis, financial management strategies, and financing structures have a significant positive impact on business performance. Inventory decisions and working capital management showed no direct effect, although the effect of working capital management became significant when firm age was considered. These findings highlight the need for targeted financial training and policy support tailored to enterprise maturity and context.