Since the 1990s, studies utilizing descriptive statistics have documented factors in the business environment,
which hinder the performance of Ugandan micro and small enterprises (MSEs). Based on secondary data, this paper assesses the
trend of critical factors since 1994 to 2010. The paper also utilizes the primary data from MSEs to examine the effects of these
factors on the growth potential of MSEs, while controlling for the owner’s and the firm’s attributes. Results from the trend analysis
reveal that the business environment has been deteriorating over time. Results from the regression analyses reveal that MSEs’
growth potential is negatively associated with limited access to productive resources, high taxes and lack of market access