The Contribution of Microfinance Institutions to the Growth of Small Medium Enterprises (SMEs): A Case Study of Kinondoni District, Dar es Salaam

Mwaipopo, Diana Mpoki (2020) The Contribution of Microfinance Institutions to the Growth of Small Medium Enterprises (SMEs): A Case Study of Kinondoni District, Dar es Salaam. Masters thesis, The Open University of Tanzania.

PDF Download (1MB)

Abstract

Micro and Small-Medium Enterprises play a crucial role in the development process of industrialization and economic growth. More than twenty percent of employment in Tanzania comes from over 3 million enterprises, which accounts for 27% of the Gross Domestic Product (GDP). Access to finance has been an obstacle faced by most SMEs. Along with it, the cost of finance is also an issue. Despite having a tremendous increase in number of SME there are little documented evaluations in Tanzania that examines role of financial institutions; banks and microfinance institutions; on the growth of SMEs. The study design used was a sectional. Convenience sampling was used to sample business owners. A self-administered questionnaire using structured questions was used to collect quantitative data. The study involved 323 business owners in Kinondoni Municipal Council. Quantitative data analysis was done through descriptive statistics where frequencies and percentages were computed. Inferential statistics was also used by using Spearman’s rank-order correlation for non-parametric variables and chi-square to determine the relationship and association respectively between variables. Results were presented in tables and charts. Results indicated that Small-Medium Growth contributed by Microfinance institutions was by 58%. It was also revealed that adequacy amount of loan had significance association with SME’s growth (X 2=8.472d.f=1, p=0.004). Also, there was a weak negative monotonic correlation between access to loan and collateral asked (rs= -0. 264, n=323, p<0.01). Results also showed a weak positive monotonic correlation between SME’s growth and utilization pattern (rs= 0.366, n=302, p<0.01). The study demonstrates the growth of SME’s with interplay of cost associated with access, accessibility of loans and utilization pattern.

Actions (login required)

View Item