Impact of Multinational Companies on the Growth of Small and Medium Enterprises in Tanzania: A Case of Ilala Small Medium Enterprises.

Mapuga, John Lameck (2023) Impact of Multinational Companies on the Growth of Small and Medium Enterprises in Tanzania: A Case of Ilala Small Medium Enterprises. Masters thesis, The Open University of Tanzania.

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Abstract

Using the case of Ilala district, the study aimed to investigate the impacts of Multinational Corporations (MNCs) on Tanzania's small- and medium-sized business (SME) growth. The researcher employed a case study research design based on both a qualitative and quantitative approach. The sample size was 99 respondents and both document reviews and questionnaires were used to gather the data from the field. The data was collected from the employees and owners of the SMEs. Questionnaires were as the data collection tools. The data were analyzed through SPSS with the aid of MS Excel. The results showed that MNCs' FDI has both positive and negative effects on the expansion of SMEs in the Ilala district and the whole city of Dar es Salaam, whereby those positive impacts include managerial knowledge transfer, technical knowledge transfer, the creation of new entrepreneurial opportunities, and advanced stages of monetary growth. While, those negative impacts include the displacement of local investment by FDI in the human capital sector, a decline in the market share held by SMEs, and a widening technology gap that hinders the expansion of regional SMEs. In order to build a favorable business environment that will enable them to compete with MNEs in the market, the study suggests that the Tanzanian government should promote SMEs by coming up with a clear legal framework and favorable financing scheme. Additionally, the nation must create an atmosphere that makes it simple for SME owners without collateral to get loans and adopt export promotion strategies. Furthermore, government negotiators should demand the same open doors for our own locally produced goods rather than giving up the chance for MNCs only. Keywords: SMEs, MNcs, Knowledge Transfer, Employment Opportunities, FDI.

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