Impact of Foreign Direct Investment on the Growth of Small and Medium Enterprises in Tanzania: A Case Study of Selected Manufacturing Industries in Dar es Salaam City.

Balimanya, Didas (2025) Impact of Foreign Direct Investment on the Growth of Small and Medium Enterprises in Tanzania: A Case Study of Selected Manufacturing Industries in Dar es Salaam City. Masters thesis, The Open University of Tanzania.

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Abstract

In recent decades, Foreign Direct Investments (FDI) have been considered as the key driver of trade, economic growth and foreign technology transfer in the recipient countries, especially Sub-Sharan Africa. This study sought to establish the impact of FDI on the growth of small and medium enterprises (SMES) in Dar es Salaam City. Specifically, the study concentrated on how technology, equipment transfers and knowledge transfers through FDIs influence SMEs growth in Dar es Salaam City. This study employed descriptive research design. 178 people were chosen as a sample size, however during data collection only 120 respondents effectively participated in the study. Data was collected through close-ended questionnaires and analyzed through descriptive and inferential statistical analysis methods. The Statistical Package of Social Sciences (SPSS) (version 25.0) tool was used as the data analysis tool. The results revealed that majority of the respondents argued that the new production techniques adopted from FDI had a positive effect on the growth of SMEs. In addition, findings indicated a positive significant of FDI and equipment transfer to SMEs in Dar es Salaam City. Moreover, the results indicated that there was a positive significant effect of FDI on knowledge transfers to SMEs in Dar es Salaam City with a p-value of .982. This indicates that effective knowledge transfers through FDIs have significant impact on the growth of SMEs in Tanzania. Finally, the study recommends that the government should initiate special capitation to support the import and acquisition of modern technology and equipment to SMEs. Keywords: Foreign direct investment, manufacturing enterprises, SMEs, Dar es Salaam City.

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