The contribution of Microfinace Institutions on the Economic Performance of SMEs in Tanzania. The case of Kisaccos-Kitunda and Jiendeleze Group-Ketumbeine

Kapwani, Gaspar Alphonce (2014) The contribution of Microfinace Institutions on the Economic Performance of SMEs in Tanzania. The case of Kisaccos-Kitunda and Jiendeleze Group-Ketumbeine. Masters thesis, The Open University of Tanzania.

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Abstract

This study presents an assessment on the contribution of the microfinance loans to SMEs in Tanzania. The research was conducted in Dar es Salaam and Arusha-Kitumbeine where the representative sample of 77 SMEs, 6MFIs` workers and 3 MFIs leaders were randomly selected. The data was collected using different tools such as questionnaires, interviews, documentary review and observation. The findings from the study have shown that there is no progress of SMEs at the enterprise level as claimed by more than 60%, the reasons behind this failure have been attributed to the poor national economy and the borrowers do not inject the capital on the enterprises but on different fixed assets. However, other parameters at household levels, affordability of home needs, ownership of fixed assets and community development support have improved for both MFIs workers SMEs owners. In general MFIS loans despite of the negative impact at enterprise level appear to have positive contribution to the development of the borrowers. Regarding the availability of loans the results have shown that the loans are available but are given upon fulfilling the requirements and at an established increasing rate set by the MFIs. The main challenges facing SMEs in Tanzania include lack of sound entrepreneurial skills among the practitioners. Despite of the seminars and workshops orgasined by the MFIs the skills acquired to the borrowers appeared to be rote and lacking basic skills. Since the members are mostly primary schools level then there is a need of starting entrepreneurship study at primary level throughout to tertiary levels. Poor national economy and frequent inflation were pointed as obstacles to the progress of SMEs so, the government is advised to find the ways of building stable economy.

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