The Role of Microfinance Institutions on Growth of Small and Medium Enterprises. A case of ECLOF in Mbeya City Council

Rugumisa, Liberatus Terentius (2017) The Role of Microfinance Institutions on Growth of Small and Medium Enterprises. A case of ECLOF in Mbeya City Council. Masters thesis, The Open University of Tanzania.

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Abstract

This study focused on addressing the Role of Microfinance Institutions on growth of SMEs, Mbeya city was used as a case study. The study had three specific objectives which were; to identify services offered by ECLOF that lead to growth of clients enterprises; to examine the relationship between microfinance services offered by ECLOF and growth of SMEs and; to assess the challenges facing SMEs in accessing ECLOF financial services. A sample of 56 respondents from Mbeya city was covered. SME growth was a dependent variable while microfinance services of loan, training and savings were set as independent variables. Multiple linear regression model and descriptive statistics were used in this study whereby simple percentage, graphs and charts were applied in data presentation and analysis. The study found microfinance services have great impact on growth of SMEs. However the well appreciated service was loan which was supported by 93% of respondents to have resulted to profit increase, followed by training which was accepted by 42% of respondents and lastly only 12% voted for savings. The study recommended that the process of applying and accessing loans is tedious and bureaucratic; therefore microfinance institutions should ensure they design a friendly policy by discouraging bureaucracy. It was further revealed that the saving product of microfinance institution is not well known to members as about 30.1% were not aware of the product. It was recommended more emphasis should be put on appropriate training and seminars as they were found to be essential services for growth though not well provided. Keywords: Microfinance institutions, Small and Medium Enterprises.

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