Abstract
The growth of Small and Medium Enterprises (SMEs) globally is dependent upon a conducive business environment. However, in Tanzania, SMEs face several constraints such as limited finances, poor market accessibility, low entrepreneurial knowledge and bureaucracy which hinders their growth. This paper aims to assess the factors impeding the growth of SMEs in Tanzania. Factors such as a lack of business training, capital constraints, a lack of finance, poor infrastructure, a lack of collateral, poor production, poor technologies, tight regulations, corruption, poor market accessibility, the motivation of the business owners, limited access to information, a lack of human competencies and inadequate raw materials were measured. A mixed-method approach was used in this study, inclusive of content analysis to extract the constraints from the 21 items of literature in Tanzania. Thereafter, a quantitative approach was applied where descriptive statistics were used to determine the frequency and percentage of the factors in order to extract the most significant variables affecting SME growth in Tanzania. The findings reveal that Tanzanian SME growth is mostly impacted by financial constraints, capital constraints, poor technology and tight regulations. The study recommends that financial assistance through lowering the interest rates and simplifying the borrowing procedures must be given to SMEs to enable them to avail the necessary finance and capital for their business Also the government must support SMEs by simplifying the regulations for SMEs such as levying taxes. Business training must be provided to the SMEs by government organisation such as the Small Industries Development Organisation (SIDO) to facilitate business knowledge. Keywords: SME, challenges, growth. DOI : 10.7176/EJBM/11-33-01 Publication date: November 30 th 2019
Highlights
The Tanzanian Small and Medium Enterprise (SME) sector has been recognised as a critical sector in the creation of employment opportunities, the generation of income and in its contribution to GDP and economic growth
The variables extracted in the study include (i) Lack of business training (LBT), (ii) Capital constraints (CC), (iii) Lack of access to finance (LAF), (iv) Poor infrastructure (PI), (v) Lack of collateral (LOC), (vi)Poor production (PP),(vii) Poor technologies (PT), (viii) Tight regulations (TR), (ix) Corruption (CO), (x) Poor market accessibility (PMA), (xi) Motivation of business owners (MOB), (xii) Limited access to information (LI), (xiii) Lack of human competencies (LHC) and (xiv)Inadequate raw materials (IRM)
Discussion of the findings The findings reveal that the four significant variables affecting SCM growth are financial constraints, capital constraints, poor technology and tight regulations
Summary
The Tanzanian SME sector has been recognised as a critical sector in the creation of employment opportunities, the generation of income and in its contribution to GDP and economic growth. Despite an attempt by previous researchers (Mashenene & Rumanyika, 2014; Kimathi, 2015; Anderson, 2017) to document SME constraints, these issues still persist and as a result, SMEs still undergo challenges which force most of them to go out of business. An explanation of such persistence that can be given is that the country has limited resources and so addressing most of the challenges can prove to be difficult. This research, aims to evaluate the critical impediments hindering SME growth in order to provide feasible solutions on how these challenges can be tackled to facilitate SME growth
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