Determinants of Financial Sustainability of Small Scale Sunflower Oil Processing Firms in Tanzania

Anastasia Njiku

doi:10.11648/j.ijber.20190803.16

Abstract

Financial Sustainability of firms as a necessary condition for institutional permanence and long-lasting service has attracted scholarly attention in both developed and developing world over several decades. Little attention however, has been paid to small scale agro-processing firms’ context in developing economies like Tanzania. This study was set to investigate factors influencing financial sustainability of small scale sunflower oil processing firms in Tanzania. The study used 219 small scale sunflower oil processing firms randomly selected in central sunflower agricultural corridor of Dodoma and Singida regions in Tanzania. Data collected were analyzed by using Hieratical Multiple Linear Regression model, where a number of firm specific factors were considered as important determinants of financial sustainability while controlling for differences in technical efficiency levels. It was found that location of the firm, age of the owner and training of the employees are statistically significantly influencing financial sustainability in sunflower oil processing firms in Tanzania. In addition, technical efficiency contributes significantly on financial sustainability of small scale sunflower oil processing firms (SSSOPF). The findings imply the need for the government and other agencies in the sector to nurture entrepreneurial aspirations in tender age and consider clustering firms in the designed industrial areas for easy accessibility of inputs and support services. Moreover, improving technical efficiency is a pre-requisite for financial sustainability of SSSOPF in Tanzania.

Highlights

Introduction and BackgroundSunflower is one of the potential cash crops in Tanzania introduced since colonial times from America and Europe and found to grow in almost all parts of the country [1]
This study aimed to determine the influence of firm specific factors taking into account technical efficiency scores differences on financial sustainability for sunflower oil processing firms in Tanzania
Previous studies did not use technical efficiency scores as control variables when assessing the influence of firm specific factors on financial sustainability, its contribution is scantly found

Summary

Introduction

Introduction and BackgroundSunflower is one of the potential cash crops in Tanzania introduced since colonial times from America and Europe and found to grow in almost all parts of the country [1]. The crop is very interesting as it grows well in dry weather conditions in the Central Agricultural Corridor of Singida and Dodoma regions. It is very important crop grown by pro-poor small holder farmers as a means of reducing poverty through employment creation and income generation due to limited public employment opportunities in public sectors. Three (3) out of five (5) firms fail within their few months of their establishment [3]. This raise uncertainty on their ability to meet their operating and financing expenses from their income generated

Objectives

Methods

Results