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| Factors Affecting the Performance of Rural Small and Medium Enterprises (SMEs) A Case Study of Tanzania |
Muhsin Danga, Joel Chongela and Ismail Kaudunde
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Abstract:
The study was conducted in Tanzania to the four regions from January to March 2018 to investigate the factors hindering the performance of rural SMEs in Tanzania. The study employed the case study design whereby descriptive and exploratory data were captured by the study. The sample size of the study was 338 respondents who were obtained through random and purposive sampling techniques. Qualitative and quantitative data were collected through questionnaires, in-depth interview, focus group discussions, and documentary review. The study revealed that rural SMEs are influenced by the number of factors such as; access to finance, access to the market, business skills, business location, legal framework, political factors, infrastructures, tax regimes, social factors and entrepreneurs’ characteristics. However, in order to address the factors hindering the growth of rural SMEs in Tanzania, deliberate efforts should be done by SMEs and the government. The SMEs should recruit competent personnel, put more emphasis on the importance of business skills rather than believing in traditional beliefs. Moreover, SMEs should conduct baseline surveys before locating the business. The Government should establish a special campaign to motivate financial institutions to open-up a special window for rural SMEs, introduce a campaign that will offer appropriate entrepreneurship training, build reliable infrastructures in rural areas, accommodate entrepreneur’s skills in teaching curriculum starting from primary to university education. TRA in collaboration with the Local Government Authorities are advised to harmonize the tax system. Further researches can be conducted on factors hindering women to join into the SMEs in rural areas.
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