The aim of this research was to find out the impact of Microfinance institutions (MFIs) on Micro and Small business performance. The research is cross-section research design employing the use of questionnaires. The research was conducted in Dodoma Municipality Tanzania, covering 73 small and micro-enterprises. The hypothesis was operating cost, amount of loan delivered, training given to loan applicants and the amount saved, all variables have positive relationship with enterprise’s gross operating profit except one variable which is training. From the results obtained it shows existence of negative correlation between training and gross operating profit. Although theoretically training has positive correlation with enterprise’s gross operating profit. The research employed econometric model using OLS as analysis tool of the results drawn from SPSS and STATA software packages. The employed model has shown to have significantly represented the real world by more than 96%. Upon observation there has been discovered that all the variables under test significant and positively relating with dependent variable, except one variable (training). Amount saved, amount of loan delivered, operating cost and training respectively correlate with gross operating profit. Policy issue regarding to the findings of this research would be that; first to stabilize Microfinance institutions (MFIs) capacity to expand services by increasing more products and coverage so that many people are reached. The second is to soften the conditions so as to increase capacity for entrepreneurs to partner with MFIs. Third is to emphasize entrepreneurs’ partner with the MFIs to access loans services and be able to save in financial services so as to create loan ability and through tracing their financial flows. Also to put emphasis on MFIs to provide training and advice to all their clients so as to boost up the performance of their businesses. Microfinance institutions (MFIs) have proved distinguished impact to positively impact business performance.

A Dissertation Submitted in Partial Fulfillment of the Requirements for Award of the Degree of Master of Science in Entrepreneurship (MSc.E) of Mzumbe University.