Assessment of the factors affecting perfomance of Small and Medium Enterprises (SMEs): a case of Kilimanjaro Region

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Mzumbe University
This study attempted to assess the factors that are affecting performance of Small and Medium Enterprises (SMEs) in Kilimanjaro region in Tanzania. The aim of this study is to provide the knowledge to the people in the region on how they should start and manage their SMEs by being aware with the factors affecting performance of SMEs which in turn will help them to manage their business sustainably. The factors tested were: Demographic characteristics (age, sex, and education level of SMEs owners and managers); Business characteristics (age of SMEs); Capital structure (source of initial capital, and capital size); Legal structure (means of operating SMEs); the Marketing strategy used by the enterprise to increase sales revenue and the enterprise management. The study was conducted in Moshi urban, Moshi Rural, Hai, Siha, Same and Mwanga towns in Kilimanjaro region. The study used the cross sectional study design in which data of 200 SMEs owners, and managers from all Moshi urban, Moshi Rural, Hai, Siha, Same and Mwanga towns was collected only once. Both descriptive and empirical methods were applied during the study. The regression results shown that, the most significant factors affecting the performance of SMEs determined by income in the study area were: Demographic characteristics (age and education level of SMEs owners and managers), Business characteristics (age of SMEs), Capital structure (source of initial capital, and capital size), and the Marketing strategy. Sex and Legal structure (enterprise management) did not significantly contributed to the SMEs performance in this study. There is a need for policy makers to make sure that education is given to the SMEs owners, managers and the employees together, with supporting them, if possible there is a need of having curriculum in primary and secondary schools by making business and entrepreneurship subjects as compulsory subjects, this will help to equip learners with appropriate business and entrepreneurial knowledge and skills which will encourage them to start and manage business successful. There is also, a need for the government to make sure that, businessmen and women are enabled to have access to loans (credits) with reasonable conditions from banks and other financial intermediaries for expanding their businesses; also soft loans should be provided to those who want to start new businesses. There is also, a need to put more emphasis on how to encourage women to engage in SMEs business and lastly there is a need to make sure that education on saving behavior is encouraged among the people in the study area, this is because in this research most of the businessmen/women started their businesses from personal savings as their source of initial capital.
A dissertation submitted to Mzumbe University as a partial fulfillment of the requirements for the award of Master’s Degree of Science in Economics (MSC. Economics) of Mzumbe University.
SMEs, Kilimanjaro Region, Capital Structure, Legal Structure, Marketing Strategy