The Factors Hindering the Effective Development of SMEs Businesses in Tanzania a Review Study

Abstract

The development of SMEs worldwide is dependent upon a favourable business situation. However, SMEs in Tanzania confront a number of obstacles that prevent them from growing, including a lack of funding, inadequate market accessibility, a lack of entrepreneurial expertise and skills, bureaucracy, lack of business training, lack of good infrastructure, a lack of collateral, low production, unfavourable regulations, corruption, the motivation of the business owners, limited access to information, inadequate raw materials and other related factors. The significance of the study is to review on the issues preventing Tanzanian SMEs from developing. The SMEs, businesses have been demanded as the backbone for the growth of economic in almost all the developing countries including Tanzania. In Tanzania it has contributed almost 30% of the national GDP, and almost 20-30% of the total labour force, thus 3-4 million people employed. Therefore the paper has addressed some factors internal, external and other related factors as reviewed that act as the setbacks towards the SMEs development. The study has focused on literature review of different articles, research and case studies done. Mwanza region was chosen as one of the case study because of great opportunity to SMEs in the region, which if could be well utilized could add high Gross Domestic Product (GDP) of the country. The SMEs involved are such as; retail shops, bars, restaurants, hotels, playing stations, decoction centres, stationeries, etc Tanzania To achieve the intended objective, the researcher developed research question that was aimed at assessing the factors affecting performance and development of SMEs, contributions and solutions to SMEs. Data were collected from literature review of paper and cited by the author concerning Tanzania. The finding showed that most of the SMEs fails to develop due to; failure to access financial support, lack of business skills, poor technology used due to lack of awareness, lack of enough government support, high taxes imposed , failure to comply with government regulations, sudden change in climatic conditions and government rules. The study concluded by suggesting and further recommended on the better strategies that SMEs could implement with the government support like; government should always work and collaborate with SMEs in all areas by implementing favourable business policies, financial institutions should impose affordable and easy regulation to access loan that supports the SMES operations. Also the SMEs owners and employees should be given enough skills to help them perform better and copy with the daily change in technology advancement to assure effective and efficiency performance of the SMEs for their future sustainability in Tanzania.