Assessment of the investment analysis techniques used by SME’s and the practices in Tanzania: the case of SME’s in Morogoro Municipality

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Date
2009
Journal Title
Journal ISSN
Volume Title
Publisher
University of Dar es Salaam
Abstract
The main objective of the study was to identify and assess the investment appraisal methods used by SMEs and the practices in Tanzania taking Morogoro Municipality as a case study. Review of the literature consisted of the theoretical and empirical review on SMEs perspective, SMEs failure, investment appraisal methods used by SMEs and investment selection practices in SMEs. A case study design was used, in which 50 SMEs from Morogoro municipal were selected using both probabilistic and non probabilistic sampling procedures for different purposes. Primary data was collected using questionnaire and face to face interviews from the owners/managers of SMEs while secondary data was collected from financial records and other related documents kept by the SMEs. The study results indicated that, all SMEs use a particular investment appraisal method when selecting which investment to undertake. Most of SMEs do not use the discounted cash flow appraisal methods such as NPV, IRR and PI rather, they select investment basing on they are personal perception, market trends and external attractiveness of the investment. It was observed that, the methods used by most SMEs were not accurate and appropriate and do not take into account the time value of money, hence leading to poor performance of most of them. The study recommends that, SMEs owners/managers should be exposed to different trainings on financial management in order to create awareness among them on how to handle financial issues.
Description
Available in print form, East Africana Collection, Dr. Wilbert Chagula Library Class Mark ( THS EAF HD965.T34K5)
Keywords
Small business, Investment analysis, Morogoro Municipality, Tanzania
Citation
Kipesha, E. L. F (2009) Assessment of the investment analysis techniques used by SME’s and the practices in Tanzania: the case of SME’s in Morogoro Municipality, Master dissertation, University of Dar es Salaam