Constraints in financing small and medium enterprises in Tanzania: the case of Dar es Salaam region.

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University of Dar es Salaam
Access to finance from the financial institutions for investment and working capital is a critical problem in the country. The question is "what are the main constraints faced by SMIEs in accessing credit from the formal financial institutions in the country?" The objective of the study is to establish constraints that contribute to the unavailability of credit to the SMEs sector in Tanzania. The research used the case study design to obtain necessary and required qualitative and quantitative data. SMEs operating in Dar es Salaam region have taken as the case study because SMEs in the country are well developed in Dar es Salaam region than in the rest of the other regions. Both primary and secondary data were collected and analyzed. The findings of this study reveal that while most SMEs use the services of the commercial banks in one or other respects, they still have difficulties obtaining finance. The main reasons for the lack of finance are considered to be stringent lending conditions, bureaucratic decision making and high loan processing costs on the part of the commercial banks and low financial management skills on the part of SMEs. It is thus recommended that commercial banks should look into the possibility of creating a constant rapport in order to eliminate the perceptions they considered to be risk averse in financing SMEs by means of training and substantial public awareness that will bring together the commercial banks and the SMEs concerned to campaign to discuss possible solutions to the problems at hand. This will increase confidence the banks may have in the SMEs-
Available in print form, East Africana Collection, Dr. Wilbert Chagula Library, Class mark (THS EAF HG4027.7T34M85)
Finance, Small business, Small and medium enterprises, Tanzania
Mwangalaba, I.A (2007) Constraints in financing small and medium enterprises in Tanzania: the case of Dar es Salaam region.Master dissertation, University of Dar es Salaam, Dar es Salaam.