Investiment decision practices of small enterprises in Tanzania

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University of Dar es Salaam
Given the significant role that SEs play in society such as employment creation, this study attempted to analyse and describe the investment decision practices of SEs in Tanzania. Basically, this was aimed at addressing problems that hinder these enterprises from making an optimal use of resources which in most cases are limited to them when compared to large fin11s. The study was carried out in four wards of Kinondoni District namely, Sinza, Kinondoni, Manzese and Magomeni through a survey of 64 SEs. In data collection the study used open and closed-ended questionnaires. Data were analysed using tables, figures and statistical methods such as numbers and percentages. The study reveals that while the capital budgeting model suggests use of DCF most in analysing and ranking investment alternatives, due to lack of financial sophistication SEs in Tanzania use informal measures mainly individual instincts. Contrary to previous researches, the SEs in Tanzania cannot use the DCF based methods or ARR even to the slightest extent. In addition to individual instincts, financial constraints also compel SEs to concentrate more on survival, thus tending to stress on investment evaluation measures such as payback period instead of DCF to ensure liquidity. In terms of recommendations the study urges policy makers to, among other things, improve the investment decision practices of SEs by ensuring inclusion of finance both the school and vocational education. Study also urges further training researches to be carried out in rural areas as well as other countries for comparison.
Available in print form, East Africana Collection, Dr.Wirbert Chagula Library, Class mark (THS EAF HG4529.T34M86)
Small enterprises, Investment decision practices, Tanzania
Mwaikambo, I (2010) Investiment decision practices of small enterprises in Tanzania, Masters dissertation, University of Dar es Salaam, Dar es Salaam.