Approaches employed by commercial banks in enhancing effective performance of small and medium enterprises in Tanzania: a case of NBC Dar es Salaam

The purpose of this study was to examine the approaches employed by Commercial Banks in enhancing effective Performance of Small and Medium Enterprises in Tanzania. The research used case study strategy with quantative and qualitative methods and conducted in Dar es Salaam City, NBC branch. Data were collected through interviews, questionnaires, observations and focus group discussion. A total of 87 respondents were interviewed. The research established that, the business relationship between SMEs and commercial bank is scanty. The SMEs do not understand the role of the bank and MFIs in the development of their enterprises. It was revealed that only 13% of the surveyed SMEs accessed bank loan. The overall conclusion is that SMEs in Tanzania had a number of weaknesses including lack of awareness and motivation in performance of their business. As for the banks the major problems included much bureaucracy in loan provision. For the SMEs to prosper and contribute to poverty eradication, it is important that policy and capital constraints are dealt with to enable SMEs move into lines of production in the longer run and grow from small to even larger scale.