Analysis of factors influencing start up and growth of micro and small enterprises (MSES) in Dar es Salaam

The study explored and analyzed the factors which are influencing start up and growth of Micro and Small Enterprises (MSEs) in Dar es Salaam. The focus of the study aimed at analyzing the extent to which the business environment, capital, infrastructure and knowledge influence MSEs start up and growth.The survey study was conducted whereby a quota sampling technique was used in selecting a sample of 150 MSEs from Kinondoni, Temeke and Ilala districts, and questionnaires were used for data collection with a supplement of semi-structured interviews. The collected data were analyzed using computer based software.The findings from the study regarding the factors influencing the start up and growth of MSEs, business environment ranked first with 90 percent, followed by working capital/financial with 86 percent, knowledge with 75 and last the infrastructure with 66 percentage. This indicates that upon improvement of the business environment and capital, the two can contribute significantly to start up and growth of MSEs. The overall status of MSEs was rated by respondents as good by 47 percent. The results from multiple regression analysis showed that the four factors are highly correlated and significantly have effects on MSEs growth and start up as the coefficient of determination (R) showed that the start up and growth have the percentage of variation (R2) of 83.2 %.The study shows that the MSEs have an average of 4 years old since started, and on the qualitative (improved services and output) dimension a growth by 66 percent was noted, while on the financial dimension regarding capital generated up to year 2012, 28 percent of MSEs showed growth and graduated from micro to small enterprises.For MSEs to have a great contribution in both employment creation and poverty alleviation, the government should create enabling environment for MSEs through practical administration of the SMEs policy of 2003. The supportive aids information should be transparent through media all over the country so that MSEs can explore all the opportunities as stipulated in the policy. The government is the entity which can create an enabling and conducive environment for MSEs. On the other hand, financial institutions and Micro-credits should find alternative and appropriate ways to assist MSEs financially more than what they are doing now.