The Role of the Government in the Performance of Small Scale Enterprises in Dar es Salaam

Abstract

For the past quarter century the widespread use of the term “SME” in the determination of economic development policy has implied first, that the segment of businesses occupying the space between microenterprises and large firms presents opportunities and challenges that are distinctly different from those of the other two groups. The claim that “SMEs are the backbone of the economy” has become virtual boilerplate for papers, presentations, and popular articles on private sector development. Almost invariably, however, this claim has been made in the absence of any rigorous data to support it and often without an effort to understand what an SME is.The aim of the study was to assess the role of the government in improving the performance of Small scale Enterprises (SE’s). In order to fulfill the aim of the study, the researchers focused on issues relating to the legal framework within which SE’s operate, government supported Business Development Services(BDS) and their impact on the growth of SE’s and lastly, the state of the physical infrastructure and how it facilitates the growth of SE’s.  The study carried out both theoretical and empirical literature review which revealed that there was a definite relationship in a nation’s legal framework and the growth of SE’s.  The literature review also showed that BDS and infrastructure were important aspects that determined the growth of SE’s.  The study used a sample of 13 units of SE’s in Dar es Salaam region. Respondents were chosen from each district -Ilala, Kinondoni and Temeke. The sample included all categories of SE’s representing almost all types of businesses. Primary data were collected using questionnaires.  Secondary data was also used in the research.  This data was obtained from SE records, government profiles of SE’s and the various policies relating to SE’s.  The collected data was edited, coded and tabulated.  The data analysis was done using simple statistics and in particular percentages.  This data was then presented in tables. The findings of the study showed that the legal framework in general was poor and complex and thus unsupportive to the development and growth of SE’s.   However, individual components of the legal framework such as licensing and registration were seen to be effective in contributing to the growth and development of SE’s.  The results of the study also showed that the BDS offered to SE’s by the government have done little to improve the growth of SE’s.  Most the respondents indicated that the entrepreneurship training was appropriate but it was offered in major cities which was out of reach for many SE’s that were not based in these cities.  Further, the respondents indicated that the costs relating to the training were also very high. Finally, the study showed that the current physical infrastructure was not supportive to SE’s development.