Examining Challenges Facing SMEs Businesses in Dar Es Salaam Tanzania: A Case Study of Ilala and Kinondoni Municipalities.

Abstract

The analysis of different SMEs definitions worldwide reveal that it is very difficult to arrive at a common definition. In fact one study by Auciello (1975) in 75 countries found more than 75 definitions were used in the target countries. This demonstrates very well that there is no common accepted definition of SMEs. SMEs businesses range from very small micro-firms run by one or two persons and very slow growth or no growth to fast growing medium businesses earning millions of dollars and majority employing as many as 250 employees (Fjose et al., 2010). SMEs all over the world and in Tanzania in particular, can be easily established since their requirements in terms of capital; technology, management and even utilities are not as demanding as it is the case for large enterprises. They are regarded as backbone of economic growth in almost all developed and developing countries. In Tanzania, SMEs contribute over 30% of the GDP, and employs 3-4 million people, which is 20-30% of the total labour force (Kazungu, Ndiege and Matolo, 2013). Therefore this paper has identified several challenges facing SMEs such as financial access which is consistently reported as one of the major obstacles to SME’s growth and development where only 20 % of African SMEs have a line of credit from a financial institution. And suggests technical approaches to solving them in respect to the developing economy of Tanzania.

Keywords: Small and Medium Enterprises (SMEs), Gross Domestic Product (GDP), Challenges.

DOI: 10.7176/JESD/11-17-07

Publication date:September 30^th 2020