Impact of Sido Credit Guarantee Scheme on Small and Medium Enterprises Access to Finance, A Case of Agro Prosessors in Dar Es Salaam.

Abstract

The intention of the study was to assess the impact of SIDO credit Guarantee scheme on SME’s access to finance. Specifically, this study examined awareness of SMEs on the scheme as their tool for accessing finance, explored accessibility of finance to SMEs trough SIDO CGS, determined major challenges eliminated by SIDO CGS for SMEs to access finance and identifying the relationship between SIDO CGS and SMEs access to finance. The study adopted descriptive research design with exploratory element that is use a qualitative case study method. Simple random sampling technique was adopted in selecting sample size while questionnaire and interview was employed in data collection. The entry and analysis of data was done using SPSS. The study revealed that there is low level of awareness among agro processor SMEs about the existence of SIDO CGS, the study also revealed low level of financial accessibility among agro processors SMEs who are targeted beneficiaries of SIDO CGS, due to low number of SMEs that applied for loans through SIDO CGS but also low number of SMEs who managed to get loans through SIDO CGS. The study also revealed that barriers that hinder SMEs to access finance which were expected to be eliminated by SIDO CGS still exist. Lastly study reveals that, there was less significant relationship between independent variables and the dependent variable. Based on the study findings, it is recommended that Small Industries Development Organisation (SIDO) should separate operation and management of the guarantee scheme from its normal operation. The performance of the scheme will improve tremendously, if a legally separate entity with a clear MISSION and STRATEGY designed to be self-financing is established. The proposed legal entity to manage these schemes could be named SIDO CREDIT GUARANTEE FUND (SCGF).