Challenges Facing Small and Medium Enterprises Businesses in East African Market.

Abstract

In sub-Saharan Africa, small and medium-sized enterprises, or SMEs, have become the most important pillars of growing economy. In fact, they produce 80 percent of all jobs and represent nearly 90 percent of all businesses in Sub-Saharan Africa. This sector in Tanzania contributes significantly to its economy by way of taxes, utilization and conservation of local resources, foreign exchange, provision of goods and services. However, the study looked at the the challenges facing small and medium enterprises businesses in East African Market: A case of Dar es Salaam region. Research design is in form of a descriptive study, data was collected using Questionnaires that were administered to the target population; the research used contingency theory and resource based theory. Simple random sampling method was used to draw samples of the cases used for this study. The research used conceptual framework in conceptualizing the challenges facing small and medium enterprises businesses in East African Market. The data was analyzed by generating descriptive statistics such as percentages, and measures of central tendency. The data was presented by using tables and figures. SPSS (statistical package for social science) was used to generate the descriptive statistics and to establish the relation between the dependent and the independent variables of study. The findings will act as a reference point to other researchers in the same field thus facilitating their studies. The study findings will provide relevant information that will help the government in planning and also to formulate and implement policies. The study found out that access to finance, laws and regulation and availability of management experience are the key challenges facing small and medium enterprises businesses in East African Market. The study therefore recommends that banks and other credit giving financial institutions should come up with creative policies that make it easy for the SMEs to access financing, governments of Tanzania should lessen the time taken to obtain license by reducing bureaucracy and illuminating some hurdles along the way. further a research is needed to cover all the markets in the county to find out whether the same challenges are facing other traders and research that covers medium and large firms businesses in East African Market. Contingency Theory, according to Scott (1981) the best way to organize depends on the environment in which the organization is located. The work of other researchers including Paul Lawrence et.al (2017) and Thompson complements this statement. They are very interested in the impact of potential developments on the organizational structure. This concept has been widely used in research to measure organizational performance and states that there is no effective way to organize a company and a corporate structure (Battilana, 2012). It can be concluded that there is no other 'better way' of managing or doing things, different situations require a different way of handling, managing, and resolving the problem arising from acquiring three aspects of Legal and Control, management skills and business culture. Managing and ordering an 'open system', have to accept irregularities or occasional challenges, requiring an 'adaptable' and 'state' solution in order to overcome or solve a problem or problem involved (Scot, 1981). The resource-based theory was first propagated by Birger Wernerfelt in his article “A Resource Based View of the Firm” (Wernerfelt, 1984). However, the resource-based view has been a common interest for management researchers and numerous writings. A resource-based view of a firm explains its ability to deliver sustainable competitive advantage when resources are managed such that their outcomes cannot be imitated by competitors, which ultimately creates a competitive barrier (Mahoney& Pandian 1992). Resource based view explains that a firm‟s sustainable competitive advantage is reached by virtue of unique resources being rare, valuable, and non - tradable, non- substitutable, as well as firm specific (Barney, 1999). Resource based theory and contingency theory were used to enhance our knowledge and look at the importance of flexibility and organizational businesses/performance in running SMEs. Superior inter-firm flexibility is proposed to influence SMEs market place success that is concluded in one variable; Access to Finance and Performance of SMEs.