Factors Affecting Tanzanian Small and Medium Enterprises Performance in the East African Community Market: A Case of Dar es Salaam Region.

Abstract

The purpose of this study was to assess the extent legal and regulatory framework, cultural aspects, managerial skills and funding affect the performance of Tanzanian SMEs in EAC markets. Design/Methodology/Approach: A descriptive case study design was adopted to collect quantitative data from 200 SME owners/managers in three districts of the Dar es Salaam region; Kinondoni, Temeke, and Ilala, using a structured questionnaire. The collected data were analysed using descriptive statistics of frequencies and percentages. Besides, the reliability test using Cronbach’s Alpha Coefficient was conducted and all constructs were found to have values above 0.7. Findings: The findings show that to a higher extent SMEs owners/managers agreed that financing does not restrict them from engaging in the EAC market. However, they dismissed the claim that they are provided with a loan by friends and relatives. Moreover, the results show that there are restricting laws and procedures to enter the EAC market. However, the current environment has been improved to hasten and reduce bureaucracy in registration and licensing. In the case of cultural values, the findings show that punishment by parents during childhood and peer group influence reduces the chances of SME owners/managers to participate in the EAC market. Lastly but not least, SMEs owners/managers were found to have moderate managerial skills. Implications/Research Limitations: This study was concerned with the factors affecting Tanzanian SMEs’ performance in the EAC market in the Dar es Salaam region. It did not cover the whole county; therefore, further research is needed covering the larger part of the country. Also, this research was limited to descriptive statistics to establish a link between factors affecting Tanzanian SMEs in the EAC market and the performance of those SMEs in the EAC market. Practical Implications: The information that will be provided by this research will enable other researchers to develop a better understanding of SMEs’ conditions and opportunities in the EAC. The findings are sources of additional knowledge regarding the accessibility and operationalization of SMEs in the EAC market. The study found that SMEs are not well protected from external competition and multinational corporations. Social Implications: Thus, the government of Tanzania have to formulate and enforce policies which will protect small and medium enterprises from the larger business which have financial and resources advantage over smaller businesses that are coming up. Originality/Value: The factors that researchers have acknowledged to hinder the growth of SMEs include; legal and regulatory framework, cultural aspects, lack of management skills and lack of funding. However, past studies in the Tanzania context have not categorically assessed factors affecting Tanzanian SMEs in the EAC market.