CONCEPT TITLE
TITLE; REASONS WHY MOST SME’S FAIL IN TANZANIA
NAME
REGISTRATION NUMBER
MBWANA, SALIM LILANGA
BIB/D/2021/0175
MELLAU, IMANI ISAAC
BIB/D/2021/0090
MEITAWAS, STELLA JAMES
BIB/D/2021/0014
MBULULA, KITIGA JUMANNE
MDEE, TEOPISTA E
INTRODUCTION
Many current studies have addressed about the issue of SME’S. SME’S stand for small and
medium enterprises. Since introduced by policy in 2003 by the government of Tanzania, mainly
it was introduced to steer employment opportunities in the country and also the sector was
brought into attention because it was a growing sector and still is a growing sector. up to now in
2023 the sector is developing and still facing problems. Since SME sector was introduced to
generate income and facilitate contribution to the GDP and economic growth, but the sector still
is very pre-developed in the country. The aim of this concept note is to show why most of these
SME’S fail in Tanzania. Factors like financial constraints, capital constraints, poor technology,
lack of credit access, lack of collateral, stagnant SME business, poor performance, limited
knowledge on financial management and tight regulations. This title and work can be supported
by the work of other researchers(Mashenene & Rumanyika, 2014;Kimathi, 2015;Anderson,
2017;Mboya & Nkwabi, 2019) who also have concentrated on finding out about the SME sector
in Tanzania and mostly have dealt in documenting about what steers SMES to fail, the common
reasons to as why they do not prosper.so it’s still evident that though documentation of the
researchers work still the issues persist and as result, SMEs still undergo challenges that force
them to go out of the business.so this research is for explaining the reasons to why the SMEs fail
in Tanzania.
BACKGROUND
SME’s policy was passed back in 2002, this was to foster economic growth currently SMEs
contribute1/3 of the country’s GDP and also SMEs contribute 40% of employment. Since the
sector was introduced in the nation it was evident that the government had projected in the
economic development of the nation. But at that time the sector was still developing as it is of
now Tanzania is still a developing nation with a developing sector at its disposal. It is projected
in 2025 employment rate will increase to 54.3% this information is indicated by Tanzania
Development Vision. So it is still a developing sector with a lot of potential at its disposal.
PROBLEM STATEMENT
So the title of this academic work is “reasons why SMEs fail in Tanzania”. So the aim is to look
upon and specifically focus on the credit access of the SMEs . why the credit access of SMEs ?
Because in most research papers the authors have articulated about the major constraint that
faces most SMEs is that the capital constraints and financial constraints. This plays as the major
setback as (Mashenene & Rumanyika 2014) have explained as this to be a major player that
leads to why most SMEs ventures fail. But also along the title there are other factors that play
their part in SMEs downfall and it includes factors like capacity of SMEs themselves in a sense
that they have a low level of knowledge, limited capacity in working terms with SMEs this
includes limited number of competent personnel, deficits in the legal environment it includes
issues like credit bureaus absence, lack of SMEs awareness as to why tey do the business they
do, lack of enough evidence from SMEs that enable financial institutions and banks perform
required analysis. So this what the title and the aim of this academic work.
OBJECTIVES
GENERAL OBJECTIVES
Considering the problem statement from this study we except to achieve the most preferable
reasons to why SMEs fail in Tanzania. We can identify some of the major reasons to why SMEs
fail in Tanzania these include credit access to SMEs . so one of the most reasonable reason is the
financial constraint this inhibits the growth of the sector. Also we can show the ways to
strengthen the SMEs sector that includes proper legal system, and the provision of credit access
to SMEs.
SPECIFIC OBJECTIVES

To indicate the reason of SMEs failure in Tanzania

To focus on the forces that influence the demand side on the terms of accessing credit
products from the supply side.

To advise the banks to offer free advise programs to the business operations owners so as
can promote the business to be in favors of accessing credits from the banks and also the
business should prepare themselves technically for appraisal.
METHODOLOGY
Case study approach.
Mixed method approach(content analysis and descriptive statistics)
REFERENCE.
ACCA (2009). Access to Finance for Small and Medium Sized Enterprise Sector: Evidence and
Conclusion.
Beck, T ., & Demigruc-Kunt, A. (2006). Small and medium-size enterprises: Access to financial
as a growth constraint. Journal of Banking & Finance, 30(11), 2931-2943.