An examination of the policies and practices towards promoting SMEs development in Mwanza, Tanzania

Abstract

This study examines policies and practices toward promoting SMEs development in Mwanza, Tanzania. It was guided by three specific objectives; examining public policies and practices toward SMEs promotion, examining MFIs policies and practices toward SME promotion, as well as examining the contribution of Tanzania enterprise culture to SMEs development. The period from 2000 to 2009 is chosen due to the fact that numerous government policies and strategies were established and implemented in the country to stimulate the SME sector. The data was collected through interviews and questionnaires from SMEs operators, MFIs loan officers and government officials. The research finds that the establishment of SMEs is motivated by push factors. Such factors include lack of adequate formal education, lack of alternative payable employment and loss of jobs. The research also finds that Tanzania education system limits the creation of an enterprise culture. This is due to the fact that it prepares students or people for white collar jobs. Moreover, most MFIs policies and practices hinder the development of SMEs. This is shown by the placing of more emphasis on loan provisions and less on business skills generation. Lastly, the research finds that public policies and practices are not geared toward SMEs promotion. This is due to lack of clear guidance on what should be done to promote entrepreneurship development in the SME sector. The study suggests future research to be undertaken in examining public policies fostering entrepreneurship and its impact on the macro economy, the taxation system and interest rates charged to SMEs as it has been found to be a problem to the sector.