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ABSTRACT
Small and Medium Enterprises (SMEs) are very important to the Zanzibar economic
growth and hence, the need to ensure that SMEs grow sustainably cannot be over
emphasized. At present, however, SMEs growth rate is still limited due to a number of
factors that act as the barriers to its growth. This study empirically examined the
constraints to SMEs Growth. A survey of 70 small firms was carried out to firms in
services, food processing, and agriculture and tourism sectors in Urban West Region of
Unguja. The Principal Component Analysis was used to determine dominant constraints,
of which five constraints were identified. These include lack of entrepreneur skill,
unfavorable government regulations, lack of access to finance, lack of access to power
supply, and unreliable of water supply. The constraints were analyzed further to determine
the extent to which the identified constraints actually hinder SMEs growth. In this, a
logistic regression model was estimated. The result of the analysis shows that
unfavourable government regulations and unreliable utility supply (power) significantly
hinder SME growth in Zanzibar. Therefore, this study argues that weaknesses and lack of
government policy and inadequate provision of power supply do not meet requirements of
Small and Medium Enterprises (SMEs) growth. The non government organization
supported by central government should provide education concerns with business skills
at the same time enterprenuers should be ready to attend seminars on how to run their
business, institutions finance should regulate and reduce constrain on SMEs
so as
smoothing take a loan . To overcome these obstacles, various measures are suggested
include appropriate policies that create conducive environment toward SMEs growth. The
study concludes with a discussion of policy implications and areas for further research. |
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