A Dissertation Submitted in Partial Fulfillment of the Requirements for the
Degree of Masters of Science in Business Administration in Corporate
Management (MBA-CM) of Mzumbe University.
The concept of SMEs clustering in the growing of the economy has increased a
prominence in development discourse. Meanwhile, at the moment literature on that
subject has grown intensely. In addition, the SMEs incorporation in the development
of the clusters has become a communal phenomenon which almost every business
organization and firms talks about. Moreover, development of cluster was perceived
to be a solution of the problems which hinder SME’s individually. However, SMEs
clusters were not successful as it was expected as a result, it fails to meet
predetermined goals specifically in Morogoro municipality at Kihonda ward. In
addition, SMEs have continued to experience problems such as failing to be stable,
coordinated and organized as well as sustainable in their business activities. The
study aimed to investigate the challenges facing development of SME’s cluster in
Tanzania particularly in Morogoro region at Kihonda ward. It was guided by four
specific objectives which were; to assess knowledge of SMEs in developing clusters;
to examine the policies, and regulations guiding SMEs clusters; to identify the forms
of interorganizational cooperation; to assess competition affecting SMEs clusters
development. The research design was descriptive survey, in which data were
collected through questionnaire and interview schedules. A simple random sampling
was done to identify 100 respondents as a sample of the population. Data were
analyzed through descriptive statistics. The study findings revealed that; many of the
SMEs in their clustering (80%) have little knowledge which is very important in
conception and development of the SMEs cluster. Moreover, the respondents said
that, there are policies that guide the development of the SMEs clusters. However,
84.8% amongst them perceived that those policies and regulation are not effective
and efficient enough. On the other side, many of the respondents 66.3% said that,
there are strong competition challenges which affect the development of the SMEs in
their groups. Thereafter, the study recommends that, the government should put much
effort to provide workshop, trainings and capacity buildings to enhance and impart
necessary knowledge of those SMEs in their clusters, so as they can get a chance to
manage and develop their clusters sustainably. Additionally, the government should
improve policies and regulations concerning SMEs in their clusters to do not only
rely on access to loans but also the creation of favorable and for mid able business
environment within their groups.