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This study aimed to assess the determinants of SMEs’ performance in Ilala district,
Tanzania. Specifically, the study aimed to; determine the effect of financial factors
on SMEs’ performance; determine the effect of human factors on SMEs’
performance; determine the effect of governmental factors on SMEs’ performance.
The descriptive research design with the quantitative approach was used to assess the
determinants of SMEs’ performance in Tanzania. The judgmental sampling
technique was used to select 96 respondents from the selected SMEs. The study used
descriptive analysis, where the data was analysed presented in frequencies and
percentages in bar graphs and tables.
Findings show that financial factors determine the SMEs’ performance through
financial literacy, managerial experience, andeasy accessibility of capital from
financial institutions where most SMEs fail to access capital due tothe lack of
collateral and higher interest rate. Moreover, findings show that human factors
determine the SMEs’ performance through owners’ age where the working-age
group tends to perform well in the business, education level, and the business
training and seminars they acquired. Furthermore, findings show that government
factors such as tax rates are high which increases production costs, government
policies and regulations are not supportive of SMEs, and most SMEs miss marketing
support for their products from the government.
The study concludes that financial factors, human factors, and government factors
determine the performance of SMEs.However, financial skills and managerial
experiences, empower SMEs to attain the desired performance since the management
of firms ‘resources can well be manageable without or low poor allocations of
resources. The study recommends that financial institutions should lessen restrictions
of borrowing money to SMEs, and stabilize the interest rates to SMEs to give them
the courage to apply for loans. Moreover, the government should establish a sound,
stable, honest, reliable, and internationally competitive pre-institutional sector, and
enhance its recognition of SMEs which ultimately can increase SMEs’ performance. |
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