A Dissertation Submitted to Mzumbe University in Partial Fulfillment of the
Requirements for the Award of the Degree of Master of Business
Administration (MBA) of Mzumbe University
The study was based on the quest to clearly understand the impact of Small
Industries Development Organization (SIDO) microfinance loans on Dar-es-salaam
Small and Medium Enterprises (SMEs). The rationale for undertaking this study was
that, SIDO Dar-es-salaam has been providing loans to SMEs of Dar-es-salaam
through NEDF since 1994 to date as a start-up fund and working capital for SMEs
business development and growth, despite of the fact that various studies have been
conducted focusing on impact of microfinance loans on SMEs performance but,
there is inadequate information on the impact of SIDO NEDF microfinance loan to
Dar-es-salaam SMEs business. The study examines impact on the business growth,
employment opportunities and cash capacity or liquidity position.
The study was a quantitative research which employed descriptive survey design
whereby SMEs served by SIDO Dar-es-salaam under NEDF Microfinance loan were
selected for the study. The sample size was 582 randomly selected respondents
obtained by using Slovenes (1960) formula. The sample size comprised of 250 SMEs
from trade category, 161 SMEs from industries and 171 poultry and livestock
whereas the response rate was 73.4%. The facts and information to fill the gap were
collected through questionnaires which were structured for all categories of
respondents. Specific Statistics for presenting the primary data were generated from
the collected data. Inferential statistics which is, statistical t test was done to find out
the level of significance of the study results using paired samples t test to see whether
there is significant difference on the findings on each research questions
The findings revealed that SIDO NEDF microfinance loan has contributed
significantly on SMEs business as the computed one paired t -Test result was 0.000 <
specified alpha 0.05. The study recommends that management of SIDO should
approach the government for raising adequate fund for increasing loan amount
basing on the nature and needs of the project or business. Also the Ministry of
Industry should have special fund for specific sectors basing on five year
development plans as well as releasing fund a planned for NEDF. And the policy
implication from the findings is that the government should engage public private
partnership loan financing programmes with affordable costs and consider establishment of
SMEs microfinance Bank.