A Dissertation Submitted in Partial Fulfillment of the Requirements for the degree of Master of Business Management (MBA) of Mzumbe University
This study was aimed to examine the impact of microfinance credit on the performance of SMEs in Tanzania specifically in Morogoro Municipal. The research design employed was a case study. Data were collected from 100 respondents. Simple random and purposive sampling techniques were used to arrive 80 customers as well as 20 Bank staff respectively. Moreover, data were collected using interviews, questionnaires, observation and documentary review. Data were analyzed using descriptive statistics (frequencies and percentages) using computer package called Statistical Package of Social Science (SPSS) 16 version. Results shows that credit obtained from NMB Bank in Morogoro, SMEs have been able to improve businesses in term of: increased business profit, increased employees, increased sales turnover, increased business diversification, increased business capital and assets as well as reduction of poverty among customers surveyed. Result also shows that collateral, age or experience of the SMEs owners, and, size of the firm influence the access of credit. The study concluded most of the small businesses depend on bank loan for business capital growth. Bank loan especially NMB loan plays a very crucial role to promote small business growth. Although some of the small businesses fail to repay bank loan due to various reasons such as grace period, moral hazard and high interest rate. In regard to the findings, however, it was recommended that MFIs should increase credit and enhances participation in SMEs financing, in order to sustain the growth and maximal contribution to economic growth and development of the nation. Government and MFIs should enhance the out-reach of microfinance through creating awareness of the activities and operations to SMEs especially those in rural and semi-urban areas that are yet to appreciate the benefits of the scheme.