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Small and medium sized enterprises in both developing and developed countries play important roles in the process of industrialization and economic growth. A crucial element in the development of the SME sector is access to finance, particularly to bank financing. Microfinance Institutions emerged to serve the financial needs of un-served or underserved group of people in the community such as SMEs.Though there are many studies which have tried to link MFIs and SMEs,yet there are no enough studies showing MFIs‟ role to support SMEs and extend it to living standard of those who run the SMEs The objective of the study was to evaluate the contribution of Micro-finance Institutions to the growth of small and medium enterprises in Bukoba Municipality. Specifically the study aimed at examining the extent to which SMEs develop measures for the growth in Bukoba Municipality, finding out the extent to which Microfinance Institutions improve business growth and living standard of SMEs owners, analysing on how utilization of the financial services provided by Microfinance Institutions support the improvement of household‟s income. The study evaluated the contribution of Micro-finance Institutions to the growth of small and medium enterprises. The findings have covered respondents profile such as age, education level and experience of small business owners and operators. The findings showed that many of these SMEs at Bukoba developed important measures for growth such as business registration, possession of substantial experience in business. However, the study revealed that these SMEs have big weaknesses in other measures such as the size of loans taken being small, lack of entrepreneurship skills, and the fact that many SMEs do not attend SMEs‟ forums. The findings revealed that there is lack of technical support to SMEs from MFIs, and at the same time SMEs are viewed as organisations which have low credibility by MFIs. The study revealed that it is not easy for SMEs to obtain loans from MFIs, some of the obstacles being high interest rate and collateral security.
The current study has further identified the contribution of MFIs to the growth of SMEs in Bukoba municipality is not as expected, the support is a little bit impressive and still a lot have to be done to address problems and constraints such as lack of technical support from MFIs and limited access to loans. The study ended up with important recommendations to various stakeholders. |
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