A Dissertation Submitted to Mzumbe University, in Partial Fulfilment of the Requirements for an Award of the Degree of Master of Business Administration in Corporate Management (MBA-CM) of Mzumbe universityThe Tanzania cooperative sector plays a significant role in the Tanzania financial sector. SACCOs is a now predominant form of external financing for small and micro enterprises in most of the developing counties. Despite of the role played by SACCOs in supporting SMEs SACCOs is still facing with a lot of challenges which hindering them to meet the demand of their clients. Considering their support, this paper aims to unveil the constraints which hinder SACCOs development in supporting SMEs in Tanzania. The study was carried in Temeke municipality whereby three SACCOs were involved. The sample size of this study was 40 respondents. The questionnaires were administered and distributed to respective respondents which include line managers of SACCOs and the entire members of the SACCOs. The study objectives were to examine the operation capital of SACCOs in supporting the Small Enterprises, determine the extent in which the management of SACCOs is supporting SMEs, and assess the extent in which SACCOs have contributed to the development and growth of SMEs in Tanzania. The findings of this study revealed that SACCOs has been contributed to the economy of individual and national level. Despite of some challenges facing SACCOs such as delay in payment of the loan; poor management of database system; lack of enough capital, insufficient debt and equity funds to pass to the poor, poor computerized system; and delaying of presentation of financial reports to clients/ members, still yet SMEs operate their business but with small initiatives from the government.