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The study was on financing SME’s; challenges and prospects, a case study of Stanbic Bank Tanzania Ltd. The general objective of the study was to access challenges faced by financial institutions in financing small and medium enterprises. Furthermore, the specific objectives were to determine the performance of small and medium enterprise customers financed by Stanbic Bank Tanzania, determine challenges facing SMEs in securing loan, and also to determine role played by credit bureau systems in financing SMEs
Both theoretical and empirical literature was reviewed and research gap identified during development of research proposal. In carrying out this study a research design used was a case study. A total number of 80 respondents were involved to form a sample size drawn from 800 study population. Data collection instruments used includes interview questions, documentary analysis and observation schedule.
Following the analysis of collected data the study came up with findings which formed the basis for recommendations to address the causes of challenges and prospects in financing SME’s in Tanzania, hence appropriate improvement in available lenders to finance SME’S. The findings of the study shows among the challenges SME’s faces is lack of collateral have been a big problem to almost all interviewed respondents.
Whiles most of the banks are reluctant to lend to SMEs due to their inability to evaluate risk, part of the blame is put on the bad management practices among owner- managers. The perceived constraints do not have equal impact on SMEs’ access to bank credit. Some have higher impact on SMEs’ bank credit accessibility than others. SMEs who have obtained loans and those who have not obtained loans are affected differently by these perceived factors, but almost all of these differences are not statistically significant. The Government in collaboration with small business associations could establish credit information bureaus (centralized databases that include financial information on enterprises), which can help reduce financial constraints resulting from underdeveloped financial market. |
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