A Dissertation Submitted in Partial Fulfilment of the Requirements for the
Award of Degree of Master in Business Administration-Corporate Management
of the Mzumbe University
The main purpose of this study was to assess the impact of formalizing Women
Small Medium Enterprises (SMEs) on profitability. For scoping purpose, this study
laid out three objectives, to identify the causes of informality among Women-Owned
SMEs in Kinondoni municipality, to explore the effect of formalization of WomenOwned SMEs on profitability in Kinondoni municipality and to propose strategies
for promoting the formalization of Women-Owned SMEs in Kinondoni
Municipality.
The study employed case study method with target population comprising of women
entrepreneurs owning SMEs. The sample size included 100 respondents selected
using simple random and purposive sampling techniques. Data collection techniques
employed in this study were questionnaires; interview and documentary review,
which were then, qualitatively and quantitatively analysed using content analysis and
Statistical Package of Social Science (SPSS) respectively.
Findings from the study revealed that formalization of Women-Owned SMEs had a
significant effect on profitability with 46 per cent respondents denoting that
formalization of SMEs increased their access to financial services including bank
loans and contributed to customer retention. Time consumption due to prolonged
business registration processes and complicated procedures were the most
highlighted hindrances for formalization of the women-led SMEs with 40 per cent
and 32 per cent responses respectively. The study further revealed that creation of
favourable regulatory environment and reduction of business registration complexity
were the most proposed strategies for promoting formalization with 42 per cent
response whereas extended government social security fund to informal sector was
the least approach with 8 per cent response.
The study recommends the government to reduce barriers and bureaucracy involved
in business formalization thereby proposing quickening business registration
processes through automation. The study also recommends that SMEs formalization
to be leveraged through awareness creation and community sensitization on the
benefits associated with business formalization.