A Dissertation Submitted in partial fulfillment of the requirements for the Award of Masters Degree in Business Administration (MBA) of Mzumbe University
The study focused on determinant factors affecting small business in microcredit accessing in Tanzania conducted in Morogoro Municipal using National Microfinance Bank as a case study. Specific objectives of the study were to determine various types of micro-credit services offered by NMB bank and its accessibility procedures, to investigate the contribution of micro-credit in promoting business development in the study area and to investigate the significant of demographic factors in microcredit access. The research was guided by the questions what kind of micro-credits is offered by NMB? What is the relationship between credit delivery and business development and how does demographic factor affect the access of credit? Simple random sampling and purposive sampling techniques were used to get a total of 204 study respondents which were customers of NMB and loan officers. Data were collected through questionnaires, interviews, observations and documentary reviews. Data analysis was based on descriptive and inferential statistics and presented in tables, frequencies, and percentages.
Study findings show that high interest rate, legal and regulatory procedure, complicated and bureaucratic loan application procedures, age, income level and education of the respondents affects small business holders in access bank loans. In addition, factors that hinder microcredit access are such as lack of verifiable business premises, culture of non repayment, over insistence on collateral rather than business potential and inadequate record keeping. The study recommends that, regulation governing micro-financing are to be revised in order to improve and accommodate financing to those business with less than one year old and flexibility in financing those with no working capital. The repayment time and interest rates should be reflected to match the reality of life. The small business holders are suffering from high interest rates and short repayment duration. This eliminates the ability of these small business holders to plan well their growth, and sustainability. Therefore the study recommends changes in this area by lowering interest rate per annul and increasing duration of payment of the loan, this will enable small business holder to participate in the economy profitably. In order to accelerate business growth, other services should also be provided; such as training, counseling, information services and also appropriate emphasis on Business Ethics should be given in different levels of education