A Review of Factors Affecting the Growth of Small and Medium Enterprises (SMEs) in Tanzania

The growth of Small and Medium Enterprises (SMEs) globally is dependent upon a conducive business environment. However, in Tanzania, SMEs face several constraints such as limited finances, poor market accessibility, low entrepreneurial knowledge and bureaucracy which hinders their growth. This paper aims to assess the factors impeding the growth of SMEs in Tanzania. Factors such as a lack of business training, capital constraints, a lack of finance, poor infrastructure, a lack of collateral, poor production, poor technologies, tight regulations, corruption, poor market accessibility, the motivation of the business owners, limited access to information, a lack of human competencies and inadequate raw materials were measured. A mixed-method approach was used in this study, inclusive of content analysis to extract the constraints from the 21 items of literature in Tanzania. Thereafter, a quantitative approach was applied where descriptive statistics were used to determine the frequency and percentage of the factors in order to extract the most significant variables affecting SME growth in Tanzania. The findings reveal that Tanzanian SME growth is mostly impacted by financial constraints, capital constraints, poor technology and tight regulations. The study recommends that financial assistance through lowering the interest rates and simplifying the borrowing procedures must be given to SMEs to enable them to avail the necessary finance and capital for their business Also the government must support SMEs by simplifying the regulations for SMEs such as levying taxes. Business training must be provided to the SMEs by government organisation such as the Small Industries Development Organisation (SIDO) to facilitate business knowledge.


Introduction
The Tanzanian SME sector has been recognised as a critical sector in the creation of employment opportunities, the generation of income and in its contribution to GDP and economic growth.It is estimated that there are over 3 million SMEs in Tanzania that are engaged in various businesses such as manufacturing, retail and trade, agricultural and services (Mashenene & Rumanyika, 2014).In Tanzania, small scale businesses are defined according to the number of employees and capital invested in machinery.Therefore a micro-enterprise comprises of up to 5 people with a minimum capital requirement of up to 5 million Tanzanian Shillings (TZS), a small enterprise comprises of 5-49 employees with a minimum capital of 5-200 million (TZS) and a medium-scale enterprise comprises up to 100 employees with a minimum capital of 200-800 employees.In 2003, the government introduced the SME development policy that was aimed at alleviating poverty and improving the SME sector.The same policy was reviewed in 2013 which documented that despite the government efforts to improve the sector, SMEs still are faced with challenges such as a failure to compete in international markets, financial constraints, underproduction, poor supply chain management, technological difficulties, a lack of access to raw materials and a low business registration rate.Despite an attempt by previous researchers (Mashenene & Rumanyika, 2014;Kimathi, 2015;Anderson, 2017) to document SME constraints, these issues still persist and as a result, SMEs still undergo challenges which force most of them to go out of business.An explanation of such persistence that can be given is that the country has limited resources and so addressing most of the challenges can prove to be difficult.This research, therefore, aims to evaluate the critical impediments hindering SME growth in order to provide feasible solutions on how these challenges can be tackled to facilitate SME growth.

2.Literature review
Business impediments have been recognised as stumbling blocks standing in the way of SME growth around the globe.Mashenene & Rumanyika (2014) reported inadequate business training, insufficient capital and an antientrepreneurial culture to be the major constraints affecting SMEs in Tanzania.Bilal, Khan & Akoorie's (2016) study on South Asian countries reported financial constraints to be the major impediment affecting SMEs in Pakistan and India.The same was reported by Wang (2016), who found external financing to be a major constraint to growth in SMEs in developing nations.Bouazza, Ardjouman & Abada (2015) reported the business environmental factors, legal and regulatory frameworks, access to external financing and human resource capacities to be the major constraints affecting Algerian SMEs.Baporikar, Nambira & Gomxos (2016) found that Namibian SMEs are unable to grow due to factors such as stealing and security problems from their customers, a failure to adapt to the latest technology, access to finance, appropriate marketing strategies and a lack of skilled manpower.Yukhanaev et al. (2015) found that Russian SMEs face political, economic and regulatory challenges which hinder their growth.Clegg (2018) reported a lack of people-based capability, a lack of competence, a lack of skills and information technology to be the central factors hindering SME growth in the UK.Inadequate human capacity.

Constraints of Accessing Debt
Financing from Commercial Banks among Small and Medium Enterprises in Tanzania: A Literature Review (Mashenene, 2015) Poor access to debt finance, lack of collateral, bureaucratic loan procedures, business informality, poor repayment habits and corruption.

Obstacles Towards Adoption of
Mobile Banking In Tanzania: A Review (Rumanyika, 2015) Poor

Hypotheses
H1: There is a negative relationship between a lack of business training and SME growth in Tanzania H2: There is a negative relationship between capital constraints and SME growth in Tanzania H3: There is a negative relationship between a lack of access to finance and SME growth in Tanzania H4: There is a negative relationship between poor infrastructure and SME growth in Tanzania H5: There is a negative relationship between a lack of collateral and SME growth in Tanzania H6: There is a negative relationship between poor production and SME growth in Tanzania H7: There is a negative relationship between poor technologies and SME growth in Tanzania H8: There is a negative relationship between tight regulations and SME growth in Tanzania H9: There is a negative relationship between corruption and SME growth in Tanzania H10: There is a negative relationship between poor market accessibility and SME growth in Tanzania H11: There is a negative relationship between the motivation of the business owners and SME growth in Tanzania H12: There is a negative relationship between a limited access to information and SME growth in Tanzania H13: There is a negative relationship between a lack of human competencies and SME growth in Tanzania H14: There is a negative relationship between inadequate raw materials and SME growth in Tanzania

3.Research Methodology
A mixed-method approach was adopted in this study where content analysis and descriptive statistics were used.First, content analysis was employed by the researchers by reviewing 21 recent items of literature from within the last 5 years on SMEs in Tanzania.Next, a descriptive analysis was conducted whereby frequencies and percentages were used to determine the most significant factors impacting SME growth.A sample size of 21 literature items was deemed to be suitable for this study.Mashenene & Rumanyika (2014) recommended that a minimum of 12 literature items is sufficient to conduct analysis and draw conclusions.In this study, 14 variables were extracted and analysed using frequencies and percentages, and these were presented in tabular form.The variables extracted in the study include (i) Lack of business training (LBT), (ii) Capital constraints (CC), (iii) Lack of access to finance (LAF), (iv) Poor infrastructure (PI), (v) Lack of collateral (LOC), (vi)Poor production (PP),(vii) Poor technologies (PT), (viii) Tight regulations (TR), (ix) Corruption (CO), (x) Poor market accessibility (PMA), (xi) Motivation of business owners (MOB), (xii) Limited access to information (LI), (xiii) Lack of human competencies (LHC) and (xiv)Inadequate raw materials (IRM).

4.Findings
Table 2 From the table above, its shows that a lack of access to finance has the most negative relationship with the growth of SMEs by 38%.This proves that most SMEs fail to grow due to financial constraints.This is followed by capital constraints (CC) at 33%.This demonstrates that SMEs fail to grow due to being underfunded to reach their initial business goals as set at the beginning of the business.Next to CC, both poor technology and tight regulations scored 24% as the variables affecting the growth of SMEs.Other factors limiting SME growth include a lack of business training at 19%, poor infrastructure, market accessibility, limited access to information and a lack of human competencies with a similar score of 14% and inadequate raw materials, corruption, a lack of collateral and the motivation of business owners which scored 10% in terms of their negative effect on SMEs growth.

Discussion of the findings
The findings reveal that the four significant variables affecting SCM growth are financial constraints, capital constraints, poor technology and tight regulations.This finding indicates that hypotheses 2, 3, 7 and 8 are significant and have been accepted.This indicates that Tanzanian SMEs fail to grow due to issues in finance, capital, poor technology and tight regulations that are imposed by the government.The results are in line with those of Mashenene & Rumanyika (2014) who found that both capital constraints and business training significantly affect SME growth in Tanzania.These findings also echo those of Nyangarika (2017) who reported that finance, technological market accessibility and an unfavourable regulatory environment are the factors standing in the way of SME growth.Moreover, these findings are incongruent with those of Juma & Said (2019) who found that marketing difficulties, a lack of business training, inadequate business skills poor infrastructure and technological difficulties are the main impediments to SME growth.

Conclusion and recommendations
The purpose of this paper was to evaluate the constraints affecting the growth of SMEs in Tanzania.The paper concludes that financial constraints, capital constraints, poor technology and tight regulations to be the most significant impediments to SME growth in Tanzania.These findings imply that financial institutions in Tanzania like banks and microfinance institutions should provide financial assistance through improving their borrowing procedures by lowering the rates and collateral.This is as SMEs are unable to afford collateral which stands in the way of them gaining financial assistance.Mashenene (2015) recommends that simplifying the lending schemes by removing the tight borrowing regulations is vital for easier accessibility to credit by SMEs.The same has been suggested by Lindvert (2017) who found that discriminatory borrowing loans leads to SME growth failure as adequate finance is not issued by banks.Additionally, the government of Tanzania should provide support to SMEs by levying the rules and regulations to allow SMEs to grow.Shamsuddin et al. (2017) reported there to be a positive relationship between support from the government and SME performance and growth.
SIDO should offer business training to SMEs to enable them to gain new business knowledge and to change their way of thinking.Mashenene & Rumanyika (2014) suggest that business training can enable the SMEs to overcome challenges such as technological difficulties, corruption and fear of competition.
Future researchers should focus on how these issues affect SME growth individually by conducting primary data collection and analysis.It will be interesting to conduct a comparative study on the growth impediments to SMEs in developed and developing nations.

Table 3 .
. Business impediments affecting SME growth Based on the table above, the most extracted variables have been presented as frequencies and percentages (frequency divided by literature).Results of the SME growth constraints