Funds Management On Small – Scale Industries In Tanzania: A Case Of Dodoma Municipality

ABSTRACT

This study was carried out in Dodoma Municipality particularly at Bahi Road Ward, Majengo Ward, and Railway Ward. The objective of the study was to assess Funds management on Small-Scale Industries in Dodoma Municipality. Funds Management on Small Scale Industries in Tanzania was undertaken, to highlight the issues facing small scale industries in Tanzania in their growth and quest, to accessing bank credit (loans) from financial institutions (banks & non– banks) to undertake various activities; be it general business operations or carrying out expansion project all in the name of fulfilling the objectives as being job creators and development. In tackling this topic, a mixture of qualitative and quantitative approaches was adopted. Both primary and secondary data were used in gathering information for the study through survey and focus group discussion. The study used 50 respondents in Dodoma Municipality through a technique of simple random, and purposive sampling techniques. Quantitative data were analyzed through SPSS program and Microsoft Excel while qualitative analysis were analysed through content analysis. From the findings of this study, it was revealed that there are institutions such as bank and non-bank financial institutions that were willing to provide funds to SMEs, but Tanzanian SMEs are not able to meet the requirements of these financial institutions. The Chief among these requirements is the issue of collateral, which most SMEs cannot provide. Apart from this is the issue of small equity base of these SMEs among others. Secondly, those who were able to access this credit were also faced with high interest rates and short repayment periods, making it very difficult to embark on any developmental or expansion projects. Another interesting revelation with regards to the high rate of defaults in repayment of loans contracted, relates to the tight Cash flow situations of these SMEs, that is mostly due to difficulties in the management of the account receivables, of the respective SMEs surveyed. The study concludes with some recommendations to help free up capital or credit to the SME sector. Among the recommendations are to encourage financial institutions (banks & nonbanks) to establish factoring services, enforcement of the credit reporting act and finally provision of tax incentives for banks that lend to SMEs, to encourage others to do same