CHALLENGES FACING SMALL AND MIDIUM ENTERPRESES

TABLE OF CONTENTS

CERTIFICATION……………………………………….…………………………………....I DECLATATION…………….....………………………………………………………… …II ACKNOWLEDGEMENT……………………………………………………………….. …III DEDICATION………………………………………….………………………………. …..IV

ABSTRACT…………………………………….........................…………………………….V ABBRAVIATION………………………………………………..…………………………..VICHAPTER ONE..................................................31.0 INTRODUCTION................................................31.3 OBJECTIVES OF THE STUDY....................................51.3.1 GENERAL OBJECTIVE.........................................51.3.2 SPECIFIC OBJECTIVES........................................51.4 RESEARCH QUESTIONS.........................................51.5 SIGNIFICANCE OF THE STUDY....................................61.6 SCOPE FOR THE STUDY.........................................6LITERATE REVIEW.................................................72.1 INTRODUCTION................................................72.2 THEORETICAL REVIEW...........................................72.3 EMPIRICAL REVIEW...........................................10FINALLY WE FOUND A VERY CRUCIAL POINT BY RESEARCHER THAT OF ALL RESEARCHTHE ENTREPRENEURSHIP IS CONSIDERED AS THE DRIVING FORCE BEHIND CHANGES IN THE ECONOMY AS WELL AS BUSINESS ENVIRONMENT. 2.4 RESEARCH GAP........11CHAPTER THREE...............................................143.0 RESEARCH METHODOLOGY AND DESIGN..............................143.1 INTRODUCTION...............................................143.2 RESEARCH DESIGN............................................143.3 RESEARCH TECHNIQUE.........................................143.3 SAMPLING TECHNIQUE........................................153.4 ...............................................SAMPLE SIZE.

153.5 DATA COLLECTION TECHNIQUES...................................153.6 POPULATION UNIT............................................15CHAPTER FOUR................................................16RESULTS AND FINDINGS........................................164.1INTRODUCTION................................................16

1

4.1 GENERAL REPORT.............................................164.1.1 PURPOSE AND METHODOLOGY...................................164.2 DEMOGRAPHIC INFORMATION......................................174.2.1 GENDER DISTRIBUTION.......................................174.2 AGE DISTRIBUTION...........................................174.3. LENGTH OF SERVICE IN BUSINESS...............................184.4 RESPONDENTS CURRENT LEVEL OF EDUCATION.........................184.5 RESPONDENTS AREAS OF OPERATION................................194.6 RESPONDENTS ASSIGNED TASK(S) THERE ARE ENTERPRISES FACTORS AFFECTING THE GROWTH OF SMALL AND MEDIUM ENTERPRISES?.........................194:7 CAN YOU TELL US WHAT SHOULD BE DONE TO INCREASE AWARENESS AND UNDERSTANDING THE PROPER WAY TO RUN SME’S?........................214:8 THERE ARE THE ADVANTAGES OF UNDERSTANDING THE KNOWLEDGE OF RUNNING THESE SMALL AND MEDIUM ENTERPRISES?...............................224.9 CAN YOU IDENTIFY THE POSSIBLE SOLUTIONS FOR THE PROBLEMS AFFECTING SME’S.......................................................244:10 FACTORS THAT CONTRIBUTED BAD MANAGEMENT OF MANY SMES..........254:11 DO YOU HAVE ANY SUGGESTIONS TO IMPROVE EFFICIENCIES IN SMALL AND MEDIUM ENTERPRISES?.......27TABLE 4:10 SHOWING RESPONSES IF THERE ARE SUGGESTIONS OR NOT.........27CHAPTER FIVE................................................285:0 CONCLUSION AND RECOMMENDATIONS...........................285.1 INTRODUCTION.............................................285.2 SUMMARY...................................................285.3 CONCLUSION................................................285:4 RECOMMENDATIONS.........................................29REFERENCES AND BIBLIOGRAPHY.................................31APPENDICES..................................................32APPENDIX 1..................................................32APPENDIX 2..................................................34

2

CHAPTER ONE

1.0 IntroductionThis chapter presents the background to the problem statement of

the problem, objectives of the study, research questions, and

significance of the study, limitation of the study and scope of

the study.

1.1 Background of the problem

Over the past twenty years or so Tanzania has constantly been

embarking on a long process of political, economical and social

reforms to improve the business environment, promote economic

growth and reduce poverty in the country. The economic hardship

the country has been facing has been attributed to a lot of

factors among them being the underdeveloped private sector which

accounts for over 80% of employment ( 2006). Unemployment has

been a chronic problem in the country. Today the unemployment

rate stands at a staggering 12.7% ( 2009 .) forcing a large

3

number of the working population to opt for self employment. But

due to a number of reasons the newly formed businesses fail to

operate on profits and eventually close down or continue

operating without a good return on investments constrained from

growth and expansion. The rise of the urban informal sector in

Africa is particularly associated with the postcolonial period,

when rapid urbanization tended not to be accompanied by

concomitant growth in urban formal economies. The urban people

adopted diverse self-help initiatives to create employment and

incomes. However, both rapid urbanization and this

entrepreneurial response have their roots in the late-colonial

period.

For example, the planned solution to what was seen as the problem

of urban growth was to attempt to limit it. Restricted numbers of

more skilled employees – being paid salaries which were for the

first time high enough to make permanent urban residence an

option –were to replace scores of indigenous and temporary

migrant labourers. Such thinking plainly failed to address what

was evident in towns and cities throughout the continent, that

ever-growing numbers of people were opting to move to the urban

areas. By so doing, these migrants flagrantly contradicted

colonial schemes aimed at restricting urban growth. Faced with

what was often contracting employment in the formal sector, these

migrants turned to the informal economy to get by, in

contravention of both municipal by-laws and the colonial ideals

of a

4

restricted urban African class engaged in privileged formal

employment.

Faced with the unruly ingenuity of their subject populations,

colonial authorities vainly attempted to enforce their urban

vision through the criminalization of the informal sector, and

the later colonial period was characterized by periodic campaigns

in which Municipal Administrations vainly attempted to clean the

streets of unsightly vendors and hawkers. Despite the manifest

inadequacy of such a policy, those African officials who assumed

responsibility for the administration of urban centers after

independence maintained this approach. It is comparatively

recently that those policies, that are more tolerant of informal

economic activities, have been adopted in sub-Saharan Africa.

However, even today those active in the informal sector are still

highly vulnerable to the whims of Municipal officials and

politicians, as is only too evident in the wave of demolitions of

informal trading areas which entrepreneurship, Small Business and

Crime Dar es salaam occurred in many towns throughout the country

on the pretence of the so called cleaning the city and make it

safer!

In Tanzania, Dar es Salaam in particular, the question of

entrepreneurship and small business especially itinerant trading

were evident even during colonial period. Hawking and peddling

were, according to Leslie (1967) ‘the standard expedients of

those unable to find paid employment.’ Few of these petty traders

5

were licensed: ‘the casual peddlers’, observed Leslie, ‘seldom

bother to comply with the law.’ Despite the obvious inefficacy of

municipal policy, the attempt to control itinerant trading

through restricting the number of licenses persisted. Unlicensed

hawkers continued to be apprehended and taken to court. In 1959,

as ever-growing numbers of migrants were entering the township –

many of whom were resorting to petty trade to get by – the

Municipal Council deliberately decided to reduce the amount of

trading licenses available. Illegal tapping of palm wine

(tembo)with its attendant evils of illegal selling of liquor is

very prevalent in the neighborhood of Dar es Salaam. Drunkenness

and hooliganism were, as a result, on the increase especially

among the youths of the suburban areas who patronized illegal

‘tembo’ clubs and ‘marujuana’ to a very large extent Municipal

and district officials viewed unlicensed street trading as either

a public health threat and/or an activity which undermined the

licensed and controlled trade conducted in the official markets.

Generally in order to survive and grow we must continually adopt

new knowledge to overcome new challenges facing small and medium

enterprises.

1.2 Statement of Problem

Tanzania eventually makes suggestions on how to deal with the

factors limiting small business growth. Discourse on

entrepreneurship and small business subject can take us long to6

pursue. However, practitioners share some common understanding

when they describe entrepreneurship. For example, Thomas Zimmer

and Norman(1996:52)describe entrepreneurship as a result of being

disciplined and systematic in the process of applying creativity

and innovation to needs and opportunities in the market place. It

involves not only applying focused strategies to new ideas and

new insights but also creating a product or a service that

satisfies customers’ needs or their problems (ibid).

Schumpetarian takes a rather traditional view when he describes

entrepreneur as a person who identifies a market opportunity and

transform s it into a profitable economic value. Moreover, by

identifying the possible solutions to the problems, it will not

only help the author as an entrepreneur but it could be of great

advantage to the Tanzanian business community and the government

as a whole. Sometimes it needs some knowledge in order to exist

and to run the business profitable. so these are regarded as a

challenges to most business man in developing countries and this

influencing the researcher to trigger on the challenges facing

small and medium enterprises a case study of machinga complex at

Dares salaam.

1.3 Objectives of the study1.3.1 General objectiveThe main objective of the study is to assess the challenges

facing small and medium enterprises in developing countries.

1.3.2 Specific objectives To determine enterprises factors affecting the growth SME’s

7

To increase awareness and understanding on how to run

SME’S.

To find out solutions for the problems affecting SME’s.

1.4 Research questionsThe study will be guided by three research questions that focused

on the key variables of the purpose.

(i) What are enterprises factors affecting the growth of

small and medium enterprises?

(ii) What should be done to increase awareness and

understanding the proper way to run SME’S?

(iii) What can be the possible solution for the problems

affecting SME’S?

1.5 Significance of the study(i) This study will help to understand area of weakness and

strength in managing small and medium enterprises.

(ii) This study will increase the knowledge and the truth

about small and medium enterprises.

(iii) This study will help to answer the questions about the

factors affecting the growth of small and medium

enterprises.

(iv) To the government reduce many youth with jobless in

street, through advice of the researcher of this article

many youth will be having job opportunities as they will be

able to create business.

1.6 Scope for the studyThe scope of the study based on small and medium enterprises

especially Machinga complex at Dar es Salaam.8

1.7 Limitation

This research has been limited by following factors:

Time : because this research was so important and it was

supposed to be given more time in order to study wider area,

example: the research was supposed to be conducted in

upcountry regions around Tanzania in order to know extent

of problem for purpose of making good decision. We suggest

that to be given a period of one year to study this problem.

Expensive: This research cost money and time when conducting

it. It requires buying of materials, notes regarding the

expected research.

Lack of information: It might happen that the information

source is not reliable. Some people might not agree to give

information.

Lack of reliable transportation to the targeted area due to

complicated traffics of Dar es Salaam. In some area machinga

might steal parts of your parked car like sight mirror.

Bad weather like rain or extreme hotness.

It is risk to asses small business men in Dar es Salaam

because some of them are thieves in nature

CHAPTER TWO

9

Literate Review

2.1 introductionThe main purpose of this chapter is to present the relevant

literature as written by different others and several researchers

on the subject of challenges facing small and medium enterprises

in developing countries.

2.2 Theoretical reviewEntrepreneurship is considered as the driving force behind

changes in the economy aswell as business environment. The term

entrepreneur has evolved over the years to be used to mean an

individual (group of individuals) who has the ability to see and

evaluate the business opportunity existing in the environment and

take advantage of it. An entrepreneur is considered to be a

person with ability to take risk of organizing resources into

business venture and manage it with the aim of being successful.

The question of success here becomes axis mundi and the prime

goal and vision of every entrepreneur. Entrepreneurship can

operationally be defined as the ability or attempt to create and

manage a new venture. It is linked with the qualities and

activities of entrepreneur i.e. to see an opportunity and being

able to benefit from it.The rise of the urban informal sector in

Africa is particularly associated with the postcolonial period,

when rapid urbanization tended not to be accompanied by

concomitant growth in urban formal economies. The urban people

adopted diverse self-help initiatives to create employment and

incomes. However, both rapid urbanization and this

10

entrepreneurial response have their roots in the late-colonial

period. For example, the planned solution to what was seen as the

problem of urban growth was to attempt to limit it. Restricted

numbers of more skilled employees – being paid salaries which

were for the first time high enough to make permanent urban

residence an option –were to replace scores of indigenous and

temporary migrant labourers. Such thinking plainly failed to

address what was evident in towns and cities throughout the

continent, that ever-growing numbers of people were opting to

move to the urban areas. By so doing, these migrants flagrantly

contradicted colonial schemes aimed at restricting urban growth.

Faced with what was often contracting employment in the formal

sector, these migrants turned to the informal economy to get by,

in contravention of both municipal by-laws and the colonial

ideals of a restricted urban African class engaged in privileged

formal employment. Faced with the unruly

ingenuity of their subject populations, colonial authorities

vainly attempted to enforce their urban vision through the

criminalization of the informal sector, and the later colonial

period was characterized by periodic campaigns in which Municipal

Administrations vainly attempted to clean the streets of

unsightly vendors and hawkers. Despite the manifest inadequacy of

such a policy, those African officials who assumed responsibility

for the administration of urban centres after independence

maintained this approach. It is comparatively recently that those

11

policies, that are more tolerant of informal economic activities,

have been adopted in sub-Saharan Africa. However, even today

those active in the informal sector are still highly vulnerable

to the whims of Municipal officials and politicians, as is only

too evident in the wave of demolitions of informal trading areas

which occurred in many towns throughout the country on the

pretence of the so called cleaning the city and make it safer! In

Tanzania, Dar es Salaam in particular, the question of

entrepreneurship and small business especially itinerant trading

were evident even during colonial period. Hawking and peddling

were, according to Leslie (1967) ‘the standard expedients of

those unable to find paid employment.’ Few of these petty traders

were licensed: ‘the casual peddlers’, observed Leslie, ‘seldom

bother to comply with the law.’ Despite the obvious inefficacy of

municipal policy, the attempt to control itinerant trading

through restricting the number of licenses persisted. Unlicensed

hawkers continued to be apprehended and taken to court. In 1959,

as ever-growing numbers of migrants were entering the township –

many of whom were resorting to petty trade to get by – the

Municipal Council deliberately decided to reduce the amount of

trading licenses available. Illegal tapping of palm wine (tembo)

with its attendant evils of illegal selling of liquor is very

prevalent in the neighborhood of Dar es Salaam. Drunkenness and

hooliganism were, as a result, on the increase especially among

the youths of the suburban areas who patronized illegal ‘tembo’

clubs and ‘marujuana’ to a very large extent Municipal and

12

district officials viewed unlicensed street trading as either a

public health threat and/or an activity which undermined the

licensed and controlled trade conducted in the official markets.

Despite the shortage of work, the numbers of trading licenses

were highly restricted as the town council maintained their long-

held policy ‘to keep street trading to an absolute minimum’.

According to narration by Burton (2001), in 1955 special police

squad was set up to apprehend, amongst other

So-called undesirables, unlicensed hawkers. In the first

quarter of 1955, 111 were prosecuted for

trading without a licence as a result of police raids. In the

next quarter 31 were apprehended for the same offence. It was not

until the election of Dar es Salaam’s first African mayor, Amri

Abedi, that there was a reconsideration of the long-held

municipal policy of restriction. On coming to office in early

1960, Mayor Abedi proposed that ‘street tea and food sellers

should be given licenses to trade freely and hawkers’ licences to

move freely.’ By this time, ever growing

Entrepreneurship, Small Business and Crime Dar es salaam numbers

were resorting to informal trade as a means of getting by. Some

councilors opposed the move, by mere reason that the act would

harbour health problems and jeopardize the interest of licensed

traders. Councillor Jaffer of Indian origin spearheaded the

opposition. The outcome of these exchanges was a compromise in

which itinerant fruit and vegetable traders were allowed to

13

operate unlicensed as long as they had acquired written

permission to trade, whilst regulations were introduced

restricting traders of other goods to operate from approved

sites. 192 licenses were made available to such traders.

Meanwhile the Police were ‘requested to take action against any

such traders operating on

the streets or sidewalks and against any other persons trading on

the streets with nopermit.’ ‘The new controls’, announced a

satisfied Councillor Jaffer, ‘should go a long way towards

solving the indiscriminate trading which was going on … in Dar es

Salaam.’ This approach was maintained after independence in

December 1961. Once African politicians

and officials assumed responsibility for managing the town, their

response to the problems

of rapid urban growth bore marked similarities to that of their

colonial counterparts. The

ideal of a restricted urban population engaged in formal wage-

earning employment

persisted in the official rhetoric.

The ideal situation in three municipals of Dar es Salaam has

more than 50% private sector employments. The increase of

population according to past ten years sensor shows that the

employment demand was increasing in the acceleration which could

not be fulfilled by the government sector. Therefore the private

sector was the area of employment watched as solution.

14

Highly and medium educated professionals and non professionals

whom did not get government employment opportunity were forced to

create self employment. Unskilled and non educated from villages

migrating to towns and especially to Dar es Salaam all are

creating self

employment to survive. Those based in Dar es Salaam every gay

the number is increasing; hence due to life challenges

entrepreneurs in deferent levels face challenges in a range of

degree. Example of a very key challenge is the area of conducting

activities which is expected to be potential for an entrepreneur.

Unskilled and uneducated migrating from villages evade a

restricted place doing the petty business and services face city

police power to remove them from restricted places.

These situations lead then to loose their capital interns of

goods they possess for petty trading and sometimes cash money.

Others face charges but they use corruption by lobbing the police

to release them or their goods.In another way middle

entrepreneurs they most of them possess addressed business which

have several challenges such as poor location of type of business

leading them to failure or loosing of capital. Same does not

have enough knowledge about their business, others does not have

knowledge of record keeping etc. All challenges lower the profit

merging and leading medium entrepreneur to loose a lot of their

life time for earning less income.

2.3 Empirical Review

15

According to Rashid M. Mfaume and Wilhelm Leornard Small Medium

Entrepreneur Researchers 2004 had a literature review data of Dar

es Salaam in three Municipals Temeke, Kinondoni and Ilala as

shows:

TABLE 1: Dar es Salaam Administrative Structure

District No of

Division

No of

wards

No of Mtaa Village

s

Population

Kinondoni 4 27 113 14 1.08

MillionTemeke 3 24 97 15 0.78

MillionIlala 3 22 65 9 0.62

MillionTotal 10 73 275 38 2.49

Million

Therefore the purpose of this research will be based on the

study and exploratory study to be conducted in the city of Dar es

Salaam about SME (Small and Medium Entrepreneur)development

against challenges in 2013.The researches pointed out some key

areas

which was challenge to the SME (Small and Medium Entrepreneur)

between 1960’s to 2004/2005. For example politicians had

interests especially when Elections was near, to express a favor

of trade free policies to small entrepreneurs into restricted

16

areas. Police could not attack such traders under such

situations. This means regulations set by that time could not

work. The researchers also mentioned issue of “Hawkers” (traders

without license) according to Leslie (1967). There was several

reasons causing the situations but also government policies were

involved. Researcher pointed out the outcome of small business

traders in the city of Dsm.

Finally we found a very crucial point by researcher that of all

research the entrepreneurship is considered as the driving force

behind changes in the economy as well as business environment.

2.4 Research Gap

Dar es Salaam city with its three Municipals recent senser found

increment in population up to about 4.5 Million compared to 10

years ago of about 3 Million. This population have a big number

of youth contributed with those born and grown within the region

and others migrants from Villages seeking for better life and

employment.

Speaking about the gap between past ted years to date we can

experience the great change to SME (Small and Medium Entrepreneur

) in terms of capital for business, environment change,

competition due to involvement of unemployed educated youths in

SME and current government policy.For example the recent

government policy to prepare a business centers for SME

(sometimes known as Machinga) such as Machinga Complex at Ilala

Municipal and Makumbusho in Kinondoni Municipal has changed the

style of trading used before. Although such policy does not

17

immediately show the solution of removing petty traders from

restricted places but slowly remove or reduce member of street

petty traders and make they trade formal helping government to

collect tax from their business. Hence we can conclude

development to both sides Small Medium Entrepreneur and

government when Small Medium Entrepreneur

change style of trading.Trading capital is another issue which in

recent years we have experienced change in government policy

although it is not known exactly if it worked efficiently. The

president Jakaya Kikwete in present years issued Capital Money

known as “Mabilioni ya Kikwete” which aimed to enable Small

Medium Entrepreneur through Financial institutions such as banks.

We have not get proper data on how the capital helped the Small

Medium Entrepreneur but this effort is not for granted.

Comparing with research done last ten years we can see that the

government policy to Small Medium Entrepreneur intend to change

informal trade to formal trade. The difficult or challenges

encountered by Small Medium Entrepreneur on reaching the capital

(Mabilion ya Kikwete) in one way it is the light to help Small

Medium Entrepreneur to change from petty trading and slowly have

an addresses trading center. The business competition is a

challenge to Small Medium Entrepreneur within their capability in

terms of education level and skill. In the recent years the

government policy on education especially to make sure many youth

18

acquire secondary education by introducing and building secondary

schools in every ward has made change to mend-set of youths.

Youths are now travelling over regions and bring goods to Dar es

Salaam for trade. The education gap between youth causes

competition because skilled youths plans business and are capable

to see opportunities through media and other sources. Unskilled

youths have few resources to see opportunities. Most of the time

they trade using past experience. We can conclude that the

current research will reveal hidden ideas on developing Small

Medium Entrepreneur making more achievement on trade and

opportunities for the gap of about ten years of implementation of

science and technology in Business. Other studies suggest that

any one can become an entrepreneur! However there is slight

difference in terms of age, sex, competence and level of capital

leverage as some of the distinctive features among the groups of

entrepreneurs when placed together. It can be argued that when

capital, managerial and financial competence, planning, (market?)

information, customers are put together, small business ventures

can prosper. At the apex, there seems to be factors linked to

individual entrepreneur and those linked to environment and

institution. The latter can be regarded as

supportive/facilitative factors. Generally, the concept of crime

has become ambiguous (Leon, 1996).The petty crime described in

this context should be construed to encompass all that

‘malethical acts’ that are in contrast and are in breach of law

of the land. They may also rangefrom infringement of human

19

natural right to the breach of the state and societal order. The

crime we discuss in this paper is mostly limited to social crime

mainly petty crime. In East African cities, crime and violence

especially that affecting the equation of human security and

mutual vulnerability, is on the rise.

Depressed economic conditions make crime a lucrative opportunity

for some and the only opportunity for many.

Once internalized as a social practice, crime becomes part of

the culture and a persistent systemic condition.

20

CHAPTER THREE

3.0 Research Methodology and Design3.1 IntroductionThis chapter portrays the procedures on how the study will be

conducted in consideration to the provided important

information. On the overall, the elements under discussion

of methodology includes the research design, sampling technique,

scope of the study, how data will be collected for the

attainment of research objectives as well as providing the

important information about the study area.

21

3.2 Research designAccording to C.R Kothori (1985:31) a research design is

conceptual within which research is conducted, it constitute

the blue print for collect, measurement analysis of data. In

conducting this research a case study approach will be used.

This is because the case study is comprehensive and

descriptive. The interpretation of data will be grouped

according to themes adhering to variables of the research

questions as categorized in the review of literature and designs

into the questionnaire. The data presentation will be done by

showing percentages accompany with tables and texts where

necessary.

3.3 Research Technique Qualitative research is multimethod in focus, involving an

interpretative (Saunders et al, 2004) naturalistic approach

(Matueer, 2002) to its subject matter. This means that

qualitative researchers study things in their natural

settings, attempting to make sense of, or interpret phenomena in

terms of the meanings people bring to them. Accordingly,

qualitative researchers deploy a wide range of

interconnected methods, hoping always to get a better fix on the

subject matter at hand.

The reasoning process used in qualitative research involves

perceptually putting pieces together to make wholes. From

this process, meaning is produced; However, because,

22

perception varies with the individual many different meanings are

possible.

3.2 Population UnitPopulation is the whole class of people or things that I will

wish to investigate. The po pulation study will comprise of

heads of this enterprise especially officers, suppliers,

sellers stakeholders at Machinga complex and other individuals

(clients) who are the customers of these enterpreses.

3.3 Sampling technique.Researcher will use random or judgmental sampling in order to

obtain appropriate information. In this type researcher will

select sampling items, according to their suitability relation

to the study.

3.4 Sample size.Since it was not possible to interview all enterprenuerers at

machinga complex, a total of 40 respondents will be selected to

represent the whole community. This sample size will base on

limited resources in terms of funds and time of the researcher.

Table 1 Sample sizeNo Selected sample Size of

sample1 suppliers 5

23

2 sellers 73 producers 154 stakeholders 13TOTAL 40

Source: Field data, 2013.

3.5 Data collection techniques The study will use primary and secondary data. The primary

data will be obtained through the aid of unpublished

materials from the particular institution and the

questionnaires. The secondary data come from library and web

site search. It includes books, journals, media publications

and web topics on research questions.

3.6Data analysis

The findings collected in the case study was precisely

analyzed and processed in a tabular form expressed in

percentage and then discussed accordingly.

CHAPTER FOUR

RESULTS AND FINDINGS

4.1Introduction

This chapter deals with the report of the research findings based

on the data collected from the field. The findings are presented

using tables and explanations. The chapter is structured on the

24

basis of background information. That is, general report of the

participant’s responses, regarding the challenges facing small

and medium entrepreneurs a case study of machinga complex at

Dares salaam.

4.1 General Report4.1.1 Purpose and MethodologyThe purpose of the study was to examine the challenges facing

small and medium enterprises in developing countries, by taking a

case study of machinga complex at Dar es salaam in Tanzania as

area for investigations. There were three guiding research

questions that focused on challenges facing small and medium

entrepreneurs, factors leads to small growth and sometimes to

death of these enterprises and finally to provide positive

alternative ways for growth and development of these small and

medium entrepreneurs in developing countries. The questionnaires

were hand delivered to the target population sample of 40 people

in the respective institution.

The study used structured and open questions, the open questions

mainly required respondents to give general demographic

information by filling in short answers. The questions of the

questionnaire required the respondent to put a tick in the

appropriate corresponding opinion state.

25

4.2 Demographic Information4.2.1 Gender Distribution

Male respondents were 25 employees and 15 respondents where as

female employees which making 62.5% of male and 37.5% female

respondents as presented in the table 4.1 and charts below.

Table 4.1 Gender Distribution

GenderFrequencie

spercentage

Cumulative

percentagemale 25 62.5 62.5

female 15 37.5 100total 40 100

Source: research questionnaire

4.2 Age DistributionThe age distribution of respondents was from 24 to 70 where the

percentage of employees aged 20 – 30 was 22.5% 30 – 40 was

20%, 40 – 50 was 25%, 50 – 60 was 12.5%, 60 – 70 was 15% ,

70 – 80 was 5% summing up to 100% as table 4.2 below indicates.

Table 4.2 Age distribution

AgeFrequencie

spercentage

Cumulative

percentage

VALID

20-30 9 22.5 22.530-40 8 20 42.540-50 10 25 67.550-60 5 12.5 8060-70 6 15 8570-80 2 5 100

26

TOTAL 40 100Source: research questionnaire

4.3. Length of Service in businessLength of service included 88.6% businessman who had served 1-5%

years. 5.7% for 5-15 years. 2.9% for 10-15 years and 2.9% for

15-20 years, giving total 100% as tab le 4.3 below vividly.

Table 4.3 length of service

VALID

Length

interval

Frequencie

s

percentage Cumulative

percentage15-20 3 7.5 7.510-15 4 10 17.55-10 2 5 22.51-5 31 77.5 100Total 40 100

Source: researcher questionnaire

4.4 Respondents current level of education

Table 4.4: Showing respondents current level of education

Level of education Frequency Percentage

Form four 21 52.5%

Form six 6 15%

Certificate 3 7.5%

Diploma 4 10%

Advanced Diploma 4 10%

Degree 2 5%27

Total 40 100%

Source: Field data 2013

The study shows that 52.5% of all respondents were form four

leavers, 15% of all respondents were form six leavers, and

15% of all respondents were certificate holders. 10% of all

respondents were Diploma holders, 10% of all respondents

were advanced Diploma, and 5% were degree holder holders.

This implies that, a researcher had a good combination of

professional respondents.

4.5 Respondents areas of operation

Table 4:5 Showing respondents areas of operation

Areas ofoperation

Frequency Percentage

Sellers 23 57.5%

Suppliers 14 35%

customers 3 7.5%

Total 40 100%


A researcher had collected findings from respondents from

different areas or places of operation. The responses show

that, 57.5% of all respondents worked in market as a

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sellers, 35% of all respondents worked in as suppliers and

7.5% of all respondents as customers. It implies a

researcher had contacted respondents from several areas of

operation, which was a good approach for a study.

4.6 Respondents assigned task(s) there are enterprises factors affecting the growth of small and medium enterprises?

Table 4:6 Showing respondents assigned task(s) there are

enterprises factors affecting the growth of small and

medium enterprises.

Response Frequency Percentage

Yes 34 85%

No 6 15%

Total 40 100%


A researcher had collected findings from respondents who were

assigned with task(s) and the interest was to find out whether

are enterprises factors affecting the growth of small and

medium enterprises or not. The responses indicated that, 85%

of all respondents agreed that, there are some factors which

lead to small growth. 15% of all respondents on the other hand

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refused that, there were not related enterprises factors lead

to small growth of these small and medium enterprises.

This impliedly, gives facts to a researcher that there are

enterprises factors affecting the growth of small and medium

enterprises. For those who agreed that were the factors,

had the following to support their agreements by identifying

those factors.

Luck of capital

High interest rate

Government policy

Uncertainty market

Luck of business education(entrepreneurship)

Poor infrastructures ,that is road,reilways,storage

facilities etc

Poor communication

High taxes

Bad managements

Bureaucracy

Corruptions

Low level of technology

No culture to change

30

And those who disagreed they had the following reasons tosupport their agreements by saying that there are not factorsbut

Because of the poor Management plan and uses of humanresources in the organization

Managers are always biased

Managers are in fear that I can’t perform it

There are bureaucratic procedures4:7 Can you tell us what should be done to increase awareness and understanding the proper way to run SME’S?

Table 4:7 Showing What should be done to increase awareness

and understanding the proper way to run SME’S.


Yes 32 80%

No 2 5%

I don’t know 6 15%

Total 40 100%


The findings shows that, 80% of all respondents said yes, 4%

of all respondents said no and 15% of all respondents did

not know (were not aware).

These facts are therefore indicating that a researcher had

visited several areas to know whether the stakeholders

according to experiences they can suggest how to solve the

problem and the findings show that the high number of people

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was able to provide recommendations. In reality there is a

problem, because some respondents showed they don’t know

anything about entrepreneurship. A researcher explored

findings from respondents and replied the following.

Create awareness and education on the issue of

entrepreneurship.

Awareness to the producers.

Policymaker should involved stakeholders from the

beginning

Provide seminars to both suppliers and buyers

Advertisements to promote awareness

Eliminate bureaucracy, favoritism and selfishness

There should be managerial will

Professional on rating system

Institute training of proficiency methodologies of

running SME’S

This means that, a researcher had the intention of observing

the respondents perceptions on the way of increasing

understanding and awareness on to run SMEs

4:8 there are the advantages of understanding the knowledge of running these small and medium enterprises?

Table 4:8 Showing if there are there are the advantages of

understanding the knowledge of running these small and

medium enterprises.

32


Yes 29 72.5%

No 8 20%

I don’t know 3 7.5%

Total 40 100%


72.5% of all respondents replied that they are advantages, 20%

of all respondents showed no any advantages buy saying business

is experiences and the way you save the profit earned and 7.5%

of all respondents did not know.

For those who agreed that were the advantages, had the

following to support their point by identifying those

advantages.

Create awareness and education on the issue of

entrepreneurship.

Awareness to the producers.

To get the market

Customers creation

To add value to customers

To be creativeness

Managerial will

Professional on rating system

To adopt the best fit approach

To focus

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To maximize profit

To have plan of action

To be committed on successes


the respondents perceptions on the advantages of having

knowledge on small and medium entrepreneurship.

4.9 Can you identify the possible solutions for the problemsaffecting SME’S

Table 4:9 Showing responses on the possible solution for the

problems affecting SME’s


Yes 31 77.5%

No 6 15%


Total 40 100%

Source: Field Data 2013

The findings show that, 77.5% of all respondents repliedyes. But 15% of all respondents said no. 7.5% of allrespondents did not know whether there is possible solutionor not.

The possible solutions according to respondents were the

following.

Training

34

Low rate of interest

Good infrastructures

Easy availability of capital

Market

Taxes policy should favor SMEs

Technology

Political stability

Commitment

Government will

4:10 Factors that contributed bad management of many SMEs

Respondents pointed out the following aspects to be possible

factors ineffective management.

These were as follows:

Lack of commitment

Not having courage to be competent enough

Biasness

Not know what and how to do

Stereotype

Lack of enough fund

Inadequate knowledge

35

The goals/objectives are not very smart

Ignorance of the research reports.

Unfairness

Favoritism

Discrimination

Not to be promoted

Not achieve their goals

Poor preparation of the facing problems

Poor linkage between was evaluated before and now

Lack of feedback

Inadequate knowledge

Poor cooperation with others

Lack of awareness

Non – proper involvement of employees

Negative altitudes of the owners

Expectation of the owners

Personal altitudes towards others

Lack of effective mechanisms to reward or punishment fromthe result obtained

Moving goals post

Bad relationship between officers and the subordinates

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Poor performance

No observer of these two persons

Lack of appropriate skills

No culture of change

Bad mind set

Late disbursement of funds

Adhoc activities

Lack of fund

Lack of motivation

Poor communication

These indicated that respondents had different perceptionson the factors that contribute bud management of many smalland medium enterprises.4:11 Do you have any suggestions to improve efficiencies in


Table 4:10 Showing responses if there are suggestions or not


Yes 38 95%

No 2 5%

Total 40 100%


The findings show that 95% of all respondents agreed saidyes while 5% of all respondents disagreed that they don’t

37

have any suggestions..A researcher explored findings from respondents and replied

the following.

Create awareness and education on the issue of SMEs

Provide enough education to both suppliers and

producers

More benefit awareness on the benefits of sales

There should be managerial will

Institute training of proficiency SMEs


the respondents suggestions on the way of eradicating the

challenges facing small and medium enterprises.

CHAPTER FIVE

5:0 CONCLUSION AND RECOMMENDATIONS

5.1 IntroductionResearch is a long systematic process through different stages

which are chain linkage. This chapter provides the conclusions

derived from the findings and recommendations for improvement and

compelling interest for further research.

5.2 SummaryThe purpose of the study was to asses the challenges facing small

and medium entrepreneurs at Machinga complex in Dar es Salaam.

38

The study will be guided by three research questions that focused

on the key variables of the purpose.

(i) What are enterprises factors affecting the growth of


(ii) What should be done to increase awareness and


(iii) What can be the possible solution for the problems

affecting SME’S

5.3 ConclusionThis research meant to achieve the objectives by providing the

possible solutions to the challenges facing small and medium

enterprises in developing countries. The study applied

quantitative and qualitative research design that technically

used both descriptive and explanations. Its population was male

and female respondents at machinga complex in Dar es salaam.The

respondents were 40, where 25 male and 15 female respondents out

of 40. The instrument for data collection was a researcher

designed questionnaire, interview and observation. Data

collection involved both primary data (mostly from the

respectively field ie machinga complex) and secondary data

(greatly from Tanzania Public Service College and internet).

The data was recorded and edited, then analyzed using computer

spreadsheet. In this study, apart from exploring asses the

challenges facing small and medium entrepreneurs at Machinga

39

complex in Dar es Salaam as developed as well as presented,

discussed and analyzed in chapter four; the results show that to

some extent there are problems which lead to slow growth of small

and medium enterprises which include skills, lack of

commitment ,poor infrastructures, low quality and poor

technology. Tanzania eventually makes suggestions on how to deal

with the factors limiting small business growth. Discourse on

entrepreneurship and small business subject can take us long to

pursue. However, practitioners share some common understanding

when they describe entrepreneurship. For example, Thomas Zimmer

describe entrepreneurship as a result of being disciplined and

systematic in the process of applying creativity and innovation

to needs and opportunities in the market place. It involves not

only applying focused strategies to new ideas and new insights

but also creating a product or a service that satisfies

customers’ needs or their problems (ibid). Schumpeterian takes a

rather traditional view when he describes entrepreneur as a

person who identifies a market opportunity and transform s it

into a profitable economic value. Moreover, by identifying the

possible solutions to the problems, it will not only help the

author as an entrepreneur but it could be of great advantage to

the Tanzanian business community and the government as a whole.

Sometimes it needs some knowledge in order to exist and to run

the business profitable.

5:4 Recommendations

The researcher recommends that the organization could reduce the

40

problems leads slow grow of small and medium enterprises by

introducing strong government policy, improvement of skills

provided and providing capital. Significantly to ensure job

satisfaction areas like leadership training, team building and

effective communication, Improve working resources, and all ways

of motivating employees were to be sought. Moreover, it was

recommended that the enterprises should strategize and design a

plan for development. Such improvements in the process and

systems of the enterprises can reduce the challenges facing small

and medium entrepreneurs at Machinga complex in Dar es Salaam.

Thus, for any enterprises, be it service or business provider

organization there must pay consideration on how to solve the

problems and to improve service so as to enhance products or

service in all aspect levels of management with regards to the

competitive advantages market.

For that matter therefore, the following should be

considered in the mindset of both Human Resource Officers

and other staff (subordinates);

It is better for the public service in Tanzania toinitiate, promote and maintain good systems that willmake the organizations reach their anticipated goals inthe near.

A high performer should be maintained, promoted andmotivated in relation to their results so as to upliftthe employees work morale.

The employees be preliminarily involved to the

41

arrangement of performance appraisal standards, becausethese are the operators to the achievement of theorganizational goals.

Give a required knowledge and skills to the lowerperformers so as to uplift their performance throughtraining at reasonable costs, procedures and modalitythat the appraisers are required to adhere to. Theresponses indicate that, raters are biased and theemployees are not frequently rated. Several factors thatwere identified by employees as the factors thatcontributed to the challenges facing these enterprises.

The study provides that the integral part to theachievement of the business objectives and goals are notinvolved in the course of setting standards ofperformance appraisal.

Employees and managers should prefer high performancemanagement model and high involvement management model toenhance services or products to the competitiveadvantage.

Management ought to create, promote and maintain

awareness towards development strategies.

REFERENCES AND BIBLIOGRAPHY

42

Anderson, C & Stavrou (2000) ‘Youth Delinquency and the criminal

Justice systemin Dar es salaam’: Research report (UN-HABITAT).

Nairobi.

Assiago, J (2002) ‘Youth and Crime in Nairobi’: Research report

(UN-HABITAT).

Cresswell, J.W (1994) Research Design: Qualitative and

Quantitative Approaches,Sage publication-London.

Kuzilwa, J. A (2003) ‘The role of Credit for Small Business

Success: A study of the National Entrepreneurship Development

Fund in Tanzania’ A Paper presented at the MU/AUC International

Conference on Entrepreneurship and Business Development. White

Sands Hotel, Dar es salaam February 26-28 (Unpublished).

ILO/UNDP/UNIDO (2002) Road map for business in the informal

Sector

Hellevik, O (1988) Introduction to Casual Analysis, OsloHuff, A.S

(1990) ‘Mapping Strategic Thought’ In A.S Huff (ed) Mapping

Strategic Thought. Chichester: John Wiley Krippendorf, K. (1981)

Content Analysis: An Introduction to its methodology;London:

SageMfaume, R and W. Leornard (2003) ‘Prevalence and Impact of

Crime on Entrepreneurship and Small business in Dar es salaam

city’ Research Report

Mzumbe University – Agder University College (Un Published)

Morris, M.H and P.S Lewis ‘Determinant of Entrepreneurship

Activity: Implication for

Marketing’ European Journal of Marketing; xxix (1995) pp. 31-34

43

Norman, M. S and T.W. Zimmer (1996) Entrepreneurship and New

VentureFormation. Prentice Hall Publication. London Nkya, E.

(1997) ‘Institutional Economics and Economic Policy Reforms:

Integrative Review and Research Possibilities in Tanzania’ In

Uongozi Journal of Development Management, 1(9).

Painter, Martin (2002) ‘Public administration Reform in Vietnam:

Problems and Prospect’ In The International Journal of Management

and Research: 23(3) pp.259-270.

APPENDICES

APPENDIX 1

A researcher is pursuing Diploma in Human Resource Management at

Tanzania Public Service College. This research aims to asses the

challenges facing small and medium entrepreneurs at Machinga

complex in Dar es salaam.

I kindly ask your cooperation by providing me the reliable

information which will assist to make this study successful

particular by filling these questionnaire completely. Please

tick the appropriate place.

1. Sex

Male ( )

Female ( )

2. Your education level?44

Primary education level ( )

Secondary education level ( )

Diploma education level ( )

Advance Diploma/Bachelor ( )

Masters ( )

Doctorate ( )

3. Can you describe any factors affecting the growth of small and

medium enterprenuerers?

Yes ( )

No ( )

If yes describe………………………………………………………

4. What should be done to increase awareness and


5. What can be the possible solution for the problems

affecting SME’S?

6. what are the advantages of understanding the knowledge of

running these small and medium enterprises?

7. What are you suggestions to improve efficiencies in small and

medium enterprises?

45

Thank you for your cooperation

46

APPENDIX 2 LIST OF TABLES

Table 4.1 Gender Distribution

GenderFrequencie

spercentage

Cumulative

percentagemale 25 62.5 62.5

female 15 37.5 100total 40 100

Source: research questionnaire

Table 4.2 Age distribution

AgeFrequencie

spercentage

Cumulative

percentage

VALID

20-30 9 22.5 22.530-40 8 20 42.540-50 10 25 67.550-60 5 12.5 8060-70 6 15 8570-80 2 5 100

TOTAL 40 100Source: research questionnaire

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Table 4.3 length of service

VALID

Length

interval

Frequencie

s

percentage Cumulative

percentage15-20 3 7.5 7.510-15 4 10 17.55-10 2 5 22.51-5 31 77.5 100Total 40 100

Source: researcher questionnaire

Table 4.4: Showing respondents current level of education

Level of education Frequency Percentage

Form four 21 52.5%

Form six 6 15%

Certificate 3 7.5%

Diploma 4 10%

Advanced Diploma 4 10%

Degree 2 5%

Total 40 100%


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Table 4:7 Showing if there are there are the advantages of

understanding the knowledge of running these small and

medium enterprises.


Yes 29 72.5%

No 8 20%


Total 40 100%

Source: Field data 2012Table 4:5 Showing respondents assigned task(s) there are

enterprises factors affecting the growth of small

and medium enterprises.


Yes 34 85%

No 6 15%

Total 40 100%


Table 4:6 Showing What should be done to increase awareness

and understanding the proper way to run SME’s.


49

Yes 32 80%

No 2 5%

I don’t know 6 15%

Total 40 100%Source: Field data 2012

Table 4:9 Showing responses on the possible solution for the

problems affecting SME’s


Yes 31 77.5%

No 6 15%


Total 40 100%

Source: Field Data 2012

Table 4:10 Showing responses if there are suggestions or not


Yes 38 95%

No 2 5%

Total 40 100%

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CHALLENGES FACING SMALL AND MIDIUM ENTERPRESES

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