The Role of Microfinance Services on the Performance of Small and Medium Enterprises Case Study: Mwanza Small and Medium Enterprises

Abstract

This research seeks to examine the role of microfinance services in the performance of small and medium enterprises (SMEs) in Mwanza, Tanzania. The research mainly focuses on how micro credits services, savings services and training services contributes to SMEs performance, also the challenges SMEs faces while enjoying microfinance services.

Simple random sampling technique was employed in selecting the 44 SMEs that constituted the sample size of the research. Structured and unstructured questionnaire were designed to facilitate the acquisition of relevant data which was used for analysis.

The research indicates that MFIs have had a positive effect on the performance of SMEs. The critical contributions of MFIs include; greater access to credit, savings mobilization and financial and management trainings. Irrespective of the contributions of MFIs services to the performance of SMEs, there are challenges the SMEs owners face when accessing these MFIs services. The major challenges faced by SMEs when accessing these MFIs services are associated with accessing credit of which collateral security and high interest rate are major setback. The final analysis of the research clearly reveals that MFIs services have positive contribution on the SMEs performance. In order to enhance SMEs performance MFIs should improve their services towards SMEs and SMEs should increase their efforts.

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