Factors That Hinder Small and Medium Enterprise Customers to Access Credit from Commercial Banks in Tanzania

Topics: Economics, Bank, Microfinance Pages: 4 (1053 words) Published: April 7, 2013
In this period of globalization of world trade, an increasing role is being assigned to the private sector in many developing countries. In parallel to and as part of this shift, there has been emergence of the Small and Medium Enterprises (SMEs) sectors as a significant component in economic development and employment. In many countries in the world, this sector with both its informal and formal components has increasingly been seen as a means of generating meaningful and sustainable opportunities. In the first Micro credit summit which was held in Washington DC, USA in 1997, the world target was to reach 100 million persons with credit for self employment and other financial and business services by the year 2005. The UN has declared 2005 as the “International year of Micro credit”. Generally provision of credit has improved the livelihood of participant in individuals and SMEs relate to those who do not have.

The SMEs sector is expanding in the majority of countries throughout the world. In many cases creating markets and quickly adapting to the ever changing needs of global consumers. It is clear that these smaller enterprises face particularly severe competition as many of them operate at the margins of the formal economy with far less resources than the larger global players. In addition Micro and Small Enterprises have traded to suffer from a” scale bias” under national and regional industrial and enterprise development policies that are not always supportive (ILO,2001). In most economies, smaller enterprises are much greater in number, in the EU, SMEs comprise approximately 99% of all firms and employ between them about 65 million people. In many sectors, SMEs are also responsible for driving innovation and competition.

In Tanzania since independence in 1961, the business sector was mainly private owned. But after...
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