Service offered by Rural Financial Institutions and Their Impact on the Performance of Agribusiness Small and Medium Enterprises in Tanzania

Abstract

Financial institutions services in Tanzania have great contribution to the growth of agriculture sector. The assessment of the contribution of the rural financial institutions services to agribusiness SMEs performance was very crucial. The study adopted cross section study done in Arusha region. Quantitative data collected using 88 questionnaires. Data collected was processed using SPSS, and analyzed using correlation analysis, multiple linear regression, binary logistic regressions, Leme and Show test, and t test for comparison. The results of the study were; correlation coefficient of the credit was r= 0.908 and its P= 0.01, since P<0.05, this shows that, there was a strong relationship between credits lent by financial institutions and agribusiness SMEs performance. A similar finding obtained by Olutunla and Obamuyi (2008), significant increase in profit is contributed by additional amounts in credit. Credit access was found to be affected by business management, age of the owners, and collateral, business experience and business registration. The results are similar with Maghembe.Y, (2017), Age of the SMEs operator (Age) is statistically significant. t test results concluded that there is no significance difference on the performance of the agribusiness SMEs which are constrained in accessing credits from financial institutions and those which are not constrained, the results is similar to Dzanja J, at el (2016) on the study done on the Role of Microfinance on Growth of Small-Scale Agribusinesses in Malawi revealed that, t-value found to be 0.511 with significance level of 0.61, which was greater than 0.05