Abstract:
SME’s) The purpose of this study was to analyze the challenges facing Small and Medium Enterprises growth in Arusha and to establish potential alternative solutions so as to reach the anticipated business performance in Arusha city particularly and to the entire country of Tanzania at large. Despite the important role of this sector in achieving more inclusive economic growth, access to business finance, markets for products and services, business innovations, availability of conducive business infrastructures, supportive government and regulatory policies as well as necessary business management skills of the owner for SME’s remains a challenge. On the other hand, SME’s typically do not have collateral to back their loans and lack credit history hence they are more vulnerable to external influences (e.g., price risks, interest rate risk) than large enterprises. In relation to the study, the study was guided by the following objectives; to evaluate effects of business managerial skills on SME’s growth rate, effects of access to credit on SME’s growth rate and effects of business registration and tax administration to SME’s growth at Arusha. Furthermore, case study research design was employed throughout the study by using quantitative data approach that which were collected through administering questionnaires to the designated sample of 353 SME’s located in Arusha city. Moreover, collected data were measured and analyzed by using Statistical Packages for Social Sciences (SPSS). The study findings show that business managerial skills, access to credit and business registration and tax administration were found to be significant variables to SME’s growth at Arusha city. Finally, the study recommended that credit providing institutions like commercial banks and SACCOS should reduce lending rates to allow SMEs to access finance, the government should establish specific collages and courses aiming at improving business managerial skills to small entrepreneurs.
