Performance Of Commercial Banks On Small And Medium Enterprises (Sme) In Tanzania: A Case Of Nmb Bank In Arusha City Council

ABSTRACT

The study was focused on assessment of performance of commercial banks on Small and Medium Enterprises in Tanzania. It was guided by three specific objectives which were: to examine the extent loan issuance to Small and Medium enterprise in Tanzania, to evaluate the roles of Commercial Banks in the performance of Small and medium enterprises in Tanzania and to investigate the challenges in accessing and utilization of credit. The study employed cross sectional research design in which sample size of 55 respondents employed whereby probability and non-probability sampling was employed. Social survey and interview method of data collection are utilized whereas questionnaires as tools for data collection were applied. Data analysis method employed both qualitative and quantitative whereas SPSS version 16 used in data analysis. The findings reveal that commercial banks provide loans as a seed for the establishment and expansion of the SMEs which helps them to establish and strengthen their business. Also CB provides awareness creation to SMEs on how to utilize their loans. However; the findings reveal that most of the challenges on accessing and utilization of loans are lack of mortgage, high interest rate as well as lack of steady cash flow and poor management of loans. Eventually; study concerning to performance of commercial banks on SMEs is of most important since the majority of Tanzanian engage in SMEs and commercial banks is key for their success. The study recommends that in order to ensure effective performance of commercial banks on SMEs in Tanzania; awareness creation is more important so as to ensure proper utilization of loans and improve living standards of Tanzania who are mostly depended on SMEs.