The Impact of Small Medium Enterprises Failure On Individual Business Owners and The Economy in Tanzania (The Case Study of Temeke Municipal- Tanzania)

The role of Small Business is recognized as one of the major contributor in the growth of the counry's economy like Tanzania and therefore, poverty alleviation. The SME sector also serves as a 'nursery' and a proven training ground for 'higher level' entrepreneurship and iru10vation. The objective of the study was assessment of critical factors to small business failures in Tanzania, the case of Temeke Municipal. Data was collected from respondents by means of administering 60 (sixty) structured questioru1aire. Data analysis use both qualitative and quantitative methods to analyze the data, model and hypothesis testing. The research found that the causes of small business failure are multidimensional and diverse they include both internal and external factors to the business which hinder its hasty growth and therefore reduce the weight of its potential contribution to the national economy, and inhibit the economic empowerment of entrepreneurs. From the findings of the study, the most critical factors to small business factors are access to finance, poor health, and access to technology, lack of management skills, poor association, corruption, and property rights. Other factors were found to be contributing to small failure though in lesser weight. This research concluded that; small business funding p1imarily from non-loan sources. These included personal saving, friends, relatives, SACCOs and infmmal savings credit societies known as mchezo wap upatu". It was also noted that banks shul111ed loaning small business owners because of high risks. The study recommended on the need for financial institutions to create the possibility of extending guarantee an·angements to include coverage for long-term loans. The needs for SME database that stores all infmmation about the sector and the needs for SMEs authority with the mandate to oversee all the activities of the sector and develop sustainable plans that will develop the sector to a better future.