Abstract:
This study investigated the effects of credit management practices on the performance of
women owned SMEs in Morogoro Municipality. Specifically, the study addressed the
following specific objectives (i) to assess credit management practices among women
owned SMEs in Morogoro Municipality. (ii) To assess the performance of women owned
SMEs in the study area; (iii) to determine the effects of credit management practices on
performance of women owned SMEs in Morogoro Municipality; and (iv) to assess factors,
influencing women owned SMEs performance in the study area. Data were collected
randomly from one hundred and twenty women entrepreneurs in three randomly selected
wards in Morogoro Municipality. The information was collected using a questionnaire
with both structured and non-structured questions. Descriptive and inferential analysis
using Statistical Package for Social Sciences were employed in data analysis. The results
indicated that 55 percent of the women respondents are running their business with credit
while 45 percent are non-credit recipients. Among women who received credit, 68.18
percent use the credit to invest within the same business while 21.1 percent use the credits
to invest in other new businesses and while about 50 percent use the credit for other
purposes such as paying school fees, paying house rents, and supporting their spouses.
About 10.61 percent of the credit recipients used their whole loans in other activities such
as organizing parties and paying school fees, it means they divert the loan of the business
to other uses. An Independent t-test was run to assess whether there is a significant
difference between SMEs performance among women with credit and those without
credit. The performance indicators were all significantly different in terms of asset value,
number of employees, monthly sales, and gross margin at p >0.05. Hence, the majority of
women who received credit invests the whole credit within the same business and are
performing well compared to those who are not receiving it. In addition, the findings show
that information network, location, and household size affect negatively the performance
of women who owned SMEs in the study area. Conversely, marital status, education,
purchase plan, market plan, age, and gross margin were important factors in nurturing the
performance of women owning SMEs. The findings also show that credit availability
influenced the performance of women owning SMEs. It is therefore concluded that if
credit is available and women use the whole credit in investing within the business, then
the performance of their SMEs will improve. Therefore, women are encouraged to
establish business, which are less competitive and can lead to high profitability and high
switching cost to curb competition. It is also recommended further that women owning
SME’s should be encouraged to use the credit to the intended purposes rather than
diversify the credit to non-business areas, which affect the growth and performance of
their businesses.
