Effects of credit management practices on performance of women owned Smes in Morogoro municipality Tanzania

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Sokoine University of Agriculture


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.




Credit management practices, Women, Morogoro-Tanzania, SMEs, Curb competition