Examining the factors affecting the growth of agro- processing small and medium enterprises (SMES) in Tanzania

Abstract

Agro-processing Small and medium-sized enterprises (SMEs) are important agents of development throughout the world. Promoting a country’s agro-processing sector plays a crucial role in maintaining high employment and income generation and is therefore critical for achieving sustainable growth. Tanzania has arable land and produces a large amount of agro produce. The Agro sector in Tanzania contributes about 29.1% of Tanzania’s GDP and is the main source of raw materials, food, and foreign exchange. Despite having a favourable agricultural climate, processing activities are limited and as a result, the growth of agro-processing firms is affected. Such a decline in processing activities can be explained by several challenges that processors encounter. Although the benefits of agro processing have been documented by various researchers, the majority of studies have focused on large enterprises, whereas small and medium enterprises (SMEs) have been neglected in contrast. Little research has been conducted on agro-processing SMEs. Furthermore, with regard to the agro sector in Tanzania, previous studies have focused on the entire industry while others have focused on raw agricultural products analyses. Agroprocessing SMEs in Tanzania have been growing rapidly; however, they have showed that there is high possibility of them meeting their death or stagnation. Therefore, this study examined the factors affecting the growth of small and medium agro-processing firms in Tanzania. A mixedmethod approach was employed in this study; 15 interviews were conducted, and 170 questionnaires were distributed to the respondents. The data collected was analysed using NVIVO 12 and SPSS 25. The findings reveal that the status of agro-processing SMEs in Tanzania is still developing. The study found out that, education, technology, competitive markets, financial resources, poor facilities as well as government policy and regulations influence the growth of agro-processing SMEs in Tanzania. Operational challenges, technical and networking challenges, quality and completion, management training and seasonality of crops, were identified as a set of factors that affect the processors and growth of SMEs. This result implied that the growth of the agro-processing firm in Tanzania depends on technological support, easy access to loan, financial resource and government policy and regulations. This work contributes to the literature on agroprocessing SMEs. This is where limited research has been conducted, especially in developing countries. This study also created an opportunity for future studies to focus on the development of strategies to grow agro-processing SMEs in Tanzania and can thus serve as a reference when seeking to understand related to issues affecting the growth of agro-processing SMEs and how to overcome them.

Date of Award	25 Jul 2024
Original language	English
Awarding Institution	Northumbria University
Supervisor	Yevhen Baranchenko (Supervisor), James Cunningham (Supervisor) & Richard Nyuur (Supervisor)