Socio-cultural determinants and enterprise financial sources among the Chagga and Sukuma small and medium enterprises in Tanzania

Abstract

This paper examines the influence of socio-cultural determinants (SCDs) on the choice of enterprise financial sources (EFSs) among the Chagga and Sukuma small and medium enterprises (SMEs) in Tanzania. A survey of 254 owner-managers was conducted in Kilimanjaro and Mwanza regions in order to collect quantitative data and case studies for qualitative data. Descriptive and Binary Logistic Regression Model (BLRM) analysis were employed to analyze quantitative data and case studies analysis for qualitative data. The results show that borrowed fund from financial institutions, borrowed fund from family/relatives/ and or friends, personal savings and trade credit demonstrate positive effect while family assistance and economic groups show negative effect on capital growth among the Chagga and Sukuma SMEs in Tanzania. However, results show variation on the effect of EFSs on capital growth between the Chagga and Sukuma in which EFSs have higher contribution to capital growth among the Chagga than Sukuma SMEs. This study concludes that SCDs have effect on EFSs and capital growth and its implication is that individuals exposed to such SCDs are likely to grow capitals better than individuals under exposed. Through these findings the study recommends that policy makers should consider the effect of SCDs on the choice of EFSs among Tanzanian SMEs.