Effect of Borrower Qualities on Business Performance of Rural Based SMEs in Kagera Region, Tanzania

Abstract

The objective of the study was to assess the impact of Borrower’s qualities on business performance of rural-based SMEs in Kagera region Tanzania. The Study was guided by the theory of the Group Based Micro-financing (GBM) model. It was done in four districts of Kagera region. The study used structured questionnaires composed of a five-point Likert Scale. The quantitative and regression research approach was adopted for the study. A sample size of 279 group borrowers of two commercial banks and two MFIs was used to collect primary data from June to August 2020. The regression analysis was done between three independent variables of Borrower’s qualities against three dependent variables of Business performance. It was found that 98.5 percent, 96.4 percent and 96.0 percent of respondents agreed to have increased knowledge, family income and household assets, respectively. On the other hand, the hypothesis testing confirmed that Borrower’s qualities impacted positively on the business performance of rural-based SMEs in Kagera region. These results imply that Borrower’s qualities under GBM model have a big positive contribution to the business performance of rural-based SMEs. It is therefore recommended that they should be adopted and promoted as a tool for fighting poverty as a result of increasing borrowers’ abilities to engage in prosperous income-generating businesses.