Linking Sources of Finance to Micro Business Growth: A Case Study of Buhongwa Ward in Nyamagana District Tanzania

Abstract

Informal sectors including micro businesses play a significant role in the growth of the economy in developing countries by providing employment opportunities to many and supplying inputs to medium and large sectors. The study aimed to determine the relationship between the source of finance and micro-business growth. The first objective was to identify the relationship between equity (personal savings) and micro-business growth. The second objective was to identify the relationship between trade credit and micro-business growth. Purposive sampling was used to select 140 samples from a population of 218 micro businesses owners in Nyamagana District, Buhongwa ward. A quantitative approach was used. Data were analyzed using descriptive statistics and inferential statistics. The study found that there is a positive relationship between personal savings and trade credit to micro businesses.  However, the sources are insufficient to support business growth. The study recommends commercial bank to provide a friendly environment for micro businesses to access finance for business growth. Also, the study recommends the government to formulate policies that will help micro businesses access financial support.