Department of Finance

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    Implications of Financial Institutions Regulations on Assets and Liabilities Management in Depository Financial Institutions in Tanzania
    (2002-12) Swai, Tobias A.; Chijoriga, Marcelina M.
    Financial sector reforms in Tanzania had posed a number of challenges to the Depository Financial Institutions (DFIs), particularly on assets and liabilities management. In line with the reforms, are the regulations issued by the Bank of Tanzania as guidelines to maintain an efficient and sound financial system. The regulations pose a challenge to DFIs in their assets and liabilities management, since apart from the need for profit, they also need to comply with the regulations. This study was designed to analyze the impact of Financial Institutions (FIs) regulations on the assets and liabilities management in depository financial institutions in Tanzania. The study has used both primary and secondary data. Interviews were made with the senior officials of depository financial institutions in particular with emphasise to the members of Assets and Liabilities Committees (ALCO). The results show that, significant importance is given by the top management to the assets and liabilities management function. It also revealed that, there is a positive influence of regulations on the composition of assets and liabilities. However, the current FIs regulations promote efficient utilization of assets and liabilities in the FIs. The critical regulations and the general laws in implementation of assets and liabilities management were identified.
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    Linking Competitiveness to Investment Decisions: The Case of Manufacturing in Tanzania
    (2004) Ishengoma, Esther K.
    One of the factors associated with poor performance of the manufacturing sector in Tanzania is limited financial sources. This suggests that manufacturers need to make proper investment decisions. Several studies have associated the performance of manufacturing firms with investment without considering the structure of investment and controllling for the effects of other firm resources. Thus, this paper examines the relationship between competitiveness and investment decisions while controlling for other firm resources. The results reveal that competitiveness is significantly and positively associated with investment decisions. Investment in production equipment raises competitiveness while investment in land and building decreases it. The strength and direction of the relationship are sector specific.
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    Economic Growth and Poverty: Does Formalisation of Informal Enterprises Matter?
    (2006) Ishengoma, Esther K.; Kappel, Robert
    The informal sector (IS) plays a significant role in developing countries viz. the provision of employment, income and supplying ignored markets. However, working and employment conditions within the sector are still poor. Its expansion and changing structures have thus drawn the attention of scholars and international policy makers to the factors hindering its formalisation. Among the factors addressed are the high costs of formalisation and the lack of incentives for operating in the formal sector. A variety of approaches have been adopted by different stakeholders to overcome these factors. This paper assesses these approaches along with the factors related to informality-formality trade-off and the issue of formalisation as a solution for firms’ growth. By focussing on the problems faced by informal enterprises and the literature which addresses the options for accelerating the formalisation of informal enterprises, the paper will briefly summarise the weaknesses of these approaches.
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    Business Constraints and Growth Potential of Micro and Small Manufacturing Enterprises in Uganda
    (2008) Ishengoma, Esther K.; Kappel, Robert
    Ugandan micro- and small enterprises (MSEs) still perform poorly. The paper utilizes data collected in Uganda in March and April 2003 to analyze the business constraints faced by these MSEs. Using a stratified random sampling, a sample of 265 MSEs were interviewed. The study focuses on the 105 manufacturing firms that responded to all questions. It examines the extent to which the growth of MSEs is associated with business constraints, while also controlling for owners’ attributes and firms’ characteristics. The results reveal that MSEs’ growth potential is negatively affected by limited access to productive resources (finance and business services), by high taxes, and by lack of market access.
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    Business Development Services to SMEs: Experiences from an Online Business Plan Competition in Tanzania
    (International Academy for African Business and Development (IAABD), 2008-05) Olomi, Donath R.
    Many initiatives have been taken to promote the private sector, which is now considered the engine for growth in all economies. A common approach to private sector development is the building of capacities for identification of innovative ideas and transforming these into bankable business plans. Unfortunately, little effort has been done to systematically learn from such experiences and hence inform improvements and replication for impact. This paper analyses the experience of organising an online internet based business plan competition by the University of Dar es Salaam Entrepreneurship Centre in collaboration with Business in Development Network Foundation based in Netherlands in 2007. The aim is to explore and share challenges, lessons and critical success factors for such and related initiatives.
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    Prospects for Lease Finance in Tanzania
    (Bank of Tanzania, 2008-11) Swai, Tobias A.
    The paper examined current global trends in lease financing and then focuses on the role of this product in promoting lending in Tanzania. It observed that leasing industry has been growing rapidly in developed countries – a development attributed to effective policy environment conducive to flexible financing to SMEs, and other small businesses. As regards to Tanzania, the paper focuses on the role of financial leasing in accelerating growth, existing potential in the lease market, and challenges ahead.
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    Social Entrepreneurship in Tanzania: Assessment of Enabling Environment
    (2009) Fulgence, Katherine; Mori, Neema
    The main purpose of the study was to assess the supporting environment for social entrepreneurship in Tanzania. Specifically, the study aimed at evaluating the current key stakeholders’ conceptualisation and recognition of Social Entrepreneurship concept and whether in Tanzania there is a supportive environment for Social Entrepreneurship. This was an exploratory study and was conducted qualitatively. The approach used was a combination of secondary data and in-depth interviews with policy makers and policy advisers. Findings revealed that most stakeholders are not aware of the concept of Social Entrepreneurship. The objectives of their organizations showed that they had some elements of Social Entrepreneurship, but this concept was not encompassed in their mission statements. Social entrepreneurship matters were thus not well integrated in their policy missions although the nature of organizational activities revealed some elements in them. The study concluded that social entrepreneurship in Tanzania has been practiced by several institutions especially non-governmental organisations and that there is a need to document and institutionalizes the policies and regulations that guide the operationalization of the social entrepreneurship concept. Recommendations and areas for further research are also discussed.
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    Strategic Decision Making in Microfinance Organizations: Stakeholder Perspective
    (2009) Mori, Neema; Munisi, Gibson
    Micro finance organizations have been increasing dramatically worldwide. This increment calls attention for these organizations to making strategic decisions which will enable them compete. We examine and discuss the roles that micro finance stakeholders in boards can play in the process of making these decisions. We combine board, strategic decision making and stakeholders’ literature in order to show how micro finance stakeholders’ representation in boards can be advantageous to these organizations, specifically in strategic decision making process. Future empirical research on stakeholders and strategic decisions in Microfinance organizations is identified and encouraged.
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    Access to Finance for Smes in Tanzania
    (2009) Mori, Neema
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    Micro-Finance
    (2009-12) Mori, Neema; Olomi, Donath
    Access to finance is often cited as the most serious constraint by micro, small and medium enterprises in Tanzania. Access is even more difficult for the disadvantaged groups, such as women, youth, the disabled and rural dwellers. Typically, these groups are trapped in a vicious cycle of marginalisation, with limited social and human capital, limited access to resources and limited power, making it difficult for the conventional markets to work for them. Therefore for this to happen, different institutional and product innovations are required. This chapter explores the needs, challenges and prospects for enabling the disadvantaged groups to overcome their liabilities and become part of the financial services market.
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    Implications of the Marketing Strategy for Exporting MSEs from Developing Economies
    (2010) Mori, Neema
    Globalization and liberalization has required firms of all size to start operating internationally. For micro and small enterprises (MSEs), the favorable mode of entry in international markets is exporting. Some MSEs have benefited from this process while most of them have encountered many challenges during the process or even before starting. This paper reviews the literature on export performance and identifies main marketing challenges which are faced by MSEs. The adjustments of these challenges have been proposed also from the literature, in order to overcome them. The paper also utilizes competence and network literature and proposes some of their benefits and implications in adjusting the marketing strategies in order for MSEs specifically form a developing economy, to improve their export performance.
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    Roles Of Stakeholders In Strategic Decision-Making Of Microfinance Organizations
    (2010) Mori, Neema
    Microfinance organizations provide financial services to low income people. These organizations have been increasing dramatically worldwide. This increment calls attention for these organizations and their boards to make strategic decisions which enable them perform well and compete with each other. Based on literature, this paper identifies six types of microfinance stakeholders who sit on boards. These are clients, employees, government, donors, creditors and owners. This paper discusses the different roles of these stakeholders when they sit on boards of microfinance organizations and these roles are further explained to show how they contribute to the process of making strategic decisions. Literature on boards, strategic decision-making and stakeholder theory are used as guides in showing how microfinance stakeholders on boards can be advantageous to these organizations, specifically in strategic decision-making. Practical implications, propositions and areas for future research on stakeholders and strategic decisions in microfinance organizations are identified and encouraged.
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    Stakeholder Influence and Board Role Performance in Microfinance Organizations: A Theory-Based Approach
    (2010) Mori, Neema
    Microfinance organizations provide financial services to low income individuals. In this paper I argue that good governance is a precondition for the long run survival of such organizations. The paper discusses importance and roles of stakeholders who sit on boards of microfinance organizations. The paper first identifies six types of microfinance stakeholders who sit on boards. These are donors, investors, government officials, creditors, employees and customers. The paper continues by discussing roles and importance of these stakeholders on boards and their contribution to board role performance. Stakeholder, agency and resource dependence perspectives are used as theoretical foundations, and used to identify stakeholder roles and their influence on board role performance. Practical implications and areas for future research on stakeholders, boards and governance of microfinance organizations are identified and encouraged.
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    Measurement of the Urban Water and Sewerage Authorities in Tanzania: A Data Envelopment Analysis
    (African Journal of Finance and Management, 2011) Swai, Tobias A.
    This paper attempts to measure the efficiency of Urban Water and Sewerage Authorities (UWSAs) in Tanzania for the years 2005/06 and 2006/07 using input oriented measures by utilizing Data Envelopment Analysis (DEA), as well as Malmquist Productivity Index (MPI). The study utilized financial data for the 19 UWSAs taking two inputs (total own operating expenditure and amount of water produced); and outputs (revenues generated and total number of connections) measures. The results indicate that category A authorities, which are self-sufficient, are the least efficient when compared to other categories that receive government support to run their activities. The result indicates that the increase in the performance of the UWSAs is not a result of technological change; rather, it is from operational efficiency. The study calls for a close monitoring of UWSAs, especially those with decreasing returns to scale as well as apply more sophisticated techniques to monitor the efficiency of UWSAs.
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    Business Environment and Growth Potential of Micro and Small Manufacturing Enterprises in Uganda
    (2011) Ishengoma, Esther K.; Kappel, R.
    Since the 1990s, studies utilizing descriptive statistics have documented factors in the business environment, which hinder the performance of Ugandan micro and small enterprises (MSEs). Based on secondary data, this paper assesses the trend of critical factors since 1994 to 2010. The paper also utilizes the primary data from MSEs to examine the effects of these factors on the growth potential of MSEs, while controlling for the owner’s and the firm’s attributes. Results from the trend analysis reveal that the business environment has been deteriorating over time. Results from the regression analyses reveal that MSEs’ growth potential is negatively associated with limited access to productive resources, high taxes and lack of market access
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    Assessing the Portfolio Behavior of Commercial Banks in Developing Countries: A Literature and Methodological Issues for the Case of Tanzania Commercial Banks
    (International Academy for African Business and Development (IAABD), 2011-05) Swai, Tobias A.
    This paper is a work in progress and tries to analyze briefly the literature, proposed hypotheses and methodology for assessing portfolio behavior of commercial banks in Tanzania. Many developing countries have adopted various measures for the economic and trade liberalizations including financial liberalization, Tanzania being unexceptional. Financial sector is believed to be the engine for the economy and economic growth. The liberalization of the financial sector took various forms involving local financial institution and multinational banks of various sizes. The assessment of portfolio behavior of the commercial banks has received little attention to these developing countries especially on the extent to which the commercial banks invest in various assets and the return they realize out of these investments. The literature suggests an optimal profit maximization model in portfolio allocation, by the use of both choice and non choice variables to be relevant in analyzing bank behavior. In the proposed study the researcher proposed the use of quarterly bank financial statements in a panel form for a period of over 10 years and inclusion of bank qualitative variables over the period of study, in a profit maximization equation.
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    The Role of the Internet in Overcoming Information Barriers: Implications for Exporting SMEs from the East African Community
    (2012) Mori, Neema; Munisi, Gibson
    Small and medium-sized enterprises play a significant role in the East African Community, contributing a significant percentage of national income and employing a significant number of people. Exportation provides greater opportunities for these enterprises to expand their businesses and improve their performance. However, they encounter a number of information-related barriers before and during exportation. This paper identifies these barriers and discusses how the internet can be used to overcome them. Based on the internet, international business and small business literatures, the paper suggests propositions and develops a model that will be useful for future studies in this area.
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    SMES Access to Financial Services: Tanzanian Bankers' Eye
    (David Publishing, 2012) Mori, Neema; Richard, Evelyn M.
    This paper reports Tanzanian bankers’ reasons for not giving SMEs the amount they request as loans to finance their businesses. Open ended interviews were used to collect primary data from eight interviews in six commercial banks that serve SMEs and which have been in operation for more than five years. Secondary data was obtained from different documents like World Bank reports, brochures and websites of visited banks to mention the few. Findings show that sectors which are perceived as too risky by banks, poor documentation by borrowers which make banks unable to assess their creditworthiness, lack of understanding by SMEs themselves as to why they are doing businesses they do, lack or very limited knowledge on financial management by SMEs, lack of awareness of different products offered by different banks, stagnant businesses as well as lack of proper securitiries to cover their loans are reasons behind banks reluctant to provide loans to SMEs. Findings clearly show that it is still difficult for new SMEs to access finance from banks in Tanzania. It is critical for existing SMEs to put their houses in order to the level that is acceptable by banks if they need to approach banks for loans. Banks in Tanzania need to review their policies on the maximum amount of loans to SMEs to reflect the market demands. At the moment, new SMEs should not have much hope of getting finance assistance from most banks. Further, training institutions should continue educating SMEs on relevant aspect that are important to lenders and lastly, the government should consider providing guarantee to SMEs sectors that are perceived as too risky by banks just like the ongoing initiatives in the agriculture sector.