Performance evaluation of three small firms' financing schemes in Tanzania

Abstract

Purpose

The purpose of this paper is to shed light on performance evaluation of small firms' financing schemes with a view to assessing their potential for improving small firms' access to finance.

Design/methodology/approach

An integrated methodology based on five commonly used methodologies is formulated to evaluate the performance of the three small firms financing schemes. This integrated methodology makes use of a number of selected performance indicators.

Findings

The findings reveal strong performance in favour of Kilimanjaro Cooperative Bank (KCB) compared to the other two schemes. Furthermore, KCB financing scheme is demonstrated to be an important actor in the financial sector particularly rural parts of the country where mainstream financial services are generally not available.

Research limitations/implications

Further research on performance evaluation of small firms' financing schemes could considerably extend the stock of knowledge in this area. It would be interesting for example to know what might be the findings if more financing schemes are included in a replication study given the ongoing growth in the number of these schemes in Tanzania. Coverage of a longer period, which allows for the use of more data for the same three financing schemes, might also produce a more robust set of results. Future research may also wish to focus on the development of a methodology that contains fewer shortcomings in assessing the performance of small firms financing schemes.

Practical implications

The findings reported provide evidence on the possibility of improving small firms' access to finance in Tanzania through replication of KCB scheme/approach to other areas of the country where the environment is similar to Kilimanjaro region. The same might be applicable in other parts of Sub‐Saharan Africa.

Originality/value

The findings reported on in this paper consolidate the stock of knowledge on performance evaluation of small firms' financing schemes. The possibility that replication of a scheme could improve small firms' access to finance, provide policy makers with a new dimension towards poverty reduction. Finally the use of accounting and organisational/institutional indicators as a measure of performance evaluation strengthens the role accounting could play in the future in developing a standardised methodology for assessing the performance of small firms' financing schemes.

Citation

Satta, T.A. (2006), "Performance evaluation of three small firms' financing schemes in Tanzania", Journal of Accounting & Organizational Change, Vol. 2 No. 2, pp. 164-180. https://doi.org/10.1108/18325910610675998