Improving Competitiveness for SMEs to Harness Available Trade and Investment Opportunities: The Case of Tanzania

Abstract

Less developed countries’ capability to face global economic challengesdepends so much on the stage of development of their small and medium enterprises(SMEs). Nevertheless, SMEs competitiveness in Tanzania and other developingcountries face a number of encumbrances hindering their success in both local andinternational markets. This paper undertakes a thorough review of the factorsaffecting SMEs competitiveness in Tanzania. Factors affecting SMEscompetitiveness include: the remaining investment climate impediments, inadequateinnovation, poor infrastructure and high transactions cost. There are alsohindrances related with information asymmetry, shortages and/or insufficientsupply of factors of production and the poor economies of scale and scope. Basedon the findings, policy recommendations for the improvement of SMEscompetitiveness are made. Among others: the government should continueinstituting environment conducive for businesses, promote the use of research anddevelopment outputs, emphasise business agglomerations and sharing of capacities,and continually propagate entrepreneurial attitudes and skills.

Keywords: SMEs, competitiveness, opportunities, investment