The Impact of COVID-19 on the Performance of SMEs in Mwanza Tanzania

Abstract

COVID-19 left many businesses stagnant with others filling for bankruptcies. Some businesses survived the shock but struggled to normalize their performance since consumers' confidence did not fully recover. This study examined the impact of COVID-19 on the surviving businesses in Tanzania by using a sample of 125 owners of SMEs from Mwanza City. Data was analyzed using regression analysis. The findings revealed that COVID-19 negatively impacted SMEs in terms of financial and operational performance while impacting positively on innovative performance as it forced them to increase the use of technology for marketing and advertisements, buying, and making payments through mobile money services. This study realized for many SMEs the prominence of adopting digital tools and online platforms to remain in operation even in times of market shocks, lockdowns, and restrictions. The findings are relevant as they inform stakeholders on how the COVID-19 pandemic affected businesses; which calls for SMEs to learn diversifying their income streams to mitigate risks associated with market disruptions. The study recommends government support and strategies to help SMEs improve their businesses which include monetary aid, tax relief, and subsidies including programs to facilitate digital adoption and transformation. This change not only would help them remain buoyant during the market shock but also put forward their businesses for impending development in a rapidly changing digital landscape.