The Effect of Credit Accessibility on Profitability of Non-Farm Enterprises in Tanzania
DOI:
https://doi.org/10.54536/ajebi.v4i1.3646Keywords:
Credit Accessibility, Non-Farm Activities, Tanzania National Panel SurveyAbstract
Non-farm activities are vital for poverty reduction, economic growth, and diversification in developing countries like Tanzania. However, non-farm enterprises have limited financial support, leading to a shortage of capital, increased vulnerability to economic downturns, and limited access to resources. This study aimed to explore the relationship between credit access and profitability outcomes among non-farm enterprises in Tanzania. Data from the Extended Tanzania National Panel Survey (TNPS) waves 4 and 5 revealed that only 18 percent of all non-farm enterprises had access to credit. Factors influencing credit accessibility include rural residence, working experience, and start-up capital source. However, the study found that profitability in non-farm enterprises is influenced by factors such as Tanzania Revenue Authority (TRA) registration, marital status, education level, location, working experience, and capital source. The study advocates for the implementation of policies that not only enhance credit access through targeted financial products but also support non-farm enterprises with training programs in business management and operational skills, and encourage formal registration with the Tanzania Revenue Authority to increase their profitability and resource accessibility.
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