What determines microenterprise growth? : evidence from Tanzania
MetadataShow full item record
- Master Thesis 
This study provides empirical evidence on the growth determinants of microenterprises funded by microfinance loans through the analysis of survey data of Tanzanian microentrepreneurs. We find strongly positive correlations between business loans and sales growth; however several factors prevent entrepreneurs from growing their businesses. Evidence of a gender divide and a business formality divide is found, with female entrepreneurs experiencing lower sales growth than their male counterparts, and licenced businesses experiencing higher growth than informal ones. The latter divide is most likely due to improved access to credit and to larger markets through government contracts. The gender divide confirms findings in recent research which point to an unexplained inferior performance by female entrepreneurs, but unfortunately our data do not shed light on what the causes might be. Finally, the insights gained on the importance of business formality for firm growth could suggest that the microfinance movement needs to rethink its role in helping poor entrepreneurs by either serving as a stepping stone on the way to formality or by adapting to the needs of formal entrepreneurs.