ANALYSIS OF FINANCING INITIATIVES AND STRATEGIES TOWARDS INDUSTRIAL DEVELOPMENT IN DODOMA CITY, TANZANIA

Abstract

Purpose: This study was premised on the quest to gain a thoroughly analysis on the financial initiatives and strategies for industrial development in Dodoma City, Tanzania specifically at Kizota Industrial area. The study was directed by three specific objectives namely: to identify the possible sources of financing industrial development, to evaluate the financing initiatives for mobilizing financial resources for development, to examine problems associated with mobilizing financial resources for industrial development in Tanzania. Methodology: In this study, the Cross-section design was used which helped in focusing on the analysis of financing initiatives and strategies towards industrial development. In this study, both qualitative data and quantitative data were collected from both primary and secondary sources. The primary sources were employees, banks and industrial owners. Secondary sources were documents, journals, and reports from other researchers. A sample size of 60 respondents was used. The study employed both probability and non-probability sampling techniques. Whereby, under probability sampling stratified sampling was used to pick the respondents, i.e., 54 employees from visited industries. Also, Non-probability sampling technique especially purposive sampling technique was used, whereby a researcher solicited for sources or persons with specific features that are appropriate to the study, hence respondents were purposively selected in accordance to their relevance to the study i.e., 1 bank officer and 5 owners of the industries. Data collections tools like; interview guide, questionnaires, and documentary review were used. Findings: The study found out that, the major sources of the industrial development financing are; equity financing, debt financing venture capital and subsidies. The study also found out that promotion of FDIs may be used in financing industrial development. However, the study also noted that there are obstructing factors that hinder access to finance such as high interest rates, weak financial institutions, poor local market, poor corporate governance, poor loan repayment culture, lack of collateral securities. The study also found that poor loan repayment culture possesses a major challenge towards financing industrial development in Tanzania as it creates good sum of non-performing loans. Recommendations: The study recommends creation of additional incentives for industrial financing, reducing interest rates, enhancing capital market operations as well as evolving and promoting venture capital are some of the strategies which can be used so as to improve industrial development in Tanzania. Furthermore, banks should come up with financing Packages specifically designed to promote industrial development, and also borrowers should create culture of repaying their loan dues to enhance effective financing for investments and capital expansion towards industrial development in Tanzania.