Economic Performance of Enterprises under Economic Empowerment Schemes in Tanzania: Comparative Insights from Mara and Arusha Regions

Abstract

Economic Empowerment Schemes (EES) play a critical role in inclusive growth and poverty reduction in developing countries. This study evaluated the economic performance of micro, small, and medium-sized enterprises (MSMEs) funded under Tanzania’s Local Government Authority (LGA) revolving loan schemes using cross-sectional data from 495 beneficiaries across Arusha and Mara Regions. It applied both quantitative and qualitative methods through interviews and structured questionnaires. Using descriptive statistics, Net Profit Margin (NPM), Return on Investment (ROI), and Benefit-Cost Ratio (BCR), the study found an average ROI of 538.7% and BCR of 6.4 across enterprises, indicating enhanced viability post-loan. Profitability rose by an average of 38%, with significant gains in crop production, livestock keeping, petty business, transport, and construction sectors. Employment generation increased by 42%, with higher female participation, and revenue growth averaged 33% post-loan. Business expansion was evident, with 61% of enterprises formalizing operations and acquiring new assets, particularly among women and youth in both regions. These results underscore the effectiveness of EES in improving profitability, viability, and employment generation while revealing regional disparities in outcomes. Post-loan support, including market linkages and training, is essential to sustain growth and reduce regional disparities in economic outcomes in Tanzania.