Analyzing the Extent of Dollarization and Its Potential Impact on the Growth of Small and Medium Enterprises in Tanzania

Abstract

The primary objective of this study was to investigate the prevalence of dollarization and its potential impact on the progress of Small and Medium Enterprises (SMEs) in Tanzania. To achieve this, an extensive review of literature was conducted to explore the various causes, types, trends, and global effects of dollarization. The research specifically focused on the Dar es Salaam region in Tanzania, employing a survey strategy that involved the distribution of questionnaires to gather data. A sample size of 160 SME representatives was chosen using stratified random sampling techniques.

The collected data underwent analysis using the Statistical Package for Social Sciences (SPSS) software, and the findings were presented using tables, charts, figures, and percentages. The results indicated that more than 80% of the respondents were aware of dollarization and its potential implications on their businesses, expressing a predominantly negative perception towards it. However, around 20% of the participants exhibited a lack of comprehensive understanding regarding dollarization and remained uncertain about its benefits. Some respondents argued that dollarization contributes to currency instability, leading to fluctuations in prices for goods and services, as well as creating uncertainties in the foreign exchange market.

Based on these findings, it is recommended to conduct further research and analysis to investigate the relationship between SMEs and dollarization within the context of development.