The small and medium enterprises’ (SME) sector has been and is known to be the growth driver of economies in many countries and is the most flourishing business sector particularly in the developing countries.

SMEs have benefited the macro – economy of several developing countries through creating employment, motivate people in entrepreneurship, generating income, and provide encouragement to social and political stability.

The contributions made by SMEs in the economic development are measured by observing the rise or fall in the gross domestic product (GDP) and employment rate. This ultimately shows the economic performance of any nation.

The aim of the research is, first to recognize the contributions made by SMEs in economic growth of countries in the Sub-Saharan Africa that is; Nigeria, Zimbabwe and Tanzania. Second, is to appraise their performance. Third, is to identify the challenges affecting the performance of SMEs.

1. INTRODUCTION

In today’s world, small and medium enterprises (SME) have contributed immensely towards the social and economic well being of the countries. Africa is by no means left behind and therefore the SMEs are becoming a major force of driving the economy of developing countries.

SMEs have been recognized as an important means in the economic growth of any nation by contributing towards gross domestic product (GDP), creating jobs, reduction in poverty, generate income and facilitate nation’s wealth thus resulting in national development.

Generally, a nation’s economic development can be measured in terms of gross domestic product (GDP), gross national income (GNI), inflation rate, employment rate and other necessary indicators. (Begg et al, p.423)

In spite of the fact that, majority of the firms in developing countries are small and medium enterprises (SME) and have been acknowledged as major players in the economic development; it is difficult to obtain specific evidence of contributions made by SMEs. This is because, SMEs operate in almost all sectors, embody different firm size; vary in terms of formality level and technological know how.

2. SME CONTRIBUTION TO THE ECONOMY

Small and medium enterprises have significantly contributed to the economic growth of many countries such as developed, developing or least developed countries (LDC). There are about 90% of small and medium enterprises that contribute over 50% of employment worldwide (IFC, 2010). For OECD economies, that is countries under Organization for Economic Co-operation and Development (OECD); have more than 95% of the entities as SMEs generating about 60% -70% of the employment. (OECD Report)(EuroJournals Publishing, 2010)

In Africa, 90% of the businesses operate as SMEs and contribute towards more than 50% of employment as well as GDP. For example; the SME sector in South Africa comprises of 55% employment along with 22% of GDP, in Kenya SMEs contribute 18% of national GDP, while in Morocco the SME sector accounts for 93% of the industrial firms and 46% employment. Some of the less developed SMEs can mainly be found in Zimbabwe, Tanzania, Kenya, South Africa and Nigeria. (Saravanan A. et al, 2008)