This research assesses the challenges that small ICT firms are facing in Tanzania for a period of 10 years (2004 – 2014). It looks at the challenges that small ICT firms are facing in the industry and relate them to their performance. Moreover, it assesses the impact of the main critical challenges to small ICT firms in Tanzania and the measures to take in order to reduce those challenges. The research is based on a statistical survey approach where by a group of ICT firms in Dar es Salaam were assessed. Various reports, literatures and theories were reviewed in this study to see how they are applicable in real world situations. During Literature review it wass observed that a lot has been written on the impact of ICT to the economic development of the country but no studies were done on the challenges facing small ICT firms in Tanzania. Findings revealed that small ICT firms in Tanzania are mainly affected by the government policy and regulations, tax policy and lack of access to financial aid. It was concluded and recommended that policies, laws and regulations guiding SMEs in Tanzania should not only focus on tax collections, but also to subsidize small firms to help them grow and gain enough market share. These findings are consistent between macro and micro, and robust over various industries.
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