Beyond connectivity: The complementary role of rural electrification and digital infrastructure in enhancing rural small and medium-sized enterprises’ competitiveness in Tanzania

Felchesmi Jossen Mramba; Goodluck Charles Urassa; Ulingeta Obadia Mbamba

doi:10.51867/ajernet.7.4.130

Authors

Felchesmi Jossen Mramba University of Dar Es Salaam, Tanzania https://orcid.org/0009-0005-0527-7492
Goodluck Charles Urassa University of Dar Es Salaam, Tanzania
Ulingeta Obadia Mbamba University of Dar Es Salaam, Tanzania

DOI:

https://doi.org/10.51867/ajernet.7.4.130

Keywords:

Digital Infrastructure, Infrastructure-Led Development Theory, PLS-SEM, Rural SMEs, Rural Electrification, Resource Dependence Theory, SME Competitiveness

Abstract

Small and Medium-sized Enterprises (SMEs) in rural areas play a role in employment, household income generation, development of local markets and economic diversification, but they are less competitive due to the lack of productive infrastructure. Rural electrification enables the use of energy for machinery, product preservation, longer machine operation, digital devices charging, communication, access to information, digital payments, and routine business services while digital infrastructure enables communication, access to information, digital payments, and participation in markets in rural areas. Although these resources are closely linked, rural enterprise competitiveness studies tend to be split into two categories namely electricity and digital connectivity that are analyzed separately. This study explores the correlation between Rural Electrification and Rural SME competitiveness and digital infrastructure and rural SME competitiveness in Tanzania. The study is based on Resource Dependence Theory and Infrastructure-Led Development Theory with explanatory quantitative and cross-sectional design. Partial Least Squares Structural Equation Modelling (PLS-SEM) in SmartPLS 4 was used to analyse the data of 362 rural SMEs. The upward trend for the rural SMEs competitiveness associated with digital infrastructure (β = 0.447, p<0.001) and rural electrification (β = 0.382, p<0.001) accounts for 60.1% of the variance of rural SMEs competitiveness. The results confirm that providing electricity is not enough to promote rural enterprises development. Electricity and digital infrastructure should be seen as complementing productive resources in the development strategies of rural SMEs. The paper adds to literature on infrastructure and rural entrepreneurship by presenting a single model of rural SME competitiveness in Tanzania, and integrating energy and digital infrastructure. It is recommended that policymakers and infrastructure planners adopt an integrated approach that bundles electricity and digital connectivity investments rather than treating them as separate priorities. Furthermore, enterprise support programmes should combine infrastructure provision with financing, digital skills training and device access so that rural SMEs can translate connectivity into productive competitive gains.

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