Damaso
JF-Expert Member
- Jul 18, 2018
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Tanzania aspires to a future of economic prosperity and opportunity. However, achieving this vision requires a significant increase in job creation. While large corporations and the government play a role, the true engine for generating millions of new jobs lies within a different sector: Small and Medium Enterprises (SMEs). Large corporations, often lauded as significant job creators, tend to have limitations. Their focus on efficiency and economies of scale can lead to automation and job displacement. Additionally, their presence is often concentrated in urban centers, neglecting the vast rural areas where a large portion of Tanzania's population resides.
According to the Tanzania Chamber of Commerce, Industry, and Agriculture (TCCIA), small firms account for more than 95% of the total. SMEs provide around one-third of the country's GDP and account for up to 40% of overall employment. Malaysia's experience with access to credit for SMEs has been effective, providing as a learning point for nations like Tanzania but the government doesn't utilize this much so far.
According to the Tanzania Chamber of Commerce, Industry, and Agriculture (TCCIA), small firms account for more than 95% of the total. SMEs provide around one-third of the country's GDP and account for up to 40% of overall employment. Malaysia's experience with access to credit for SMEs has been effective, providing as a learning point for nations like Tanzania but the government doesn't utilize this much so far.
Photo courtesy of TanzaniaInvest.com.
Government initiatives, while well-intentioned, also face challenges. Bureaucracy and budgetary constraints can hinder the effectiveness of government programs. Furthermore, large-scale projects, while creating some jobs, may not be scalable enough to address the sheer number of new jobs needed. SMEs, on the other hand, offer a compelling alternative.
Here's why they hold the key to unlocking Tanzania's job creation potential:
Here's why they hold the key to unlocking Tanzania's job creation potential:
- Ubiquity and Local Focus: Unlike large corporations, SMEs are present across the nation, including rural areas. This localized presence allows them to cater to specific regional needs and tap into local talent pools. This fosters economic growth in underserved communities and creates job opportunities closer to where people live.
- Labor-Intensive Approach: SMEs often operate with a lean structure, relying more on human resources than automation. This creates a direct link between business growth and job creation. As an SME expands, it naturally requires more manpower, leading to a snowball effect of job generation.
- Innovation and Adaptability: Unburdened by the heavy structures of large corporations, SMEs are nimble and adaptable. They can quickly respond to changing market trends and consumer demands. This fosters innovation and the creation of new products and services, leading to the creation of new jobs in emerging sectors.
- Entrepreneurial Spirit: SMEs are often driven by passionate entrepreneurs with a vision for their businesses. This passion translates into a strong work ethic and a commitment to growth. These entrepreneurs are more likely to take calculated risks, create new ventures, and provide apprenticeship opportunities, further fueling job creation.
- Fostering Formalization: A significant portion of Tanzania's economy operates in the informal sector. SMEs can play a crucial role in formalizing these businesses. By providing access to financing, training, and mentorship, they can incentivize informal businesses to transition to the formal sector, creating sustainable jobs with better benefits and worker protections.
Photo courtesy of Go Chambers.
However, unlocking the full potential of SMEs requires addressing some key challenges:
- Access to Finance: Obtaining financing is a major hurdle for many SMEs. High-interest rates and limited access to credit stifle their growth potential. Government initiatives and partnerships with financial institutions can create loan programs with more favorable terms, specifically tailored to the needs of SMEs.
- Lack of Infrastructure: Limited access to reliable electricity, transportation, and communication infrastructure hinders the growth of SMEs in rural areas. Investing in infrastructure development is crucial for creating an enabling environment for SMEs to thrive across the nation.
- Skills Gap: The skills required by SMEs may not always align perfectly with the skills available in the workforce. Investment in vocational training programs that equip young people with the skills needed by SMEs can bridge this gap and ensure a readily employable workforce.
- Regulatory Burden: Excessive regulations and bureaucratic procedures can stifle the growth of SMEs. Streamlining regulations and simplifying compliance procedures can encourage entrepreneurship and make it easier for SMEs to operate and create jobs.
Photo courtesy of UN News.
In conclusion, while corporations and governments have a role to play, SMEs are the true engines of job creation in Tanzania. Their ubiquity, labor-intensive nature, and entrepreneurial spirit position them perfectly to address the nation's job market needs. By fostering an environment that supports SMEs through access to finance, improved infrastructure, relevant skills training, and streamlined regulations, Tanzania can unlock its full job creation potential and empower its citizens to build a brighter future. The path to economic prosperity lies in nurturing the entrepreneurial spirit of its people and recognizing the immense power of Small and Medium Enterprises.
Tanzania we Want: Corporates and governments alone cannot create the millions of jobs that Tanzania needs. Only SMEs can.
