At the Global Smart Partnership dialogue, one of the most
significant highlights was an impassioned call by President Jakaya
Kikwete on the role of governments and society to support Small and
Medium Enterprises (SMEs).
At the dialogue, President Kikwete urged African
leaders to invest in science education and training of indigenous masses
that can ultimately assist in finding home-grown, practical solutions
to challenges that confront the African continent. He said societies
that had anchored science and technology into development programmes had
succeeded in finding solutions to their challenges, including fast
tracking development in various areas.
“Invest more in our youth, this is their time, if
we invest more in the youth, Africa will have a future in science and
technology,” the President said. He said three years ago, his government
had invested in incubators and so far they had succeeded in creating
some products, giving an example of Maxi Malipo, which had already gone
beyond the borders.
Similar thoughts have been held in reports by the
Small Industries Development Organisation (SIDO), the United Nations
Industrial Development Organisation (UNIDO), the Confederation of
Tanzania Industries (CTI), the Tanzania Private Sector Foundation
(TPSF), the World Bank and the Investment Climate Facility (IFC).
Similarly, in one of his writings, former
secretary-general of the East African Community, Dr Juma Mwapachu, on
how to forge an entrepreneurial spirit, he expounds more on a critical
factor for broadening the base of SMEs and which catapults greater
wealth and job creation. “In my view, such an entrepreneurship spirit
would have to be built and cultivated through the education system, much
in the same way that the school curriculum on citizenship has been able
to engender a powerful culture of civic responsibility in some
countries, Tanzania included, and I have in mind, in this case, during
Mwalimu Julius Nyerere’s leadership,” he said.
That a successful promotion of SMEs must,
therefore, proceed through an education system that deliberately
cultivates an enterprise culture. But he quips that there are some
challenges facing SMEs.
To him, a general perception in the financial
sector that lending or provision of capital to SMEs is risky business
due to a number of reasons: High mortality rates of SME businesses,
poorly prepared business proposals, the lack of reliable collateral,
suspect management capabilities and skills and obscure historical
records of SME operations.
It would be necessary, in enhancing the role of
SMEs in African economies such as Tanzania, to develop exclusive stock
exchanges for SMEs. The East African Community (EAC) must give its SME
opportunities to enable them to thrive in a bid to make them contribute
more meaningfully to the region’s economic growth.
It is the same reason the Nation Media Group
started the top 100 mid-sized companies’ survey, after arriving at the
conclusion that SMEs were important drivers of the economy capable of
pushing up development.
The top 100 mid-sized companies’ survey aims at
identifying and recognising the fastest growing mid-sized companies and
attracted over 200 companies compared to last year’s 120 participants.
The initiative is the brainchild of Mwananchi Communications Ltd (MCL)
through The Citizen and KPMG Tanzania.
The initiative – founded in 2011 – recognises and
identifies Tanzania’s fastest growing mid-sized companies (quality
growth); emerging industry leaders; prosperity creators (wealth and job
creators) and the new business role models and mentors. Through the
results of this survey, investors, financiers and policy makers are able
to make better and informed decisions related to the growth of the
economy. The noble idea is to be appreciated in the corporate sector and
government circles for promoting and spurring growth of the sector of
SMEs in the country.
Apart from being major employers, SMEs contribute
significantly in wealth generation through harnessing local resources
and using simple technologies. Through business linkages, partnerships
and subcontracting relationships, SMEs have the potential to complement
large industries requirements
The same survey, two years ago, noted that 92 per cent of the
country’s medium-sized firms support EAC integration. Of over 200 firms,
52 per cent said they wholeheartedly support EAC integration and 40 per
cent said they support it to some extent. Only nine per cent does not
support it at all.
It is estimated that SMEs contributed over 30 per
cent to the country’s gross domestic product (GDP), which is the
generation of wealth in the national economy.
According to the minister for Industry and Trade,
Dr Abdallah Kigoda, Tanzania Bureau of Standards (TBS) should provide
necessary technical assistance to SMEs and ensure that their products
are certified to enable them to flourish across sophisticated markets.
“The biggest challenge facing SMEs is packaging. Without quality
packaging they cannot sell,” says Dr Kigoda, adding that it is upon TBS
to give the SMEs the packaging know-how and also to ensure that their
products are certified.
The minister noted the role of TBS is crucial more
especially now, when the nation is undergoing reforms in industrial,
commercial, marketing and economic sectors. He said as the private
sector becomes the engine for economic growth, standardisation gains
more importance in the future and sustainability of the country’s
economy.
SMEs in Tanzania are playing a critical role in
the economic growth, progression of technological innovation, sourcing
to large industries and promoting economic renewal and social
development. The importance of SMEs in economy cannot be underestimated
because SMEs are the main driving force in the successful fight against
poverty, expansion in the national economy, foundation of employment and
social uplifting.
About three in 10 or 28 per cent of the firms
surveyed last year said they are considering listing on the Dar es
Salaam bourse, which now has a special segment dubbed Growth Enterprise
Market Segment (GEMS) for SMEs.
Of these, 49 per cent of the firms mostly in
manufacturing, ICT, transport and construction industries plan to list
at the bourse within the next two to three years.
The cash-related constraints have hampered expansion of SMEs, forcing most of them to operate single branches.
Therefore, the government and the Bank of Tanzania
(BoT) need to further improve the financial sector infrastructure and
provide a more conducive and enabling environment for SMEs in Tanzania,
so as to strengthen the concept and applications of intellectual capital
for achieving a competitive edge in the market for the country, the
region and beyond the African continent.
The author is an advocate and the managing partner of Kibuukalawchambers. He can be reached at paul.kibuuka@kibuukalaw.com.
