Initiatives to Build Entrepreneurial Culture Pay Off
Priscus Mareshi, 38, no longer runs away from Tanzania Revenue Authority (TRA) officials, thanks to formalisation of his shoe making business through the Business Development Gateway (BDG) programme.
“I do not close my shop to hide from them anymore whenever they come…They are my friends….We only discuss how things are going and we agree on a common position…..I’m now happy to be in the formal sector….I’m really free….I can only look forward,” he told The Citizen’s BusinessWeek in Dar es Salaam during an entrepreneur exhibition.
Mareshi, the proprietor of a shoe-making workshop at Kibaha, in Coast Region, now has concrete plans for the future of his business. He has books in which he records his transactions of all the income and expenditures for the business.
“The other very good thing is that, with the training under the BDG programme, I’m now able to know who my buyers are and how to impress them,” he said.
After receiving Sh3.6 million grants through the project, which is coordinated by Tanzania Private Sector Foundation (TPSF), Mareshi’s first task was to purchase a sewing machine for his business. He is now refurbishing his office and he is in final stages to secure a shaving machine to help him in processing animal skins into leather.
“The future really looks bright…I should also be able to employ one person so that we can share the responsibilities on who should be making the shoes and who should be going out to look for market…Ultimately, it should reach a point that the business goes on even in my absence,” he explained.
Mr Suleiman Pilli, 51, who runs Tugangale Workshop at Majimaji area in Songea believes that he is now knowledgeable on how businesses are running than he has never been before.
“It has taken me time to realise that I started business with virtually nothing in my head to make me run it efficiently….It was difficult to know the losses and in fact, there was nothing like profits and losses those days because all I could was to find money from the business and spend it,” he explained.
His two businesses of making carvings and iron are now flourishing. With the Sh3.6 million from BDG programme, he has managed to purchase new tools including welding machines as well as refurbishing his workshop.
Mareshi and Pilli are among 2,780 micro enterprises, which received grants of between $1,000 (about Sh1.5 million) and $20,000 (about Sh30 million) since August 2008 under the BDG, a programme initiated to strengthen Tanzania’s entrepreneurial culture.
Another 2,550 business owners received entrepreneurship training, under the BDG’s Business Diagnostic Programme.
“In short, we have managed to reach out to thousands of entrepreneurs countrywide. About Sh10 billion has been spent on various BDG projects and we believe that this is the best way we can build up the Private Sector in Tanzania,” said the TPSF executive director, Dr Evance Rweikiza.
He said over 90 per cent of small and medium scale entrepreneurs who have participated in the BDG programmes have formalised their businesses. “They now hold licenses from the Business Registration and Licensing Agency (Brela) and are paying taxes,” he added.
Cooperation between the businesses and the National Microfinance Bank (NMB) and the People’s Bank of Zanzibar has necessitated almost all the beneficiaries to open bank accounts.
The BDG is a brainchild of the government and its development partners. It is just one of the four components within the Private Sector Competitiveness Project (PSCP) that aims at wiping the problems of high costs of doing business and access to financial services to Micro Small and Medium Enterprises.
The utmost goal of the project is to converse issues that hinder the smooth development of Tanzania’s private sector in a bid to make it aggressive and capable of withstanding current local and international market challenges.
Available data indicates that the informal sector accounts for 70 per cent of employment and about 58 per cent of gross national income.
Why formalize
According to experts, the country and individual business operators lose a lot when a majority of businesses remain outside the formal sector.
A study commissioned by the government and undertaken by the Institute of Liberty and Democracy (ILD) of Lima in 2004, established that businesses in the informal sector fail to benefit from existing economic mechanisms that are meant to help businesses to increase their production. This is because they may not have any document to support them should they want to apply for bank loans.
Informal businesses also lack legal means to help them network with others nationally or internationally. As a result, most of them will always remain family businesses.
“Without being formalised, a business remains legally and economically dead…its potentials are locked up while at the same time, the government also loses revenues in form of taxes,” said Dr prosper Ngowi of Mzumbe University.
Author: Samuel Kamndaya
Source: The Citizen (http://thecitizen.co.tz/magazines/31-business-week/3294-initiatives-to-build-entrepreneurial-culture-pay-off)
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