Current Status Of Sme Sector In Tanzania Economics Essay

Current Status Of Sme Sector In Tanzania Economics Essay

This chapter describes the research scene. It is designed to give some utile background information about Tanzania, the state in which the survey was conducted. The chapter begins by first supplying general overview of geographical and economic characteristics of Tanzania. Second, the chapter presents the historical overview of the entrepreneurship development in Tanzania. This is followed by the description of the SME sector and its function in economic development. Following in the chapter is a brief account of the administrations which support SME sector in Tanzania ; this is followed with a presentation of an overview of fabricating industry in Tanzania. Thereafter, the chapter provides an overview of the furniture sector and its function in employment and income coevals. Finally, the chapter provides a brief overview of the four parts involved in this survey.

The state

The United Republic of Tanzania was formed in 1964 following the brotherhood of Tanganyika ( mainland ) and Zanzibar ( island ) . The state is located in the eastern side of the Africa continent liying between longitudes 29 and 40 grades east and latitudes 1 and 11 grades south. The state portions boundary lines with eight states, that is, Kenya and Uganda to the North ; Rwanda and Burundi to the West ; Zambia, Mozambique and Malawi to the South and Democratic democracy of Congo to the north-west. Tanzania is the largest state in East Africa with a surface country of 945,000 square kilometers with a population of about 34 million people as per the 2002 national population nose count. The population distribution shows that approximately 77 % of the entire population lives in the rural countries while merely 23 % lives in the urban countries. The state has 26 parts of which 21 are from Tanzania mainland and 5 from the island of Zanzibar. Tanzania is blessed with assorted natural resources which include minerals, three great lakes ( Victoria, Nyasa, Tanganyika ) , wildlife and other tourer attractive forces such as national Parkss ( e.g. Serengeti, Ngorongoro, Manyara, Mikumi ) , mountains ( e.g. Mt. Kilimanjaro, Mt. Meru, Uluguru and Udizungwa ) , craters ( e.g. Ngorongoro ) and the similar.


Tanzania is still regarded as a underdeveloped state, with 36 per centum of its population life below the poorness line ( ITU 2004 ) . The state ‘s economic system is chiefly based on agricultural sector, and it is estimated that 74 % of Tanzanian people engages in agricultural sector. This sector is dominated by smallholder husbandmans which produce both nutrient and hard currency harvests and the bulk of these husbandmans live in the rural countries. Consequently, it is estimated that a big proportion ( 75 % ) of the export trade goods come from agricultural sector ( URT 2007 ) and as such agribusiness is the highest foreign exchange earner. The major export harvests include baccy, sisal, cotton, tea, java and spices. Sing the GDP growing, the statistics shows that Tanzanian GDP has been increasing from 7.1 % in 2007 to 7.4 % in 2008. Furthermore, the statistics from the Tanzania National Bureau of Statistics shows that three sectors viz. agricultural, service and fabrication have been the major beginning of the GDP growing in 2008 ( see Table 1 ) .

Table 1: Contribution to GDP by Sectors – 2008


% Contribution to GDP

Agribusiness, forestry and Hunting









In Tanzania, there are over 120 different autochthonal cultural groups. Some of these have up to a few million people, whereas many others comprise smaller Numberss of members ( Olomi 2001 ) . For illustration, Asians and Arabs constitute about 1 % of the entire population. In order to deter cultural sentiments, which seemed to loom big, the authorities instituted several steps, the most effectual of which is the acceptance and development of Kiswahili as the first official linguistic communication and medium of direction in primary schools. Additionally, in 1990 ‘s there has been an addition in cultural integrating through inter-ethnic matrimonies. Despite these steps, cultural groups continue to keep distinguishable subs-cultures and group individualities, intending that there is a really large cultural diverseness in the state. For illustration, cultural sentiments can be still maintained in Asians and Arab people. Furthermore, the dominant faiths are Christianity and Islam, each of which comprises about a 3rd of the population while Atheists, Hindu and other little spiritual groups account for the staying per centum of the population.

The cultural symbol in Tanzania encourages conformist behaviour whereby regard for senior status and authorization is purely observed. In fact, kids are inculcated with conformist ideal right early childhood through to school traveling age. They are ever trained to obey and esteem people who are older than themselves. In fact kids are invariably reminded that their success in about anything can merely be a merchandise of this type of behavior ( Nchimbi 2002 ) . Additionally, most of the African states and Tanzania in peculiar have been known for traping down every success or failure on the work God. As a consequence, most of the people would utilize this anecdote as a convenient alibi of taking full duty for their actions.

As for the entrepreneurship civilization, this is the facet which is by and large under-developed in Tanzania ( Olomi 2001 ) . This can mostly be attributed to historical and political grounds associated with colonialism and socialism severally. For illustration, during the colonial epoch there were calculated attempts in curtailing the engagement of autochthonal Africans in concern activities. In fact, the engagement of autochthonal Africans in concern was limited to ownership of really little endeavors such as bantam stores whereas Arabs were allowed to run as retail merchants merely, and Asians as medium jobbers and retail merchants ( Rugumamu and Mutagwaba 1999 ) . However, the concern community of the Asian beginning is still most entrepreneurial active and successful in Tanzania ( Finseth 1998 ) . With respects to autochthonal people, it is the Chaga people from Kilimanjaro part who are significantly overrepresented in the entrepreneurial sphere across the state.

SME sector in Tanzania

As briefly discussed in Chapter One, the SME sector is an result of the structural accommodation policy instead than of a design. It is amongst the merchandises of the failure of African socialism which led to the economic crisis of the 1970s and the early 1980s. Within this political model, private concern sector was actively discouraged in favor of public endeavors which were authorities owned, community based, or concerted owned ventures. Consequently, the ordinance was introduced to curtail civil retainers and leaders of the governing party from prosecuting in concern activities. Since about all educated people were members of the civil service so it is obvious so that concern activities were left to people who had no instruction at all. Further, this African socialism policy was based on the top down attack in determination devising and in fact the Government was the lone organ which made all the determinations for its citizen, including on such maters as who should travel to which school or college, who should work where one should work and populate, how much one should gain in footings of rewards etc. The trust on Government discretion in determination devising determinations has resulted into a civilization of dependence on authorities and unquestioning obeisance among most Tanzanian people. In fact this attack have contributed to the suppression of development of entrepreneurial values such as the demand for accomplishment, personal enterprises and or creativeness, willingness to take hazards and related behaviors ( Olomi 2001 ) . The socialism attack recorded pronounced accomplishment in societal development in the 1970s and early 1980 ‘s particularly in primary instruction, wellness services bringing every bit good as H2O supply and sanitation ( Temu and Due 2000 ) . However, the nationalization of the private sector led to hapless economic system marked by a figure of macro-economic instabilities, and accordingly an economic crisis that lasted for over a decennary ( Kanaan 2000 ) . This crisis has besides led to the eroding of existent buying power among the salaried people. Therefore Tanzanian people were forced to set up little concern augment their meagre incomes. For case, some of the people engaged themselves in doubtful activities such as smuggling goods from neighboring states and sell them at premium monetary values in Tanzania. These sorts of concerns were against the authorities ‘s policies that considered such concerns as being in struggle with the state ‘s political orientation ( Maliyamkono and Bagachwa 1990 ) .

Yielding to force per unit area from the World Bank, Tanzanian Government changed its policy from province led economic system to a market goaded economic system. In fact, the concluding reform took topographic point in 1991 taking to denationalization of most public endeavors as a consequence. The denationalization of province endeavors and the detachment of the authorities from some activities resulted into the retrenchment of workers from the populace sector and, as a consequence, most of these workers turned to micro endeavors for endurance. In visible radiation of the above experience, the SME sector has late become a really important docket in the Tanzanian economic system. Indeed, it is good accepted that the SMEs sector has an of import function to play in income and employment coevals. Having explained the development of SME sector in Tanzania, the subdivision below defines SME harmonizing to Tanzanian definition, this is followed with a reappraisal of the current position and jobs of SMEs in Tanzania.

Definition of SME

There is no universally accepted definition of SME. Different states define SME otherwise depending on their degree of development. However, the normally used standards in the definition include the entire figure of employees, the entire investing and gross revenues turnover. Therefore, the Tanzanian Government defines SMEs harmonizing to sector, employment size, and capital invested in machinery. Consequently, in the context of Tanzania SMEs are defined as micro, little and average size endeavors in non farm activities which include fabrication, excavation, commercialism and services. A micro endeavor is defined as a house with fewer than five employees whereas a little house is a house with 5 to 49 employees, a medium enterprises is a house with 50 to 99 employees. Any house with 100 employees or more is regarded as a big endeavor ( see Table 2 ) below for elaborate presentation ) . In the instance where an endeavor falls under more than one class so the degree of investing would be the determinant factor.

Table 2



Capital invested in machinery

Micro endeavor

1-4 employees

Up to 5 million

Small endeavor

5-49 employees

5-200 million

Medium endeavor

50-99 employees

200-800 million

Large endeavor

100 and above

Above 800 million

Current Status of SME sector in Tanzania

Despite the importance of the SME sector in economic development, it is hard to acquire recent and dependable informations sing the current position of SME sector in Tanzania. From the adept interviews conducted by the research worker in the current survey, it has been discovered that SME sector is dominated by micro and little endeavors despite that the available informations to back up this observation are instead unelaborated and undependable. Additionally, it is estimated that there are about 2.7 million endeavors in the state, out of which about 60 % are located in the urban countries. The bulk ( 98 % ) of these are micro endeavors ( using less than five people ) . Therefore, medium and big endeavors in the economic system are highly few. Most ( 66 % ) of the micro and little endeavors have an one-year turnover of less than US $ 2,000 and have been established as a endurance scheme. Furthermore, the estimations show that there are about 700,000 new entrants into the labour force every twelvemonth. About 500,000 of these are school departers with few selling and entrepreneurial accomplishments. The public sector employs merely approximately 40,000 of the new entrants into the labour market, go forthing approximately 660,000 to fall in the unemployed or the underemployed ground forces modesty. Most of these people end up in the SME sector, and particularly in the informal sector. The survival rate of these emerging SMEs is besides low ; over 60 % survive merely the first five old ages of operation. Although SMEs are found in all sectors of the economic system, they are dominant in trade ( 54 % ) followed by services ( 34 % ) ( URT 2003 ) . This is because the SME sectors as identified above require minimal capital and demand for some one to get down a concern of this sort.

Problems faced by SME in Tanzania

Despite its parts to income and employment creative activity, by and large SMEs in Tanzania are presently faced with a batch of jobs ( Bagachwa, Harris, and Tinios 1993 ; ( Verspreet and Berlange 1998 ; ( Calcopietro and Massawe 1999 ; Ziorklui 2001 ; .

In finding barriers to SMEs growing, rural plan on Enterprise Development ( RPED ) studies found two degrees of restraints confronting SMEs in Tanzania: those moving as barriers to general operations and those clogging growing. The study concludes with a list of factors hindering the development of SMEs as follows,

Lack of entree to recognition,

Low instruction degree of enterprisers,

The deficiency of managerial, selling and production accomplishments, and

Regulative restraints stemming from the trouble of obtaining legal position.

( Calcopietro and Massawe 1999 ) sort the factors impeding SMEs development in Tanzania into five classs viz. ; macro-economic and policy environment, physical and technological substructure, the banking and finance construction, legal and regulative model, and market conditions. This unwanted state of affairs has persisted for a long clip despite the being of assorted plans aimed at developing SME sector. As ( Olomi 2006 ) notes, establishments and associations back uping SMEs are weak ; their services are quite basic and chiefly concentrate on assisting the hapless to last. As a consequence, there are fluctuations in public presentation among SME ; whereas some are turning others have for good remained micro or informal without any pronounced growing. In Africa, this phenomenon is referred to as the “ missing center ” and continues to be a long-run concern for African policy shapers ( Kibera and Kibera 1997 ) .

Organizations back uping SME in Tanzania

Due to the acknowledgment of the importance of SME to the state ‘s economic system, Tanzania Government has continued to plan several programmes and establishments which aimed at back uping the development of SME sector, these include-

Small Industries Development Organisation ( SIDO ) .

This was established in 1973 by the Act of Parliament to be after, organize, promote and offer every signifier of service to little industries. This is a chief authorities arm for advancing SMEs in Tanzania. Some of the things SIDO have achieved include:

Constitution of 10 training-cum-production Centres that offer simple rural based engineerings ;

Introduction of hire purchase plans through which more than 2000 enterprisers were assisted with machines and working tools ;

Puting up of regional extension services offices that render advice on puting up of new industries, pick of engineering, readying of feasibleness surveies, readying of economic studies, installing, operation of machinery, care and selling of merchandises ; and

Conducting developing programme in Management, Financial and Marketing accomplishments.

Presently, SIDO is focused much on carry oning preparation programmes ; nevertheless, since the SME baseline study which was conducted in 1991 ; there has ne’er been any other study SIDO to day of the month. This is attributed to deficiency of financess for the research worker to carry on the study survey in all the parts.

Despite the accomplishments and failing mentioned above, SIDO in coaction with other stakeholders have continued to back up the constitution of SME associations to authorise persons in the private sector. Some of these associations include Tanzania Food Processors Association ( TAFOPA ) , and Tanzania Small Industries Organisation ( TASISO ) . These associations have been utile in affecting the members in all issues related to handiness to markets, information flow, natural stuff, packaging and micro recognition services. However, these administrations are chiefly located in Dar Es Salaam, which makes it impossible for the enterprisers in the upcountry to profit from the services rendered by these associations, such as entree to information.

Ministry of Industry, Trade and Marketing

Recently, the Ministry of Industry and Trade established the SMEs Department ; this section focuses on advancing the growing of SMEs in Tanzania. This section is in its baby phase, so it is still garnering information about SME. The chief end for this move is to hold a Centre for database for SME and other responsibilities which would be commissioned by the Government. Thus, no informations were found in this section.

Private administrations

Apart from administrations mentioned above, establishments in the private sector such as Tanzania Chamber of Commerce Industry and Agriculture ( TCCIA ) and Confederation of Tanzanian Industry ( CTI ) are besides back uping SME development. These establishments are actively encouraging, advancing rank, and guaranting that the administrations are adequately financed through member fees and donor-sponsored programmes aimed at strengthened the private sector. For case, there is an office at the CTI which deals with SMEs jobs and services. In this respect in 1999, CTI conducted a survey with the purpose of placing major jobs and concerns of SME in Tanzania. Twenty-seven major restraints were listed by SMEs and to day of the month some of the restraints have been addressed. . However, the outreach CTI services are still limited because holding Dar Es Salaam as their centre of attending.

University of Dar es Salaam Entrepreneurship Centre ( UDEC )

The Faculty of Commerce of the University of Dar Es Salaam established UDEC in 2001. The Centre provides consultancy and preparation in SME related issues. Presently, the Centre has established the brooder whereby alumnus enterprisers and other managers/owner of concerns can be trained on entrepreneurship and related issues. Furthermore, UDEC in coaction with Business in Development Network Foundation ( BiDNF ) of the Netherlands and other local spouses launched a concern program competition on 11th April 2007. The enterprise aimed at exciting Tanzanian of all businesss to place and develop originative thoughts which have some impact on development. These Tanzanians are supported in developing bankable concern programs and being linked with local and international moneymans. The best 25 concern contrivers would be linked to concern professionals for the intents of bettering these programs to the degree of sustainable endeavor thoughts.

Government/donor joint attempts

Joint Government and givers support establishments have been established besides to back up endeavor development in Tanzania. During adept interviews the current research visited assorted establishments as explained below.


This plan dwells with Tanzania ‘s belongings and concern formalisation, which is popularly known by its Kiswahili acronym MKURABITA. This programme helps people who want to formalize their belongings or concern, to make so. The chief intent of the programme is to authorise the bulk in the informal sector so that they can do better usage of their belongings and concern assets and take advantage of other chances in the modern market economic system. The thought behind this enterprise is that many hapless people do really possess wealth in the signifier of land and little concerns, but because they have no rubric deeds to their land, or because they operate unregistered concern, they either have small entree to capital or are unable to spread out their economic activities beyond their ain local countries. If these concerns or assets are formalised, it would be easier for them to procure loans from fiscal establishments. Presently, a little Programme Management Unit under the President ‘s Office manages MKURABITA.

Business Environment Strengthening in Tanzania ( BEST )

This programme aims at beef uping the concern environment in Tanzania by foremost, cut downing the load on concerns through taking regulative and administrative restraints, and secondly through bettering quality of the services provided by the Government to the private sector, including commercial difference declarations. As celebrated earlier, private sector in Tanzania has been earmarked as the engine for economic growing hence beef uping concern environment is among the precedence countries in Tanzania. Among the cardinal enabling factors to a reinforced concern environment is good regulative environment. The BEST Programme is hence instrumental in accomplishing this aim, and is designed to supply concerns with the enabling environment they need, and thereby heightening economic growing and accomplishing rapid poorness decrease

In drumhead, several administrations support SME development though they are ailing coordinated and lack the necessary coverage to make all the sectors of the little concern community. This is because most of these administrations have their attending focused to ( and are located in ) Dar Es Salaam. Additionally, most of the undertakings funded by givers ( e.g. BEST and MKURABITA ) are more focusing on legal and regulative model and overlooking the fact that there are other factors environing the being of SMEs, which need more attending as good. However, it is obvious that since the Government took the enterprises of developing the private sector, the sector has grown in footings of figure of concerns established, capital and employees. SMEs have contributed well to the turning GDP and in making employment chances to the Tanzania people. However, there is no recent comprehensive information on the public presentation of SMEs in Tanzania. The study survey done by Wangwe in 1999 summarizes the parts of SME to Tanzanian economic system as follows:

That they are estimated to lend 30-35 % of the gross domestic merchandise ( GDP )

They create occupations for 20 % to 30 % of the entire labour force.

They temporarily mobilise fresh resources such as land, capital, labor and direction accomplishments that would hold remained idle.

The sector is an of import beginning of income for those whose existent rewards and wages are falling in the formal sector.

The sector has become the largest urban occupation supplier and shows the highest employment growing rates which is estimated at 10 % per twelvemonth.

The recent available information is from the 2004 Investment Climate Assessment, which was based on the house ‘s degree study informations covering about 480 houses, 276 from the fabrication sector in the woodworks, furniture, fabric and garments, leather, building stuffs, paper and publication, chemicals and pigment, plastics and agribusiness sub-sector. The survey reveals that SMEs sector is turning fast in recent old ages as compared to the rate of growing in the early 1990 ‘s.


An overview of fabrication industry

Manufacturing industry in Tanzania consists of a figure of activities as seen in Table 3. Most of these sectors deal with production of goods and services that are used as terminal merchandises or as inputs in other production procedures. This sector has a really of import function in Tanzania ‘s economic system. Although the informations to back up this observation are non up to day of the month but the statistics taken in 2000 suggests that approximately 48 % of the entire monthly pay earners are employed in this sector. Consequently, this sector remains among the major subscriber of the Tanzanian GDP, as we have seen in table 1 that the sector is presently the 3rd most of import to the Tanzanian economic system. Further, its part to GDP increased from 9 % in 2006 to 9.2 % in 2007 ( URT 2007 ) . Despite its importance to the state ‘s economic system, fabricating activities in Tanzania are comparatively little with most activities concentrating on industry of simple consumer goods such as nutrient, drinks, baccy, fabrics, furniture, and wood related merchandises. Business study in Tanzania mainland done by Tanzania national agency of statistics reveals that three sectors ( fabrics, nutrient merchandises and drinks, furniture and fabrication ) have the highest proportions of concern activities as seen in table below.

Table 3 Number and Percentage Distribution of Businesses in Manufacturing Industry by Activity, Tanzania Mainland





Wearing Apparel ; Dressing and Dyeing of Fur



Food Merchandises and Beverage



Furniture ; Fabrication



Fabricated Metal Products, Except Mach. & A ; Equip



Wood and of Merchandises of Wood and Cork, Except Furniture ; Manufacture of Articles of Straw and Plaiting Materials



Other Non-Metallic Mineral Products



Printing, Printing Recorded Media






Chemicals and Chemical Merchandises



Rubber and Plastic Merchandises



Taning and Dressing of Leather ; Luggage, Handbags, Saddlery, Harness and Footwear



Tobacco Merchandises



Paper and Paper Merchandises









Beginning: Business Survey 2007, National Bureau of Statisticss

Furniture industry

The furniture industry is portion of the fabrication industry chiefly for processing and semi processing of the wood merchandises. Therefore, the forest sector chiefly acts as a beginning of natural stuffs used in wood and wood merchandises industries all over the state. Furniture industry in Tanzania has besides changed hands several times in the last century. For case, during socialism epoch most of the furniture industries were under public ownership and were owned by the province. Again, due to the failure of the African socialism epoch in the late 1990s, most of the nationalised industries collapsed. Reacting to this, the Government so began denationalization of province endeavor including furniture industries. To day of the month, most of furniture industries in Tanzania are little scale endeavors keeping low degrees of production aimed at functioning local markets ( Nchimbi 2002 ) . Further, bulk of these little graduated table endeavors have few lasting employees and small on the job capital beyond working tools and little premises ( Kristiansen et al. 2005 ) . For case it is estimated that merely 3 % of the entire lasting employees are employed in this sector. Besides, most of these houses are located in the urban countries and merely few can be found in the rural countries. Additionally, most of these houses are run by enterprisers who have low degrees of instruction, and who rely on simple manus tools to do furniture. Despite these restrictions, little makers in Tanzania are really originative and they manufacture furniture of assorted designs, and which have been regarded as premium trade goods in foreign catalogues ( Murphy 2006 ) . This sector is among the important subscribers to the fabrication gross domestic merchandise ( GDP ) and employs approximately 17 per centum of the entire work force in fabrication sector ( URT 2008 ) Furthermore, this sector is non really import-dependent because most of the natural stuffs used are locally available in Tanzanian woods ( Harding, Soderbom, and Teal 2002 ) . For this ground, it is obvious that the sector is demand driven and provides employment to other sectors such as forestry.

Study parts

This survey was conducted in four parts viz. Dar Es Salaam, Arusha, Morogoro and Iringa. These parts are briefly described below.

Dar Es Salaam

Dar Es Salaam metropolis is found in Dar Es Salaam part is comprises three territories: Ilala, Temeke and Kinondoni. Dar es Salaam is the largest commercial metropolis of Tanzania. This metropolis is located in a quiet bay off the seashore of the Indian Ocean, and in which more than 3 million people live.. The metropolis is favoured for holding much of the economic substructure and about all ministry office central offices are located in this metropolis. Bing the outstanding part, Dar Es Salaam is likely to be a topographic point where assorted concern affairs are serious undertaken. For case, it is documented that high concentration of economic and societal activities, skilled labor and capital are likely to be found in this part ( Ishengoma 2005 ) . Major economic activities carried out in this metropolis are fabricating, trade, fiscal services, instruction and preparation, transit and building ( URT 2008 ) . Furthermore, skilled workers are likely to turn up themselves in Dar Es Salaam where it is comparatively easy for them to procure occupations ( Ishengoma 2005 ) . Consequently, compared to other parts, Dar Es Salaam has high family monthly outgo and therefore the part is a big market for consumer goods. Based on these qualities, the metropolis has besides attracted many fabrication houses including furniture fabrication.


Arusha town is found in Arusha part, which is in northern Tanzania, and lies at the pes of saddle horse Meru. This town is surrounded by most celebrated national Parkss and landscapes. The town, which is besides the administrative Centre of Arusha part and East African Community, has an estimated population of 1,288,088 people ( 2002 nose count ) . It is a fast turning town, which is handily linked to Dar Es Salaam, Moshi, and Nairobi by route, train and air services. In fact this town is regarded as 2nd to Dar Es Salaam in footings of volume of commercial activities. The town enjoys the best clime in the state with most months being cool. Arusha part has a vibrant and turning economic system. The town is a gateway to the most popular tourer attractive forces in the state, such as Serengeti, Lake Manyara, Ngorongoro national Parkss every bit good as Mount Kilimanjaro. Generally, Arusha as a part generates significant gross from minerals ( particularly Tanzanite ) , hard currency harvests ( java ) and nutrient harvests ( maize, wheat, beans and veggies ) . The part is made of four territories: Arusha, Arumeru, Kiteto, Mbulu and Hanang.


Iringa is the part located in the southern Highlandss of Tanzania about 700 kilometers from Dar Es Salaam. The town, which is besides the administrative Centre of Iringa part, has an estimated population of 112,900 ( 2004 urban nose count ) . This metropolis is a pleasant little town which is celebrated for agricultural production particularly maize, veggies, fruits and lumber. The part is made of five territories which include Iringa town, Makete, Mufindi, Kilolo and Njombe.


Morogoro is the part located in the southern Highlandss of Tanzania 192 kilometer West of Dar Es Salaam. The part lies at the base of Mount Uluguru with a population of 206,800 ( 2002 nose count ) . During African socialism era the part was normally known as industrial part because most of the industries were located in this part. To day of the month, most of these industries are privatised and owned by single people. The part is comprised of four territories viz. Kilosa, Mvomero, Ulanga, Morogoro town, ulanga and Kilombero. Morogoro is a part linking to Dar Es Salaam, the state ‘s capital metropolis of Dodoma, and the southern upland town of Iringa. It is the agricultural Centre that cultivates rice, sugar cane, fruits, veggies and lumber.


This chapter provided an overview of Tanzania ‘s history, location, population, economic system, SMEs development, administrations back uping SME, furniture industry, and parts under the current survey. From this reappraisal, four major decisions can be drawn: foremost, economically, Tanzania has experienced major alterations of great importance notably her displacement from a province led economic system to a free market economic system. However, even today the concern sector in Tanzania is developing and is mostly influenced by socialist patterns under Ujamaa epoch, and which used to stamp down development of local entrepreneurship. As a consequence, the fabrication sector, including the furniture industry is non good developed.

Second, it can be noted that a big per centum of the participants in the concern sector in Tanzania have started concern out of necessity and this has deductions on entrepreneurial civilization. For case, negative factor motivated owner-manager are improbable to exhibit the creativeness, motive and enthusiasm that owner-manager typically possess ( Grey 1993 ) . Third it can besides be said that Tanzanian environment is rather different from that of western universe where most of the entrepreneurship theories were formulated. For case, the degree of instruction is much lower in Tanzania than it is in the western universe. In fact, it has been suggested that most of these houses are run by enterprisers who have a low degree of instruction, and who depend on simple manus tools to do furniture. Consequently, Tanzania cultural context is strongly entrenched in a hierarchy of authorization in society and which encourages the civilization of conformance, in footings of rigorous observation of regard for senior status and authorization. This civilization has been believed to hold led to miss of assurance among the ordinary people in running concern ; as a consequence entrepreneurship civilization in Tanzania is under developed ( Themba et al 1999, Olomi 2001 ) . These cultural differences may hold a greater impact on entrepreneurial behavior and features. Hence the cultural differences justify the testing of pertinence of entrepreneurship theories to the Tanzanian context.