INSIGHT: Why is Tanzania stuck? Because locals think investment is a stranger’s game

Friday, 26 April 2013 17:11 

 Locals shy away from investing in trading zones like the Benjamin Mkapa Special Economic Zone because they falsely equate ‘investor’ with ‘foreigner.’ PHOTO | FILE

By Strumius Mtweve

The Citizen Reporter

Dar es Salaam. In Tanzania when you speak of investment or investors, the majority of people will think they are foreigners, according to Mr Elibariki Mchau, the chief executive officer of the Tanzania Business Creation Company (TBCC).

“This is a wrong perception because an investor is not necessarily a foreigner. Anyone can be an investor,” he said.

His remarks come amid an increase in investment activities in the country that has seen local people lagging behind, believing that investment is meant for people from abroad, a myth that costs the nation dearly in job creation and industrial development.

However, the myth has been proven wrong through initiatives being taken by the private sector, which has started providing training and raising awareness on small and medium industries in the country.

The TBCC provides training on how citizens, entrepreneurs in particular, can invest in industries through on-going training.

Mr Mchau said the TBCC was founded in 2006 and was officially registered in 2009 with the aim of making every Tanzanian able to own not only an industry, but also the country’s economy.

“Since the launch of this initiative, we have so far trained at least 6,000 people of whom 2,000 are producing various products – both consumable and non-consumable goods,” he said.

Mr Mchau alone is capable of producing more than 40 products. In its training, TBCC teaches 63 products – ranging from snacks to industrial products. This gives a range of options for people to choose the products of their choice.

Some of the products taught include hydro-foam blocks, tie ‘n’ dye for batik, soap, powder detergent, oil paint, emulsion paint and petroleum jelly.

Others are broilers feed, layers feed, bread making, queen cake, multipurpose detergents, fruit jam and hair shampoo, among others.

The platform has been connecting small entrepreneurs with the responsible authorities like the Tanzania Foods and Drugs Authority (TFDA), the Tanzania Bureau of Standards (TBS), the Tanzania Revenue Authority (TRA) as well as municipal councils to ensure laws, rules and regulations are adhered to.

“We do not only teach them how to produce quality and competitive products, but we also teach them where to find markets for their products,” said the director.

However, lack of capital is a critical challenge to the operations of the firm. This has seen it use much energy with little resources they have to conduct training, according to the director.

“We are proud because of the 2,000 producers, 570 of them have formalised their businesses and they are doing extremely well,” he said.

He explained that the TBCC planned to create 25 billionaires by 2015 from such training they had been undertaking over the last six years.  

Although the company was doing well on creating employment opportunities, Mr Mchau said the accomplishment of TBCC’s mission was being challenged by the involvement of some unscrupulous people who were after making instant riches.

“Some of them are our trainees, who are eager to get wealth as soon as possible by conducting partial and informal training that hasn’t yet helped trainees,” said Mr Mchau.

Of the 6,000 people who have attended training, 60 per cent of them are women, 20 per cent are young people and 20 per cent are men.

“This difference is not bad. It is a good move because we are preparing women entrepreneurs who will in the future own their economy,” he said.

According to Mr Mchau, entrepreneurs (trainees) contribute between Sh50,000 and Sh70,000 depending on the number of people registered per session.

On the other hand, efforts to industrialise Tanzania are hindered by lack of links between financial institutions and entrepreneurs especially young people to address unemployment.

This has, however, posed a major obstacle for successful young entrepreneurs due to the missing link between financial and non-financial services.

Mr Mchau said entrepreneurship and technical training must be combined with adequate financial services to realise anticipated results.

However, available financial services are often not sufficiently accessible to young people, who are perceived as a high credit risk due to their lack of collaterals, limited experience and young age. 

The TBCC has ventured into creating an employment chain which combines vocational and entrepreneurship training with access to funding to create income-generating activities.

Tanzania like other countries all over the world is facing the challenge of job creation for the country’s young population.

Already in 2008, Tanzania had more than four million unemployed young people, of whom the government alone couldn’t manage to address.

“Without access to employment and excluded from credit with which to finance income-generating activities, young people have essentially been left on their own,” said Mr Mchau.

To curb the current challenge, experts say there is a need to provide adequate training that matches with the demand of the private sector and access to funding – these two are needed to enable young people to create and manage their own micro-enterprises.

Tanzania has many young graduates, but few of them have undergone vocational training –posing critical challenges towards the provision and access to decent and sustainable jobs.

Taking into account limited absorptive capacity of the public sector and the formal labour market, youth entrepreneurship is a viable option for job creation for sustainable economic growth and stimulating structural change and innovations.

The 2006 Integrated Labour Force Survey shows that 2.2 million people were unemployed, equivalent to 11.7 per cent of the total labour force population in the country.

During that period, the labour force population was 18.8 million of whom, 16.6 million people were employed and among the employed, 1.68 million people were in the informal sector.

According to the National Bureau of Statistics (NBS), estimates of unemployed people for 2011 stood at 2.4 million people, representing 10.7 per cent of the labour force population.

However, with the accomplishment of statistical analysis of the 2012 census, the figure is likely to be higher. It is obvious that, most Tanzanians engage in a various activities to earn a living.

As a result, unemployment seems to be low compared to most of the people’s understanding, which confuses between employment in the informal and the formal sector of the economy.