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HEED STAKEHOLDERS ON STRENGTHENING MSMES

What you need to know:

  • MSMEs are enterprises which are engaged in the manufacturing, processing and otherwise production and preservation of commodities and other goods in a given country.

The leading story on the front page of our edition yesterday was about the financial woes that plague micro, small and medium enterprises (MSMEs) in Tanzania today – and how best to surmount them.

Generally, MSMEs are enterprises which are engaged in the manufacturing, processing and otherwise production and preservation of commodities and other goods in a given country.

Some enterprises are either exclusively engaged in the provision of assorted services – including trading – or do so in conjunction with industrial production.

In any case, in developing countries like Tanzania, MSMEs are the backbone of the economy at all levels, from the household and communal to the national economic level.

Going by Tanzania's standards, MSMEs basically are entities that employ not more than 99 people, and have capital investment not exceeding Sh800 million.

MSMEs contribute about 27 per cent of the GDP, and employ more than 5.2 million people in the country.

More often than not, MSMEs vastly outnumber large firms, employ huge numbers of workers – and are generally entrepreneurial by nature, helping to create and shape innovation.


But then again, MSMEs are not entirely without challenges which they must functionally surmount if they are not to collapse, but survive, grow and progress on a sustainable basis.

One of the challenges is the lack of ready access to adequate and timely financing; the other is shortage of management and operational skills across the board.

About 40 percent of MSMEs startups collapse within four months or so – usually for lack of financing, whereby creditors are reluctant to lend to them.

Some MSMEs are notorious for poor management and record-keeping, as well as lack of collateral and creditworthiness...

One proposed solution is to establish a government-backed Venture Capital Fund: an investments mechanism for MSMEs startups and early nurturing as they find their footing in business.

Another is for MSMEs to polish up their operational-cum-managerial skills, as well as strengthen their creditworthiness and collateral portfolio.