Quality, standards key for MSMEs to access markets and enhance consumer protection

By Gerald Runyoro

Against the backdrop of International Day for Micro, Small and Medium Enterprises (MSMEs), which was marked on June 27, it is perhaps pertinent to look at what MSMEs are and the key roles they play in the economy from the level of an individual entrepreneur, countries and the world at large.

Although almost everywhere MSMEs are a component of the private sector business community, countries define MSMEs differently.

Two major criteria used to define MSMEs in Tanzania are the number of employees, which range from 1 to 99, and capital investment in machinery, which is up to Sh800 million.

MSMEs are vital in achieving a wide range of the Sustainable Development Goals (SDGs), especially the achievement of SDG 8 (decent work and economic growth) and SDG 9 (industry, innovation and infrastructure).

It is due to the recognition of this vital role that the United Nations (UN) General Assembly designated June 27 as MSMEs Day to raise awareness on their tremendous contributions to the achievement of the SDGs.

Ninety percent of businesses

According to the World Bank (WB), MSMEs account for 90 percent of businesses, 60 to 70 percent of employment and 50 percent of the gross domestic product (GDP) worldwide.

This way, they play a role of the backbone of the economy almost everywhere, contributing to local and national economies while sustaining livelihoods, particularly among women and youth. In many developing countries, MSMEs generate a large share of employment and income opportunities, especially among women and youth.

In Tanzania, the Development Vision 2025 highlights the MSME sector as an important contributor to the country’s long-term development objectives.

It is estimated that 95 percent of businesses in Tanzania are MSMEs, contributing about 35 percent to the country’s GDP.

Although the role of MSMEs is already considerable, they still hold a huge potential that is not fully tapped due to a number of factors.

These include an unfriendly working environment, challenging legal framework, tedious and difficult procedures for accessing and meeting quality and standards requirements set out by both the regulatory bodies in the respective countries and their customers, especially those that are beyond the MSMEs’ national boundaries.

Exporters, particularly MSMEs from developing countries, including Tanzania, face challenges in meeting requirements set by importing countries and thus find it difficult to access markets.

Notably, among the most vulnerable are MSMEs owned by women and youth, which are often at risk of the external shocks and factors mentioned above.

It is encouraging to see that the Government of the United Republic of Tanzania is implementing various measures to support the establishment and growth of MSMEs.

The measures include raising awareness of MSMEs on improving production and productivity; establishing advisory and regulatory bodies; strengthening the quality infrastructure; devising supportive policies and regulations to enhance compliance with international qualities and standards and promoting access to finance, just to mention a few.

As a specialised UN agency that promotes industrial development for poverty reduction, inclusive globalisation and environmental sustainability, the United Nations Industrial Development Organization (UNIDO) is working with member states to address the challenges facing the industrial sector, including players such as MSMEs.

Promoting the MSMEs sector

It is in this regard that UNIDO is collaborating with various ministries, departments and agencies, as well as the private sector to develop and implement several interventions aimed at promoting the MSMEs sector to be sustainably competitive, including through building sustainable linkages between MSMEs, their larger scale business partners and support institutions.

One of the ongoing interventions under which UNIDO is collaborating with the Government of the United Republic of Tanzania to address challenges facing MSMEs is through the European Union Delegation (EUD)-funded project knowns as the Quality and Standards Compliance Programme for the United Republic of Tanzania (QUALITAN).

The objective of this project, for which the key public partner to UNIDO is the Ministry of Investment, Industry and Trade (MIIT), is to strengthen the capacity of the Tanzania Bureau of Standards (TBS) in facilitating MSMEs to access compliance testing, reduce compliance costs, widen market access and enhance consumer protection.

Specifically, the QUALITAN project is contributing to the effective enforcement of standards requirements and the delivery of internationally recognised conformity assessment services and at the same time reducing the costs of compliance and enhancing consumer protection by MSMEs.

It is a component of the larger EU’s BEGIN (Business Environment, Growth and Innovation) programme, whose overall objective is to promote inclusive economic growth, employment and innovation, particularly among women and youth.

To that effect, TBS technical experts from various key departments are receiving capacity-building training in and outside the country.

By building the capacity of TBS’ conformity assessment bodies, the project aims to improve testing, calibration and inspection services and enlarge the scope of accreditation laboratories and inspection bodies.

This contributes to increasing accessibility and efficiency of the conformity assessment services by MSMEs.

Through the support by EUD, UNIDO is also providing modern equipment and scalable digital infrastructure to TBS to facilitate collection, use and sharing of quality standards data with other government institutions in Tanzania.

The aim is to enable MSMEs to easily access, meet quality and standards requirements, and thereby reduce compliance costs for increased quality and price competitiveness on markets.

Besides, the QUALITAN project also aims to improve outreach by designing and implementing awareness raising campaigns to reach out to TBS’ customers across the country with a special focus on women and youth-led MSMEs together with the general public.

It is the hope of both the Government and UNIDO that, in this way, MSMEs’ compliance with quality standards will increase through the support to TBS meant to improve quality standards development process with the ultimate goal being increasing market access opportunities and enhancing consumer protection.

Partners and stakeholders

We call upon other partners and stakeholders, including policymakers, to join us in this noble cause to ensure that MSMEs work in a friendly business environment for the good of our people and country economies and the world at large.

Apart from improving access to quality and standards requirements, joint efforts should also be dedicated to lowering and eliminating barriers faced by MSMEs, improving the business environment and their access to finance, markets and technology.

It is critical that countries and their development partners continue to support and empower MSMEs and unlock their full potential through inspiring innovation, creativity and decent work for all.

To this end, we would like to once again extend our appreciation to the EU for the financial support provided and to the Government of Tanzania through MIIT and TBS for the close collaboration extended to UNIDO to make all this possible.

Gerald Runyoro is the National Programme Officer for UNIDO, Tanzania Field Office