A dissertation attachment report submitted in partial fulfilment for degree of m

i INVESTIGATION OF THE INFLUENCE OF GOVERNMENT POLICIES ON ENTREPRENEURSHIP PERFORMANCE IN TANZANIA A CASE OF KINONDONI MUNICIPAL HAROUN MTEBENE A DISSERTATION ATTACHMENT REPORT SUBMITTED IN PARTIAL FULFILMENT FOR DEGREE OF MASTER OF BUSINESS ADMINISTRATION OF THE OPEN UNIVERSITY OF TANZANIA 2011 ii CERTIFICATION I, the undersigned certify that I have read the dissertation entitled “Challenges and success of entrepreneurship performance in Tanzania: A case study of Kinondoni Municipal” and found it to be in a form acceptable for examination. Mutagwaba SUPERVISOR Date: ……………………………………. iii COPYRIGHT © All rights reserved. No part of this thesis/dissertation may be reproduced, stored in any retrieval system, or transmitted in any form by any means, electronic, mechanical, photocopying, recording or otherwise without prior written permission of the author or the Open University of Tanzania in that behalf.

iv DECLARATION I, Mtebene Haroun, declare that this proposal is my original work and it has not been submitted for a similar degree in any other institution or university. Where the work of other authors has been used, relevant quotations have been made. Date: …………………………………………………… v DEDICATION I dedicate this work to my late Father who during his life time encouraged me to work harder till I will be honored a higher degree level. vi TABLE OF CONTENTS CERTIFICATION.

v TABLE OF CONTENTS.vi LIST OF TABLES. xii CHAPTER ONE.1 Statement of the Problem.4 Significance of the Study.0 Definition of key Terms.1 Meaning of Entrepreneurship.1 Meaning of Intrapreneurship. Theoretical basis of the Research. Entrepreneurship in Tanzania.

Small Business Enterprises. Role of Small Business Firms in Society.4 Issues and Barriers for Realizing Entrepreneurial Potentials.5 Strategies for Pro-Poor Business Development.2 Survey Population/unit of Inquiry.1 Primary Data Collection.4 Secondary Data Collection.5 Data Presentation Technique. DATA ANALYSIS, PRESENTATION AND DISCUSSION. Factors Inhibiting Entrepreneurship Performance.

Assessment of Entrepreneurship and SMEs Policy in Tanzania.46 ix LIST OF TABLES Table 1: Respondents Age and Entrepreneurship Experience.23 Table 2: Correlation: Respondents Age and Entrepreneurship Experience.24 Table 3: Respondents Gender and Type of SMEs Owned.25 Table 4: Policy Strategies: Licensing Procedures, Tax System and Copyright Law.27 Table 5: Policy Strategies: Premises for SMEs, Allocating Buildings and Public Education.28 Table 6: Policy Strategies: Education, Information Centers and ICT Training.29 Table 7: Policy Strategies: SMEs Census, Networking and Joint Ventures Facilitation. Policy Strategies: Small-Large Business Linkages, Marketing Agencies and Facilitation30 Table 9: Policy Strategies: Exhibition Centers, Meeting Standards and Trade Issues.30 Table 10: Policy Strategies: Financial Institutions, Products and Access for SMEs.31 Table 11: Policy Strategies: Financing, Associations and Service Providers.32 Table 12: Policy Strategies: Policy Monitory, Environmental and Waste Management Issues.32 Table 13: Policy Strategies: Addressing Woman and Disadvantaged Groups Issues.33 Table 14: SMEs Policy Inhibits Entrepreneurial Performance.34 Table 15: SMEs Policy Facilitates Entrepreneurial Performance.34 x LIST OF APPENDICES Appendix 1: Respondents Gender and Educational Level.37 Appendix 2: Respondents Gender and Type of SMEs Owned.38 Appendix 3: SMEs Policy Inhibits Entrepreneurial Performance.39 Appendix 4: Cross Tabulation: Type of SMEs owned and Views that SMEs Policy Inhibits Entrepreneurial Performance. 40 Appendix 5: SMEs Policy Facilitates Entrepreneurial Performance.41 Appendix 6: Cross Tabulation: Type of SMEs owned and Views that SMEs Policy Facilitates Entrepreneurial Performance. 42 xi ABSTRACT Entrepreneurship has been seen as a hub in generating income for the majority of urban dwellers with no formal paid employment.

The full potential of the SME sector has yet to be tapped due to the existence of a number of constraints hampering the development of the sector. It is for this reason that SME Development Policy was formulated so as to address the constraints and to tap the full potential of the sector. This policy will serve as guidelines to all stakeholders and thus stimulate new enterprises to be established and existing ones to grow and become more competitive. In view of the importance of entrepreneurship this study is trying to investigate the influence of Government policies in entrepreneurship performance in Tanzania cited Kinondoni Municipality.

The methodology used was case study. The population of the study was exhibited on different characteristics based on age, gender, educational level, and psychological indices. Total of 30 respondents were drawn from different entrepreneurs who deal with small businesses. The stratified sampling technique was employed in selecting respondents.

The population was stratified according to gender and type of business owned, data was analyzed through SPSS. Based on study findings factors which inhibit entrepreneurial performance are marketing, capital and premises problems. These needed to be re-addressed in government policy and improved in order to facilitate entrepreneurial performance. For the case of Government policies, both ways the policy has been viewed by respondents as both facilitating and inhibiting entrepreneurial performance.

Recommendations that are advanced by the researcher are workable policy on ensuring a sustainable and reliable market is to be put in place; direct market and marketing instruments need to be addressed in the policy so that the strategies implementation can have direct effects on the specific problems at hand. Efforts to address the problems of financing needs, education and training, capital needs, simplification of business working environment and registration processes to be addressed clearly and more realistically in the policy statement and strategies as the current policy xii did not seem to be completely effective. ACKNOWLEDGEMENTS My first acknowledgements goes to Dr. Mutagwaba for his kindness to accept my proposal and to take part as my supervisor after the sudden death of my former supervisor Dr.

Katunzi may almighty God rest his soul in peace. My second acknowledgement again goes to Dr. Mutagwaba for spending his valuable time as my supervisor in advising me tirelessly from the development of the proposal up to this stage and his relentless efforts made this work to conform to the standards required by the Open University of Tanzania. Thirdly, I would like to express my gratitude to both all entrepreneurs working at Mwenge, Ubungo bus Terminal and Tegeta market place for their immeasurable support granted during the whole period of data collection.

I assertively say that without their support this dissertation would never have been a success. Lastly, I would like to express my gratitude, in a very special way, to my family which during my absence suffered in one way or another but prayed for my success. 1 CHAPTER ONE INTRODUCTION This chapter describes the background information, statement of the problem, research objectives, research questions and significance of the study in which the research is based on.0 Background Information Historical perspectives of the state of entrepreneurship in Tanzania have thoroughly been presented by Rutashobya (1998). The general view is that for many years since independence, African public policies (including Tanzania) were not conducive to entrepreneurship development.

This lack of good policies has generally been in the low levels of entrepreneurship, which has further resulted in Africans underdevelopment (Rutashobya, 1998). Most Tanzanians make their living on subsistence agriculture and small medium enterprise (SMEs) activities. It is estimated that SMEs contribute 35% to GDP and 20% of the total labour force (Wangwe, 1999). Small Medium Enterprise Entrepreneurs in Tanzania are considered to be potential in creating jobs and contributing towards the economic growth.

The SME sector contains businesspersons from different entrepreneurial background and skills. In recognition of the SME and small business the government formulated small and medium enterprise Development policy in 2003 to support the development of this sector. Also the government emphasized the importance of informal sector as part of SMEs in achieving the war against poverty (Kato, 1996). It is a recognized fact that the natural habitat of entrepreneurship is in the small businesses.

Therefore entrepreneurship has a lot to do with development of small business. As is the case with entrepreneurship, small enterprises can not be defined with unanimity. The SME sector is an area where the poor may not only make out a living, but also get most of their 2 goods and services at prices they can afford. Over 90 per cent of operators get credit, training, information, water and sanitation from the sector.

In Dar es Salaam, the capital city of Tanzania, over 90 per cent of poor communities get water and sanitation services from the SME sector (URT, 1995). So any positive or negative developments in the sector will have a direct corresponding effect on the livelihoods of the community. Different researchers tried to focus on problems facing entrepreneurship development in Tanzania. Mfaume; Wilhelm Leonard (2004) focus on Small business entrepreneurship in Dar es salaam – Tanzania exploring problems and prospects for future development.

They focused on crime and entrepreneurship in Tanzania urban areas, tried to unfold various issues that cluster and affect the development of small business entrepreneurship in Tanzania. Kuzilwa (2005), point out the role of credits for small business success. It clearly examines the role of credit in generating entrepreneurial activities. Olomi (2006) on his policy dialogue seminar paper points the opportunities and challenges for Rural SME’s development in Tanzania.

From above studies it clearly shown that still there is a need to research more on SME’s police on entrepreneurship development in Tanzania because many researchers concentrate on the challenges of entrepreneurship performance but they have not focus on the possible solution especially on the SME police, is it worth to entrepreneurs?, does the existing policies enhance entrepreneurship performance as the business environment is uncontrollable. In this study the researcher makes an attempt to conduct an investigation of the influence of Government policies on entrepreneurship performance cited Kinondoni Municipal. This study was therefore concentrated on different small businesses that are conducted in Dar es salaam Kinondoni municipality due to time and fund constrains. Inference was drawn from the results.

Businesses, which were studied range from small shops, agro-processing, saloons, cafeteria, guesthouses, stationary services and bars. The study helped to stimulated economic growth since 3 there is no way the country will develop without passing through small business or informal sector. Also the study contributed in understanding different methods of acquiring entrepreneurial skills in Tanzania. The purpose of this paper therefore is to present some empirical evidence of investigation of the influence of Government policies on entrepreneurship performance especially on small business based on the findings of the case study unity of enquiry conducted at Kinondoni Municipal.

The study is divided in five main parts. This introduction is the first chapter. The second one is literature review recently from 2008 to date. The intention here is to try to give some insights briefly on what the literature says on challenges and success so far and the views of other researchers on entrepreneurship development.

The third chapter is the context methodology that underpinned the main study. The fourth chapter presents various empirical evidences and discusses data analysis, presentation and discussions on examining the inhibiting factors for low level of entrepreneurship performance and whether the existing government policies enhance entrepreneurship in Tanzania as cited Kinondoni municipality. Chapter five which is last focus on conclusions and Policy recommendations based on related research objectives. The study was therefore intended to investigate the influence of Government policies on entrepreneurship performance in Tanzania cited Kinondoni Municipal.1 Statement of the Problem.

The research on the determinants of the entrepreneurship success is extensive. However the results are far from being conclusive. This is partially due to the lack of theoretical grounding as well as differences in the unit of analyses, growth indicators and research time frame. Consequently, Davidsson and Wiklund (1999) correctly point out that the knowledge about what facilitates and hinders entrepreneurship is still scattered and limited despite an extensive research.

In addition, a large number of empirical studies have not given a very high yield of generalizable knowledge, 4 Davidsson et al, (2006). Although the environmental factors play an important role in the small business growth and development, other factors should not be neglected either. Surely, a significant potential for SME growth is located internally within the firm. Previous studies have explored the characteristics of the entrepreneur as important factors influencing the growth of the firm.

Human capital and intentions for growth are among most frequently mentioned entrepreneur related factors, influencing firm growth.