This report of the first nationally representative baseline survey of micro, small, and medium enterprises (MSMEs) in Tanzania includes a discussion of the survey design and development, an exposition of the data collected from owners of both currently operating and recently closed enterprises, an estimate of the contribution of MSMEs to Tanzania’s GDP, and an example of the use of the data for segmentation and more detailed characterization of MSMEs.
- The specific objectives of the survey were to: Establish the size and structure of the small business segment in the Tanzanian economy.
- Estimate the contribution of small businesses to the national economy in terms of income and employment.
- Identify constraints and opportunities of the small business segment.
- Quantify the demand for financial and business development services.
- Profile this demand and segment small businesses in ways practical for the design of appropriate interventions and services.
- Develop new segmentation approaches that allow better understanding of the needs and dynamics of small business.
The data of the MSME survey were collected during interviews with 6,134 small business owners dentified in a three-step sampling process:
In the first step, a sample of 640 representative enumeration areas was selected. A complete listing of all households was carried out to identify households that currently owned and ran small businesses or had recently closed businesses.
- About 9 to 12 households with currently operating businesses (and 2 to 3 households with closed businesses) were then selected in a second step.
- If more than one member in a selected household owned and ran a small business, a Kish Grid was applied to select the interviewee.
Three questionnaires were applied in the MSME survey:
- A simple questionnaire for the household listing.
- A main questionnaire with192 questions on 20 topics, asked of owners of currently operating enterprises.
- A special questionnaire with 21 questions asked of owners of closed enterprises
During the time of the survey in September 2010, about 2,754,697 individuals in Tanzania owned and ran 3,162,886 small businesses. About 54.3% of small business owners were female. Their primary and secondary education was slightly higher than in the general population, while their vocational education was about the same. For about 83% of small business owners, the primary motivation for starting a business was to provide support to their families.
Of the more than 3 million small businesses, about 1,758,896 were in the trade sector; 964,235 were in the services sector; 430,381were in the manufacturing sector; and about 17,364 were in other sectors. About 466,049 small businesses were located in Dar es Salaam; about 935,256 were in other urban centers; and about 1,675,385 were in rural areas. Only about 2.9% of all small
A Business Sophistication Model (BSM) segmentation model was introduced as an analytical tool for segmentation or cluster analysis. Based on the MSME survey data, seven clusters of small business owners were identified and showed different needs and behaviors.
Numerous lessons and recommendations were drawn from the MSME survey. The most important recommendations include:
- This survey did not include agricultural production. As farming is a significant business, future surveys should include agricultural enterprises.
- The household-based research approach used in this survey had certain limitations; an establishment-based survey to better capture the small and medium enterprise segment would be helpful.
- The Government of Tanzania’s policy and strategy for MSMEs should be reviewed in light of the survey’s findings.
- Informal and formal businesses should not be regulated under different ministries, as is currently the case, and the entire small business sector should be under the Ministry of Industry and Trade (MIT).
The National Bureau of Statistics (NBS) should improve the collection and dissemination of statistics on small business.This report of the first nationally representative baseline survey of micro, small, and medium enterprises (MSMEs) in Tanzania includes a discussion of the survey design and development, an exposition of the data collected from owners of both currently operating and recently closed enterprises, an estimate of the contribution of MSMEs to Tanzania’s GDP, and an example of the use of the data for segmentation and more detailed characterization of MSMEs.
- The specific objectives of the survey were to:Establish the size and structure of the small business segment in the Tanzanian economy.
- Estimate the contribution of small businesses to the national economy in terms of income and employment.
- Identify constraints and opportunities of the small business segment.
- Quantify the demand for financial and business development services.
- Profile this demand and segment small businesses in ways practical for the design of appropriate interventions and services.
- Develop new segmentation approaches that allow better understanding of the needs and dynamics of small business.
