Small and medium scale industries (SMIs) and its contribution to industrialization in Tanzania: prospects and challenges
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Date
2023
Authors
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Journal ISSN
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Publisher
Tanzania Engineering and Manufacturing Design Organization
Abstract
Tanzania has undergone various stages involving industrial sector reforms since its
independence in 1961. Since then, the Government of Tanzania has implemented
various industrial reform programs aiming to build and capacitate the industrial sector
so as to increase industrial outputs, hence strengthening economy of the country. With
regard to Small and Medium Enterprises (SMEs) in general and Small and Medium
Industries (SMIs) in particular, the country has made several efforts to promote the
sub-sector, including establishment of Small Industries Development Organization
(SIDO) in 1973, a parastatal organization specifically mandated to plan, coordinate,
promote and provide capacity development services to SMIs and SMEs. Despite all these
efforts, still the SMIs/SMEs have been facing several challenges that
hinder their growth, and hence making them contribute insignificantly in the national
industrialization agenda.This review note outlines the contribution of small and medium industries and
associated enterprises (SMIs/SMEs) to the national industrialization, and their prospects
and challenges. The contribution of industrial research towards development and
promotion of the SMIs is also reviewed whereby the roles, mandates and contribution
of technical Industry Support Organizations (ISOs) towards promotion of industries in
general and SMIs in particular is also critically reviewed, and evidences of how they
help to promote the SMIs sub-sector are underscored. Alignment of the SMIs/SMEs in
various National Development Priorities and plans is also reviewed and areas whether
the nation need to put more efforts to realize even much larger economic and social
contribution from the sector is also highlighted. Key challenges that face the SMIs/SMEs
have been summarized as lack of enough
capital to acquire better supporting infrastructure and business environment; production
of goods and services that have low market competitiveness locally and internationally;
low industrial, manufacturing and entrepreneurship skills; poor collaboration among the
SMIs and hence not getting the advantage of economies of scale; and majority of the
SMIs and SMEs operating informally and sometimes in poor environment that limit their
compliance to quality standards for local and foreign markets.
Recommendations have been made on how best the nation can align its
industrialization priorities, policies and programmes to better accommodate the
SMIs/SMEs. This would make them contribute even more to the nation economic
growth by creating market to raw materials from agriculture and other economic
sectors, reducing importation of goods and machines that can locally be made and
hence reducing the use of foreign currency, creating more employment opportunities,
and improving the living standard of the people. This in turn will assist the nation to
achieve the SDGs and industrialization agenda aiming to improve livelihood of people
and the nation moving towards higher middle-income economy by 2025.
Description
Industrialization in Tanzania
Keywords
Small and Medium Industries (SMIs), Industry Support Organizations (ISOs), National Industrialization Agenda.