Due to the increasingly competitive labour market in Tanzania, attention is shifting to entrepreneurship. But, an entrepreneurship-enabling environment is very important.
Demographic groups have issues specific for themselves in the context of entrepreneurship. One group is that of youths. The group forms the largest, most dynamic, vibrant, innovative and potential segment of Tanzanian youthful nation. Given the importance of youth entrepreneurship, selected issues on the matter are highlighted in this piece.
Lost entrepreneurial era
In order to understand the current entrepreneurship space in Tanzania, it is very important to look at the country’s history. There are two major epochs in the development of entrepreneurship in Tanzania. The first one is the time period between 1967 and the mid-1980s.
This was an epoch that characterises Tanzania’s socialist past. The country embraced state controlled economy.
There was no room for a market economy due to the dominance of Marxist/Leninist-oriented social, political and most importantly economic thinking. Private sector development in general and free enterprises in particular had no room to flourish. One experienced anti-entrepreneurial educational, political, legal, policy and regulatory environment in this epoch. It is an epoch where attempting to create free private enterprise was more or less equivalent to being an enemy of the state. This was arguably the dark age and lost years in the context of entrepreneurial development in Tanzania.
Good entrepreneurial era
The major and far-reaching reforms in the management of Tanzania’s economy saw the light of the day from the mid 1980s onwards. This is the time when the country embraced private sector and market-led economic policies. Among others, this new era marked the beginning of somehow entrepreneurship friendly educational, political, legal, policy and regulatory environment. It is in this era where the corporate chiefs and captains and titans of the industry both small and big, started walking proudly. One looks forward to seeing better and eventually best entrepreneurial years in Tanzania.
Increasingly, youth of all calibre in Tanzania are becoming more and more aware of, as well as interested in entrepreneurship.
The good attitude of becoming job creators rather than job seekers is arguably slowly penetrating in some minds. This has been partly the case due to the rather tight and ever competitive labour market. It has also been caused by various policy and educational interventions.
Finance for youth entrepreneurship
Availability of finance was a big challenge before the mid-1980s. This was due to the rather limited space in the supply side of financial services providers. Banking and non-banking financial institutions were in short supply before the liberalizations of the mid 1980s and 1990s. After the liberalisation of various sectors including the financial one, the challenge of availability of finance was almost kissed goodbye thanks to the multiplicity of financial institutions that established themselves in Tanzania. What has remained a challenge however is access to the generally available funds. Youth in particular face extra hurdles in accessing the available finance as partly outlined below.
Barriers in accessing finance
There is a long litany when it comes to reciting barriers that stand between the available finance on one hand and youth on the other.
These barriers take the form of requirements that most financial institutions put forward for those wanting to access their available funds.
Requirements for accessing funds from a financier include having formal business with business licence and business address; having good, convincing and bankable business plan; having traditional collateral; good business records including sales, sales revenues and profit; indicating reputable referees; ability to pay loan processing fees; paying high interest and, at times, rough treatment for delayed repayment or default.
All these and many other factors are barriers to youth to access finance. They may be understandable from financial institutions business perspectives, but they remain necessary evils that can be solved.
Recognizing the need to support youth in their entrepreneurial ventures is not a contested territory.
Among the most important issues is identifying the game changer that will turn the entrepreneurial potentials in Tanzanian youths into reality. Among such game changing approaches include provision of adequate training, mentoring and access to finance for the country’s bulging population of young men and women. It is in this context that various initiatives to unleash the entrepreneurial potential in youth must be supported by all.