SMEs bankable, capable of alleviating poverty, says Nagu

The government has said that small and medium enterprises need support to grow and become part of the country`s economic success stories.

This was said in Dar es Salaam yesterday by Industry, Trade and Marketing minister Dr Mary Nagu when officially inaugurating the second phase of the Business Sector Programme Support (BSPS II).

``If this sector is well supported, organised and managed, chances are that it may play part as an economic drive and ultimately alleviate poverty,`` she said.

The minister commended the Danish government and other development partners for doing everything possible to address SME constraints.

She said small and medium enterprises, which were at one time regarded as not economically viable to attract loans from financial institutions, had proved to be bankable.

The minister said an estimated 85 per cent of Tanzanian micro, small and medium enterprises (MSMEs) did not access any formal sources of credit and that only some six per cent of micro enterprises had loans from microfinance institutions or banks.

``Instead many MSMEs have to rely on much more costly informal sources. This is not good at all and something must be done to address this ugly situation. Worse still, rural areas and commercial farmers are in particular disadvantaged.`` she said.

She said engaging MSMEs in the fight against economic crisis threatening the world economy was crucial in order to win the war.

It is estimated that this informal sub-sector accounts for some 70 per cent of employment and 58 per cent of gross national income while the SME sector provides one third of GDP and employs 20 per cent of the labour force.

The minister said Tanzania was undoubtedly among the least developed countries and was among the sub-Saharan countries whose economies were yet to improve to acceptable levels and were thus an unexceptional case to face the imminent impact of the global crisis.

She challenged Tanzanians to make concerted efforts in improving the national economic growth as well as the well being of the people who are mostly vulnerable to the crisis` effects.

She said that there were some 2.7 million micro, small and medium enterprises in the country, majority being micro enterprises operating informally without registration or licenses.

Earlier on , Small and Medium Enterprise Competitiveness Facility (CSF) board chairman Ibrahim Seushi said the second phase, which started officially in July last year, would last for five years.

``In the next five years, SCF would improve the international competitiveness of food processing and food marketing and exploit new markets,`` he said.

He said the project focused on both regional and global markets by enabling local retailers and food service companies to supply their products in supermarkets, hotels, safari lodges and airlines.

The SMEs Competitive Facility (SCF) was introduced in BSPS II as a pilot intervention and was established as a small project organisation in Dar es Salaam in the form of a contracted international consultancy firm, fully financed by the Danish International Development Agency (DANIDA).

* SOURCE: Guardian