Friday, December 5, 2008


NAME : Salome E. Tondi
ADDRESS : P.O. Box 1914 Moshi
MOBILE PHONE : 0754 396 517
RELIGION : Lutheran
LANGUAGE : Swahili & English
SEX : Female
DATE AND PLACE OF BIRTH: 2,February,1977, Arusha, Tanzania.
Email address :
1991 - 1994 : O’level studies at Ashira Secondary School
1995 - 1997 : ‘A’ Level studies at Ngarenaro High School.
1999 - 2002 : Advanced Diploma in Community Development. at
Community Development Training Institute
September 2005 – July 2006 Post graduate Diploma in Community Development
 Business Management skills workshop. Lushoto District, 2000.
 Seminar on National Election, Kilimanjaro, 2000.
 Research Proposal and Project write up – short course, 2000.
 Participated in Gender Development Seminars,.2003
 Computer course in word, excel ,access and internet programs,2003
 Participated in Leadership training. June 2003.
 Log frame ,opportunity and obstacle on development (O&OD)
 Good governance Training,2005,2007
 Tondi. S.E. 2000 Effectiveness of Training Programmes at Global Education Partnership, Lushoto District.
 Tondi.S.E. 2003;The position of women in Tanzania society
 Tondi,S.E. June ,2005,Factors influencing low women participation in community based institutions.The case of Rural finance service programme supported microfinance institutions,Mwanga district
• Excellent Communication skills
• Excellent Community Development Principles
• Excellent Interpersonal skills
• Pure animation skills
• Familiar with Integrated Planning skills, Project Planning and Management, Environmental Conservation, Principles of Management and Gender issues.
APRIL – MAY 2002 - Research assistant, Global Education
Partnership in Lushoto District.
AUGUST,2002 –JULY,2004: Gender Officer, Himo Environmental Management Trust Fund in Moshi Rural District.

AUGUST,2004 –JULY,2008:Community Development Officer,in Mwanga District council
AUGUST,2008 TO DATE Community Development Officer in Kinondoni Municipal Council
• To assess gender situation in the village
• To Assist and advise the management in all matters in which gender issues involved
• Train the other staff in using skills and tools for gender sensitive policy
• Design and implement training in gender and development for fairness and other group.
• To create awareness to the community about cross cutting issues such as HIV/AIDS, environmental issues
• Stimulate and support co operation of women
• To design and implement a system allowing to monitor and evaluate whether gender issues are respected in various activities
• Disseminate energy efficient technology on improved stoves to grass root communities
• Conduct Community needs analysis
• Mobilize Community to take initiatives to alleviate poverty and participate in various development activities.
• To advise District executive director in all matters concerning the community development

1. Michael M. Seipunjo (District Executive Director)
P. O. Box 176
Mobile phone: 0754-362663

2. Prof. L. Donge (Senior lecture)
P.O. Box 474
Mobile phone: 0744-170180

3. Edson S Karani (Project Co ordinator)
Himo Environmental Management Trust Fund
P.O. BOX 131
Mobile phone: 0744-695191


1.0 Introduction
The purpose of this paper is to review critically the NGO Act of 2002 and show weather it has adequate provisions for expressing financial matters for NGOs in Tanzania.
In this paper we have to understand what is an NGO and financial matters for the purpose of giving clear clarifications for expressing financial matters for the NGO Act .
In this paper also recommendations and conlusion will be provided after reviewing the NGO Act.

1.1 Definitions
1.1.1An NGO
An NGO is a voluntary grouping of individuals or organizations which is autonomous and not for profit sharing; organized locally at the grassroots level, nationally or internationally for the purpose of enhancing the legitimate economic, social and cultural development or lobbying or advocating on issues of public interest or interest of group of individuals or organization. (NGO policy ,2001)
1.1.2 Financial matters
Financial matters are all matters concerning with money within an organization.

2.0 Review of NGO Act 2002 on financial matters
2.1 Observations
In part II section 8 (1)- (2);it describe the source of fund of the board but ; the act does not explain how the fund acquired will be spent and modality of expenditure including approval mechanism. it has only mention what the funds of the board shall consist of and how the board may invest and deposit with a bank any money not immediately required for the use by the board.
Also in part II section 9 (1)- (4) explain on the annual estimates; but it does not mentioned the long term forecasting revenue and expenditure for both coordinating board and NGOs which is very crucial. This is a business plan for 3-5 years.
In part II section 10 (1)&(2) explain how the board shall keep proper books of accounts and submit to the controller and auditor general account of the board with a statement of financial activities and income expenditure during that financial year, with a statement of assets and liabilities of the board. Therefore this section does not show who will be responsible and accountable for the reports presented by Controller and Auditor general; also the section does not show the role of internal auditor that is very important for daily internal control and will help to prepare a financial statement that will show a true and fair financial position of the NGO.
In part 29 (a) &(b) explain how financial and the activities reports
for each NGO shall for every calendar year.
The section does not specify who is responsible to audit accounts of the NGOs before submitting the reports to the council, the board and other stakeholders. Also the section does not show if those reports will be monthly, quarterly; which is a good way of writing those reports.

2.2 Recommendations and conclusion
-All those sections reviewed should be amended and include the missing details on financial matters I have mentioned in each section so as to attain objectives of the NGOs.
-Financial matters in the NGO Act 2002 should compile with other financial regulations; this means finance act, financial memorandums.etc


The purpose of this paper is to discuss the linkage between SACCOS and AMCOS and show relevance of each of them to the poor communities in Tanzania. Also to give examples for well known SACCOS and AMCOS.
This paper will define what are Cooperative and its principles under International Cooperative Alliance. Then SACCOS and AMCOS will be defined.
Also the discussion on the linkages of SACCOS and AMCOS will show how poor communities can pool their resources in terms of capital and form their own micro finance and agricultural marketing to compete with capitalists and creating wealth and marketing services to their members.
From the discussion the conclusion and recommendations will be drawn.
1.1 Definitions
1.1.1What is cooperative.
A cooperative is an association of persons who have voluntarily joined together for the purpose of achieving a common need through the formation of a democratically controlled organization and who make equitable contributions to the capital required for the formation of such an organization, and who accept the risks and benefits of understanding in which they already participate. (Cooperative Development Policy, 2002).
Cooperative may be classed into two main categories, according to their economic function:
Cooperative with inward functions which act on behalf of their members, obtaining for them goods or services which they need for their personal or professional requirements: consumer cooperatives buying together, credit cooperatives for people needing money, housing cooperatives for those wanting accommodation, etc.
Cooperatives with outward functions, which act in obtaining outlet for the activities of their member’s workers productive cooperatives, agricultural marketing cooperatives, doctors’ cooperatives, actor’s cooperatives.
A cooperative must have the following characteristics:
a) It must be an organization of the people.
b) It should be independent from any other forces.
c) It should be based on equality
d) There must be an economic objective behind that cooperation
e) The economic objectives must be for members
f) The members of cooperative are the owners, investors, users of the products and workers .

1.1.2What is a SACCOS?
Savings and credit Cooperative Society (SACCOS) defined as a credit society solely dedicated to the promotion of thrift among its members and the creation of a source of credit for them at competitive rates of interest through financial intermediation. (Saving and credit cooperative society regulation, 2004)
Also SACCOS can be defined as a financial organization owned and operated on a not for profit basis by its members.

1.1.3 What is AMCOS
Agricultural Marketing Cooperative Society (AMCOS) refers to cooperatives whose principal object is the business of supplying inputs for agricultural crop production the purchasing, processing, marketing and distribution of agricultural products. They are essentially based in rural areas.(Cooperative Society Act No 20, 2003)
Then; marketing cooperative can be defined as an organization of small producers who join efforts to have a central marketing post which also solve other purpose such as procuring inputs, joint bargaining, facilitating credit, transportation, warehousing and providing education/ skills for the improvement of the commodity which they produce. The organization can eliminate middlemen (merchants) who buy cheaply from individual producers and sell dearly to the market, thus generating profits, which could go either to the producer or the final buyers. (Prof. A.B.C Ofunguo)

2.0 How SACCOS And AMCOS Looks Like?
Both being cooperative entry:
The provisions of the regulation state that:
-Credit societies shall be able to receive funds from their members, in the form of shares, savings and deposits. A credit society may also receive donations and loans.
-A credit society shall maintain deposits in a bank or financial institution supervised by the bank of Tanzania, or in securities issued by the Government or by the bank of Tanzania, for the amount of not less than 20% of its total savings and deposits.
-A credit society shall, at all times, maintain a minimal capital of Tsh. 5,000,000 and at least twenty members with full paid shares, in order to qualify for registration.
-Common bonds based on residential, associational and occupational.
- Start with a minimum of fifty members and above
-Is essential to provide marketing for agricultural produce to members.

3.0 SACCOS And AMCOS Linkages
i) The linkage between SACCOS and AMCOS was established in the 19th century when credit unions were formed in order to provide working capital to their poor farming members. These members were also members of AMCOS, which were marketing their produces.
ii) SACCOS and AMCOS as cooperative organizations are peoples organizations formed due to the need of the peoples themselves. Members are decision makers and this is being
done during the member’s general meeting. The two organizations promote the majority of the poor people and disadvantage rural community.
iii) SACCOS and AMCOS operate under the same legal framework which is Cooperative Society Act No 20 of 2003, the Cooperative Societies Rules, 2004 and Cooperative Development Policy, 2002.
iv) SACCOS and AMCOS are geared to meet the needs of the members economically and they share profit equally according to the number of shares.
v) SACCOS and AMCOS must be created and observe International Cooperative Alliance’s Statement on the Cooperative identity which states that a cooperative is an autonomous association of persons united voluntarily to meet their common economic, social and cultural needs and aspirations through a jointly owned and democratically controlled business.
vi) SACCOS and AMCOS play a key role per cooperative principles

4.0 Relevance Of AMCOS And SACCOS To The Poor Communities In Tanzania.
Agricultural marketing cooperatives play a significant role in Tanzania to the poor communities. With the majority of the poor living and working in the agricultural sector, these type of cooperatives offer an appropriate channel by which the incomes of poor farmers can be increased or stabilized. Such cooperatives provide farmers with the agricultural supplies they need, mechanisms for the sale of their produce and other essential services such as marketing, credit, insurance and transportation. Through mutual insurance and farm credit, members of cooperatives are better able to cope with failures and other emergencies.
By organizing themselves as cooperatives, small farmers can reap economies of scale through better access to inputs, sharing of common equipment and better access to markets.
The increased efficiency that agricultural cooperative achieve often place them in a better position to compete with larger business than an individual farmer operating in isolation. This is particular relevant in those sectors where farmers have to maintain their competitiveness in the face of increasing globalizations.
Through AMCOS the rural poor are able to mobilize for collective action and achieve better bargaining power as buyers and sellers in the market place.
Through SACCOS it’s where the promotion of thrift among its members and creation of a source of credit for its members at controlled rate of interest exclusively for provident or productive purposes.
Also thrift, developing the habit of putting some money aside as savings for use in the future.
SACCOS can also help in productive, income generating investments such as farming, craft institution, purchasing of milling machine etc.; which will help the members for acceptable social requirements like fees, medication.
5.Challenges For SACCOS And AMCOS
But most of the SACCOS and AMCOS that were formed facing a lot of challenges which make them not able to attain their objectives; hence those cooperatives will not be able to fight against poverty.
For SACCOS there are lack of internal auditing functions that led SACCOS to vulnerable fraud and poor internal control, Lack of skilled manpower to run the SACCOS according to their principles, also most of the SACCOS are unable to access loans from financial institutions because the interest rate is high.
For AMCOS ; many industrial enterprises based on the farming have been taken over by the large capitalist business which grip them like a vice. These businesses introduce new techniques and offer a much more dangerous form of competition to cooperatives than the old dispersed processing plants, which they have observed or eliminated.
The large modernized cooperatives must therefore adopt strategies, which are not very cooperative in spirit, in order to survive. Sometimes these strategies are contrary to the immediate interest of their members. They raise much of their capital internally, which means they cannot pay very high prices for the produce they market
6.0 Examples Of A Well Known AMCOS And SACCOS
i) Legho Mullo agricultural marketing cooperative society.

Legho is located in Kilema South Ward that has a population of 8,045 male and 8,268 females. Legho Mullo is located in a village that is estimated to have a population of 3,000 people. About 30% of the land in this village is owned by women few of them being widows and some of them inherited pieces of land. This is an exceptional case in such an area where men traditionally own land. This is a divergence from the traditional practice and thus it has an impact on the membership of the AMCOS.
Amount of coffee sold at Legho AMCOS in 1998/1999 in Tshs
344 87 23 Amount of coffee in Kgs were sold by 600 per Kg.

ii) MAMSERA Agricultural Marketing Cooperative Society.

The Society is located in Mamsera ward in Rombo district that has a total population of
246,479. Males are 116,856 and females 129,620. Mamsera ward has a population of
4,688 males and 4,956 females according to the 2002 population census.
The Society serves three villages that include Mamsera Juu, Mamsera Kati, Mamsera
Chini and the neighborhood Population of the three villages according to the 2003
census is as follows: Mamsera Kati 2345 people and 469 households, Mamsera Juu 2045
people and 409 households and Mamsera Chini 4690 people and 938 households.
The society deals mainly with coffee marketing. It assists the members in selling coffee directly to the Coffee Auction at Moshi that is coordinated by Tanzania coffee Board. Apart from coffee marketing the society has subsidiary activities that include operating a hardware shop and a brick making business.

iii) Msangeni SACCOS is a good example also; it is located in Mwanga district with 197 members with share worth Tshs. 1.7 million

6.0 Conclusion
Therefore SACCOS and AMCOS formed should adhere cooperative principles, rules and values for sustainability of those cooperatives which contribute directly to the alleviation of poverty through the economic and social progress of their members and employees and enhancing social fabric of the communities in which they operate.


Micro Finance Regulation And Supervision Resource Center (2004), SACCOS Regulations, Dar es Salaam.

The United Republic Of Tanzania (2003), Cooperative Society Act No 20. , Government Printers, Dar es Salaam

The United Republic Of Tanzania (2003), Cooperative Development Policy 2002,Government Printers, Dar Es Salaam.

Friday, November 14, 2008

Micro Enterprise

1.0 Introduction
This paper will have two sections. Section one defines the practical meaning of micro enterprise development for Tanzania. It will also try to define micro enterprise from other countries and see why those definitions might differ from Tanzania definition. And section two will discuss on how the emergence of micro finance institutions in Tanzania has promoted development of vibrant economic business all over the country. With relevant examples assess the role played by these institutions in creating entrepreneurial morale to small businesses in Tanzania.
In this paper also key words will be defined. And conclusion will be drawn according to the discussion.

Micro enterprise all over the world and in Tanzania in particular, can be easily established since their requirements in terms of capital; technology, management and even utilities are not as demanding as it is the case for large enterprises. These enterprises can also be established in rural settings and thus add value to the agro products and at the same time facilitate the dispersal of enterprises. Indeed Micro enterprise development is closely associated with more equitable distribution of income and thus important as regards poverty alleviation. At the same time, Micro enterprises serve as a training ground for emerging entrepreneurs.
In Tanzania, the full potential of the Micro enterprise sector has yet to be tapped due to the existence of a number of constraints hampering the development of the sector.
They include: unfavourable legal and regulatory framework, undeveloped infrastructure, poor business development services, limited access of Micro enterprises to finance, ineffective and poorly coordinated institutional support framework.

2.0 Microenterprises Development In Tanzania
Micro enterprises all over in the world are known to play a major role in social economy development. This is apparently the case of Tanzania, where Micro enterprises contribute
Significantly to employment creation, income generation and stimulation of growth in both urban and rural areas. Micro enterprises in many countries are supported by microfinance services. Many micro enterprises grow in Tanzania when supported by microfinance.

3.0 what is Micro enterprise ?
The small medium enterprises cover non farm economic activities mainly manufacturing, mining, commerce and services. There is no universally accepted definition of Micro enterprise.
In the context of Tanzania, Micro enterprise is a specific form of small enterprise . it involves businesses with informal characteristics,eg.small services business, Bakeries, metal woring bussiness ,small furnituremakers repair and maintenance business, small textile business, photography processing businesses, copying businesses, small scale food production bussinesses
Micro enterprises are those engaging up to 4 people, in most cases family members or employing capital amounting up to Tshs.5.0 million. The majority of micro enterprises fall under the informal sector. Small enterprises are mostly formalised undertakings engaging between 5 and 49 employees or with capital investment from Tshs.5 million to Tshs.200 million. Medium enterprises employ between 50 and 99 people or use capital investment from Tshs.200 million to Tshs.800 million.
In the United State a micro enterprise is defined as a business with five or fewer employees that can utilize initial capital of $35,000 or less. Micro enterprises can be any type of business, including repair or cleaning services, computer technology, specialty foods, jewelry, arts and crafts, gifts, clothing and textiles, childcare, and environmental products and services. They can create employment for the owner and often other family

members and in some cases, may grow into larger businesses that employ members of the community.
Different countries use various measures of size depending on their level of development. The commonly used yardsticks are total number of employees, total investment and sales turnover.

4.0 Key Features Of Micro enterprise
4.1 Enterprise Distribution By Size.
A relatively small large firm segment and a very large small firm segment characterize the Tanzanian economy. The large firm segment is made up mainly of subsidiaries or franchisees of multinational companies and a few formerly state-owned companies. These are typically capital –intensive and strongly linked to the developed world in terms of inputs, markets, expertise and technology. The small firm segment on the other hand, is dominated by a very large number of very small enterprises, with varying degrees of formalization, low level of sophistication, reliance on local inputs, expertise, technology and markets. In between the two segments is an almost insignificant medium sized segment.
The large businesses are also too few to support the increasing technological and institutional demand of the small and medium enterprises (ESRF 1997: 25). This point to a dire need to fill the missing middle a link between the small and medium enterprises and large enterprise segments.

4.2 Distribution Of Small Firms By Sub- Sector And Geographical Area.
Due to lack of reliable data, actual distribution of small enterprises by sector is not known. It is however known that Micro and small enterprises tend to concentrate in certain trades, often with the effect of self destructive competition. According to ILO (1991), about half of the Micro and small enterprises workforce was engaged in the trade/restaurant/hotel industry. Manufacturing employed about 22 pre cent, where as urban agriculture and fishing employed about 10 percent. About 15 per cent of the total workforce was engaged in the brewing and sale of local beer alone.

Women are over represented in some sectors and under- represented in others. Most women entrepreneurs engage in trading, food processing, textile and clothing, and provide services for businesses (Rutashobya, 1995). They tend to undertake activities that are in harmony with their traditional roles. This also happen to the list profitable. There are also some types of businesses that are common to both men and women.

5.0 Importance of Micro enterprises
It is estimated that about a third of the GDP originates from the small and medium enterprises sector. According to the Informal Sector Survey of 1991, micro enterprises operating in the informal sector alone consisted of more than 1.7 million businesses engaging about 3 million persons, that was, about 20% of the Tanzanian labour force. Though data on the Micro enterprise sector are rather sketchy and unreliable, it is reflected already in the above data that Micro enterprise sector plays a crucial role in the economy.
Since Micro enterprise tend to be labour-intensive, they create employment at relatively low levels of investment per job created. At present, unemployment is a significant problem that Tanzania has to deal with. Estimates show that there are about 700,000 new entrants into the labour force every year. About 500,000 of these are school leavers with few marketable skills. The public sector employs only about 40,000 of the new entrants into the labour market, leaving about 660,000 to join the unemployed or the underemployed reserve. Most of these persons end up in the Micro enterprises sector, and especially in the informal sector. Given that situation and the fact that Tanzania is characterised by low rate of capital formation, Micro enterprises are the best option to address this problem.
Micro enterprise tend to be more effective in the utilisation of local resources using simple and affordable technology. Micro enterprises play a fundamental role in utilising and adding value to local resources. In addition, development of Micro and

Small enterprises facilitates distribution of economic activities within the economy and thus fosters equitable income distribution. Furthermore, Micro enterprise technologies are easier to acquire, transfer and adopt.
Also, Micro enterprises are better positioned to satisfy limited demands brought about by small and localised markets due to their lower overheads and fixed costs. Moreover, small and medium enterprises owners tend to show greater resilience in the face of recessions by holding on to their businesses, as they are prepared to temporarily accept lower compensation.
Through business linkages, partnerships and subcontracting relationships, Micro and small enterprises have great potential to complement large industries requirements. A strong and productive industrial structure can only be achieved where small and medium enterprises and large enterprises not only coexist but also function in a symbiotic relationship.
Small and medium enterprises serve as a training ground for entrepreneurship and managerial development and enable motivated individuals to find new avenues for investment and expanding their operations.
There are also opportunities indicating a bright future for Micro enterprise sector development in Tanzania. This includes the various on-going reforms that are oriented towards private sector development and, thus, lay the ground for Micro enterprise development. In addition, the recognition of Micro enterprises sector that it has higher potential for employment generation per capital invested attracts key actors to support Micro enterprise development programmes.
Since small and medium enterprises development does contribute significantly to poverty alleviation, resources earmarked for poverty alleviation will also be availed to the Micro enterprise sector.
Therefore different countries use various measures of size depending on their level of development to define micro enterprise. The commonly used yardsticks are total number of employees, total investment and sales turnover.

6.0 Factors Contribute In The Success Of Micro Enterprises
The following are the factors which contribute in the success of micro enterprises
Firstly, is the existence of a business opportunity; the primary factor in the success of any micro and small scale enterprise is the existence of a real business opportunity. There must be some customers in the market place who, want to buy the goods or service that is being offered.
Secondly, is the adequate capital and credit. Capital refers to the amount of money the owners have to invest in the business; the greater the capital, the better chances of survival. If the owners put only a small amount of capital into the business, it is likely that this capital will be quickly exhausted and either further investment or the borrowing of funds will be necessary. Successful businesses forecast their annual needs and ensure themselves that the capital is sufficient.
Thirdly are the modern business methods. The company must use the most efficient equipment and procedure available. Otherwise the cost of doing business will rise and the completion will be able to charge lower price or obtain a high profit margin.
Last factor which help for the success of micro enterprises is the management ability the owner must know how to handle money, machinery, manpower and materials specifically; the individual must be capable of getting things done through others. Also a manager should know about business line, or at least a closely relate line. Otherwise, the individual is going to be at a loss regarding how to conduct operations.

7.0 Conclusion
But all in all Micro enterprise is an effective human and economic development strategy. Involvement in micro enterprise can help low-income individuals achieve self-sufficiency and move out of poverty.
Awareness of the opportunities micro enterprise presents is important for health and human serviceorganizations, as they are on the front lines of helping these individuals understand their economic options. Micro enterprise should be considered a viable option for the individuals served by health and human service organizations

Question No .2

1.0 Introduction

Microfinance has expanded enormously in the 1990s. In fact, most policy makers, donors, scientists and practitioners around the world emphasize the role of microfinance as a powerful tool for poverty alleviation. In addition, microfinance promotes effective institutional development at the lower end - the “frontier” - of the financial sector in developing countries. The leading role of microfinance in development policy and practice is reflected by the high volume of funding being attracted. However, microfinance practice and discussion almost entirely focus on credit delivery, although almost everywhere poor households save in various forms and for different purposes. Little progress has been made in building up microfinance institutions (MFIs) as full-fledged financial intermediaries.
Microfinance has been a growing sector for community development and has been as an important tool for the poor to access the financial services for their socioeconomic development

2.0 What is Microfinance?
Microfinance, according to Otero (1999, p.8) is the provision of financial services to low-income poor and very poor self-employed people.
These financial services according to Lidgerwood (1999) generally include savings and credit but can also include other financial services such as insurance and payment services.

Also Schreiner and Colombet (2001, p.339) define microfinance as the attempt to improve access to small deposits and small loans for poor households neglected by banks.
Therefore, microfinance involves the provision of financial services such as savings, loans and insurance to poor people living in both urban and rural settings who are unable to obtain such services from the formal financial sector.

The microfinance movement started with microcredit, focusing on loans only but the shift to microfinance has emphasised a broader concept that includes savings, provision of insurance and sometimes even distribution and marketing of clients’ output. Other financial services such as remittance transfers are also starting to make their way to microfinance (Meyer and Nagarajan, 2006 p.167).
Microfinance institutions vary in size, geographical location, institutional shape and may use different lending mechanisms.

3.0 Providers of microfinance services
T he institutions that provide microfinance services are the real driving force behind the achievement of the ultimate goal of serving the low income segment of the society, and thereby contribute to economic growth and reduction of poverty. Those microfinance institutions are banks and non bank financial institutions, SACCOS, NGOs and donor community.

4.0 The main products offered by microfinance institutions:
This includes the following:
4.1 Financial Products
i. Savings services
ii. Loan services
iii. Micro insurance services
iv. Money transfer services
4.2 Non Financial Services
i. Group Formation
ii. Information sharing
iii. Training
iv. Microfinance against poverty

5.0 Role played by microfinance institution in creating entrepreneurial morale to small business in Tanzania.

The Government of Tanzania has also been concerned with provision of micro-credit financing to micro-enterprises. Recognizing the growing importance of micro-enterprises in Tanzania’s economy, the Government of Tanzania has taken keen in establishing micro finance institutions to cater for credit to micro and small enterprises. In 1981, the National Bank of Commerce (NBC) established a small-scale enterprise department to deal with financial needs of this sector.
Moreover, in order revive and improve the situation, Tanzania has been forced to adopt a variety of Structural Adjustment Programs (SAPs) in different sectors of the economy namely, National Economic Survival Programs ( NESP ), Economic Recovery Program (ERPI) and Economic Recovery Program II (ERP II ) (Lugalla, 1995) based on neo classical theory.
Together with SAPs, in 1990s the government of Tanzania had to promote informal sector as a strategy for poverty alleviation among its people. Earlier efforts to promote small –scale industries are reflected in the establishment of small-scale industries Development Organization (SIDO) in 1973 through an Act No. 28 as a parastatal organization. Among the objectives for the establishment of SIDO were advising prospective entrepreneurs on setting a new small –scale enterprises improving technical processes and using a modern machinery and equipment. Moreover, the contemporary SIDO has been restructured to perform other activities like loan and consultancy services provisioning, among others. Therefore SIDO remains the main Government arm for promoting micro and small enterprises in country.
When microfinance Institution offer financial services of proximity to the entrepreneurs, these create businesses and initiate income generating activities which enable them to free themselves from the vicious circle of poverty. Credit Cooperative Societies (SACCOS) are Microfinance Institutions that are established to provide

Financial services to low income households, small scale farmers and Micro entrepreneurs for both rural and urban areas.
In generally by definition micro finance blends all the activities that consist in offering people who are poor, accessible financial services that are adapted to their needs.
For the majority of Tanzanians, whose income are very low and they have engaged in small and medium enterprises, access to financial services offers the possibility of managing scarce household and enterprise resources more efficiently, protection against risks, provision for the future and taking advantage of investment opportunities, for economic returns. Therefore for small and medium enterprises, it can facilitate per suit of income growth. For example in Tanzania a lot of youth and women have organized themselves in groups and do small businesses because the get loans and sometimes capacity building on entrepreneurships from their SACCOS. (Saving and Credit Cooperative Societies)
Credit services from microfinance institutions can perform some of the same services as savings and allow enterprises and families to make some important investment sooner. Enterprises use credit as a source of short-term working capital and longer term investment capital.
Moreover microfinance addresses the financial needs of micro enterprises and major sectors of the Tanzanian population. They are primarily facilitators rather than creators of underlying economic opportunities that lead to widespread economic prosperity. Microfinance services are financial in nature. They differ materially from social welfare and resource transfer policies, although they can contribute to the reduction of poverty and improvement of income distribution.
Microfinance can be seen as a solution to include on a large-scale previously excluded poorer groups without access to capital into the financial system so that they may “rise out of poverty” by themselves (BancoSol, 2006 p. 7).
Developing countries seem to be characterized by a dual financial system with an informal and a formal financial sector where the lower-income clientele tends to be left out of the latter. The lack of access to the formal financial sector is a result of the lack of the collateral required due to risks involved in lending but also due to high costs involved in small-scale financial services and weak legal enforcement (Ray, 1998).

This clientele is instead served by informal financial intermediaries that have an informational advantage over formal financial intermediaries on these clients. However, the informal financial intermediaries have inadequate savings facilities and limited funds. Also, they seem to attach a much higher cost of lending for the client than the formal financial sector. Microfinance uses the informational advantage of the informal financial sector to increase the availability and to improve financial services for the lower-income level
The World Bank (2005, in Carmen and Jemio, 2006 p. 31) notes that informal enterprises are “less productive because they have less fixed assets, older technology and as they operate outside the law, they cannot obtain favourable credit terms nor take advantage of institutions that facilitate enterprise growth and allow firms to achieve economies of scale”. The possibilities of micro- and small-scale enterprises to take advantage of microfinance, which is a means to improve capital assets, productivity, technology and human capital if spent on education, may be inhibited by the character of the informal sector.

6.0 Critical Constraints Facing Micro Enterprises
Therefore even though the microfinance institutions have contributions in the growth of micro and small enterprises but there are a number of constraints hinder the development of them; these discourage and complicate the entry, survival, growth and development of micro enterprises .Most microfinance institutions operate in urban areas with relatively well- developed infrastructure, thereby denying access to rural micro enterprises and those in backward regions.
Also credit culture is underdeveloped, partly due to the socialist experience, to the extent that some micro enterprises operators take loans as grants; and this is because the owners don’t have well experience in the major activities of the business such as finance, purchase, selling and production.
Lack of understanding and proper implementations of corporate strategy is another constrain. The owners who has someone working in the shop while she or he goes doing other functions, often finds the business falling due to neglect.
Tax policies and regulation. The tax regime is oriented to the large – scale sector. There are now provisions for tax exemptions but only to large businesses. Large businesses pay income taxes on their profits. However small businesses have to pay taxes whether they make profit or lose money, since taxes are set on the basis of type of activity and approximate size rather than income. This may limit capacity to grow.
There are a large number of taxes and levies that applies to various businesses and a certain level of knowledge is required to know which of these apply to which enterprises. This procedure is unduly cumbersome, especially for small businesses. The tax assessment and collection system lacks transparency and predictability, creating opportunities for tax officials to exhort bribes from small business entrepreneurs. It is more difficult for entrepreneurs to deal with situations that require them to bribe officials.
(Finseth, 1998)

7.0 Recommendations
Therefore micro enterprises should be considered as it has big contributions in economy growth of the country. Also a certain level of skills should be provided to those entrepreneurs so as to have more skills on the businesses.
Moreover microfinance institutions should reduce the conditions which are difficulty to the entrepreneurs; so that they can be able to access loans; like interest rates which is very high, collaterals which they don’t have. Etc

1.Armend├íriz de Aghion, Beatriz, Morduch, Jonathan, 2005. “The Economics of Microfinance” MIT Press:Cambridge MA

2.Carmen Choque del, Maria, Carlos Jemio, Luis, 2006. “Towards a More Employment-Intensive and Pro-Poor Economic Growth in Bolivia” Development Research Working Paper Series No. 18/2006 Institute for Advanced Development Studies, La Paz, Bolivia

3.Banco Sol S. A, 2006. “BancoSol: From Microcredit to Microfinance
Meyer, Richard L., Nagarajan, Geetha, 2006. “Microfinance in Developing Countries: Accomplishments, Debates, and Future Directions” Agricultural Finance Review Vol. 66, No. 2, Special Issue, 167-193

4. ESRF. 1996. A study of constrains facing micro enterprises. Unpublished report by the Economic and Social Research Foundation (ESRF), Dar es Salaam, Tanzania

5. Finseth, W, 1998. “A strategic plan to develop Tanzania’s national policy for small business. A consultancy report submitted to the Ministry of Industry and Trade.
6. Hulme, D and Mosley P. 1998. Micro-enterprise Finance: Is There a Conflict Between Growth and Poverty Alleviation? World Development, Vol. 26, No. 50 pp 783-790

7. Ray, Debraj (1998). Development Economics. Princeton University Press: Princeton
8.Rutashobya, L. K and D. R Olomi 1999 . African Enterpreneurship and Small business Development, Dar es Salaam
9. United Republic Of Tanzania (2000), The national Micro finance Policy, Dar es Salaam
10.United Republic Of Tanzania (2002) Small and medium Enterprises Policy,Dar es Salaam
11. http:/

Page No.
Question No 1.
Introduction ……………………………………………………………………………1

Micro enterprises Development In Tanzania…………………………………………2
Key features of Micro enterprises……………………………………………………3-4
Importance of Micro enterprises…………………………………………………….4-5
Factors Contribute In The Success Of Micro Enterprises…………………………6
Question No .2
Introduction …………………………………………………………………………….7
What is Microfinance………………………………………………………………….7-8
Providers of microfinance services……………………………………………………8
Main products offered by Micro finance institutions…………………………………8
Role played by microfinance institution in creating entrepreneurial morale to small business in Tanzania…………………………………………………………………9-11
Critical Constraints Facing Micro Enterprises…………………………………11-12

Southern New Hampshire University
Masters Of Community Economic Development

Name: Salome Tondi
Center: Arusha`
Lecture: S.K.A Upalla/ Rugina, Bellen
Course number and title: ICD 522-Micro enterprise Development
Date: March, 2008
Assignment 1:
1. Define the practical meaning of micro enterprise development for Tanzania. Why do you think the definition for Tanzania might be different from other countries?
2. The emergence of Microfinance instutitutions in Tanzania has promoted development of vibrant economic businesses all over the country. With relevant examples assess the role played by these institutions in creating entrepreneurial morale to small businesses in Tanzania.