Tanzania has a population of just over 37 million, a GDP of US$22 billion, and GDP per capita of US$610.6 An estimated 51 per cent of the population lives below the poverty line. Eighty per cent of the country’s poor population live in rural areas, depending on subsistence agriculture and unable to participate in broader markets. Poor roads, exorbitantly expensive utilities and prohibitive policies have compounded this problem, significantly impeding the growth of the economy.7 Agriculture, the mainstay of the economy, is almost 50 per cent of GDP, and small-scale peasant farmers, who make up 70 per cent of the population, carry out over 80 per cent of agricultural activities. About 30 per cent of the population over 15 years of age is illiterate (UDEC, 2002).
Economic growth has been between five and six per cent during 2001 and 2002, but according to key informants, most of it has been due to capital intensity (e.g., productivity improvements in mining) and has not resulted in employment creation.
While the majority of Tanzania’s formal economic activities take place in major cities, in most districts most private sector activities are micro-level, informal activities involving the local peasant population.8 An estimated 700,000 Tanzanians enter the labour force every year and only 40,000 or so can expect to find paid employment – the remainder will have to turn to some form of self-employment if they are to generate a livelihood.
Thus, the micro and small business sector is seen as very important in the next stage of the country’s economic growth. The SME sector contributes 30 per cent of GDP and is responsible for more than 50 per cent of private sector job creation.
To learn more about this author, visit International Labour Organization's Website.
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