There are two levels of constraints facing MSMEs in Tanzania, those acting as barriers to general operations and those impeding growth. The UNDP, ILO and UNIDO (2002) report concluded with a list of factors impeding the development of informal MSEs:
• the low level of education of the entrepreneurs; • the lack of managerial, marketing and production skills; • the use of rudimentary technology; • the low-skilled work base; • lack of access to credit; • the tiny purchasing power of their consumers/clients; and • regulatory constraints stemming from the difficulties of obtaining legal status.
In determining barriers to MSME growth, Rural Programme on Enterprise Development (RPED) surveys completed over the 1993-95 period, revealed that the most serious constraint was related to credit access, followed by market-related problems (demand and competition), problems with inputs, and lack of infrastructure (Verspreet and Berlange, 1998. See table 5). The ranking and intensity of constraints varied by size of the enterprise. Problems related to infrastructure, inputs, taxation, regulation, and skilled labour became more serious for medium-size enterprises.
Table 5: Main constraints as perceived by firms (by firm size)
Constraint Micro (%) Small (%) Medium (%)
Credit-related problems 85.6 75.0 63.3 Demand or competition related problems 49.3 42.3 36.6 Regulations related problems 7.7 2.3 13.0
Tax burden 9.7 10.3 14.0
Lack of infrastructure 12.0 9.7 38.7 Lack of support services 9.0 11.7 12.0
Lack of skilled labour 7.7 7.0 11.0
Investment capital related problems 11.3 10.0 4.0
Problems with inputs 16.7 17.3 24.7 Macroeconomic problems 3.7 4.3 7.7
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