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3.3 Major Constraints facing the MSM sector: Support for Growth-oriented Women Entrepreneurs in Tanzania, 2005

Guest post by: International Labour Organization

Article Overview: 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:

Free Download - References: Learning to change: Skills development among the economically vulnerable and socially excluded in developing countries By International Labour Organization
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3.3 Major Constraints facing the MSM sector: Support for Growth-oriented Women Entrepreneurs in Tanzania, 2005

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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Home > African-Accounts > International Labour Organization > 33 Major Constraints facing the MSM sector Support for Growthoriented Women Entrepreneurs in Tanzania 2005
Article Tags: infrastructure, purchasing power, regulatory constraints, UNDP ILO

About the Author: International Labour Organization
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As the world's only tripartite multilateral agency, the ILO is dedicated to bringing decent work and livelihoods, job-related security and better living standards to the people of both poor and rich countries. It helps to attain those goals by promoting rights at work, encouraging opportunities for decent employment, enhancing social protection and strengthening dialogue on work-related issues. The ILO is the international meeting place for the world of work. We are the experts on work and employment and particularly on the critical role that these issues play in bringing about economic development and progress. At the heart of our mission is helping countries build the institutions that are the bulwarks of democracy and to help them become accountable to the people. The ILO formulates international labour standards in the form of Conventions and Recommendations setting minimum standards of basic labour rights: freedom of association, the right to organize, collective bargaining, abolition of forced labour, equality of opportunity and treatment and other standards addressing conditions across the entire spectrum of work-related issues.

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