Thursday, October 30, 2008

Community analysis to identify potential business/ investment opportunities in Mwananyamala wards Kinondoni Municipal. Tanzania

1.0 Introduction:
Business and investment opportunities in particular are considered important in contributing to the socio-economic empowerment of the community. Business opportunities enable the community members to meet their social economic needs ie food, shelter, education health etc. This paper presents a report on community economic analysis that was conducted in Mwananyamala ward Kinondoni Districts to identify the potential business or investment.
The report is divided into four sections. The first section gives a brief profile of Mwananyamala ward, The second section gives an overall objective of the community business/ investment analysis , The third section points out the participatory methods that were applied in identifying and analyzing the potential business opportunities in Mwananyamala ward; The fourth section highlights the findings whereby it was revealed that major business or investment opportunities in Mwananyamala ward are dominated by the non formal sector which employs about 60% of the population through various activities which includes: carpentry, garage; metal work; welding, tailoring, food vendors, selling vegetables, fruits, and petty business, selling second hand clothes and cultivating small gardens around their houses. Section five highlights some constraints that are faced by the Mwananyamala community in opening new business/ investments opportunities. The fifth section gives recommendation and conclusion.
2.0 MWANANYAMALA WARD PROFILE
Mwananyamala ward is one of the twenty seven wards in Kinondoni district Dare salaam located on the west of the Indian Ocean Coastline bordering with the wards of Makumbusho; Tandale; Magomeni, Msasani; Kijitonyama and Manzese.
Mwananyamala ward is consisting of six streets that include: Msisiri A, Msisiri B; Mwinjuma; Kambawa; Kopa; and Bwawani. Among the six streets three are surveyed, these are Msisiri A, Msisiri B, and Bwawani. The other three are un-surveyed, these are Kambawa; Kopa and Mwinjuma where houses are in squatters and densely populated which most of them are in informal settlements that do not have land tenure.
Mwananyamala ward is occupied mostly with the indigenous coastal region tribes i.e. Wakwere, Zaramo, Ndengereko and other tribes who have migrated to the ward from all over the country caused by rural urban migration. Mwananyamala ward population is as summarized in table 1
Table 1.
SNO MALE FEMALE TOTAL GROWTH RATE
1 21946 22585 44531 4.1 %
(Source Kinondoni municipal profile and 2002 census)
3.0 Purpose of the business/ investment opportunities analysis:
The overall objective of the analysis was to identify the potential business or investment opportunities and the constraints that are faced by the community in opening up new business/ investment opportunities in Mwananyamala ward.
4.0 Methodology applied in identifying the potential business in Mwananyamala ward:
Three primary method of data collection were applied to identify the potential business or investment in Mwananyamala ward. The first method was documentary review for secondary data collection. These included: Mwananyamala ward profile. Mwananyamala Ward Executive officer’s periodical reports and documents. The second method was that of interviewing the entrepreneurs in Mwananyamala ward these included: women dealing with food vendors (mama ntilie); Shop; hair saloons, carpentry and garage workshops owners. The third method was a transecting walk where the researcher did a walk to some street for observation on physical businesses premises found in Mwananyamala ward.
5.0 Findings of the study and analysis:
The documentary review on the Mwananyamala ward profile revealed that the potential business opportunities in Mwananyamala ward includes: carpentry, garage, metal work and welding, tailoring; whole sale and retail shops, bars and restaurants; petty business of food vendors, selling vegetable and fruits, second hand clothes; small garden (horticulture). These business opportunities create employment opportunities to 60% of the Mwananyamala ward residence. 30% of the population is employed in formal sector and the other 10% of the population is not employed mostly spent time at corners called vijiwe/ camps and commuter buses callers’ wapiga debe (source Mwananyamala ward profile at ward office)
The documentary review from the Ward Executive office summarized the business opportunities found in Mwananyamala ward as it is in Table 2 below:
TABLE2.
Na Business type Number
1. Guest house 19
2. Groceries 13
3. Whole sale shops 11
4. Retail shops 49
5. Bars 28
6. Petrol stations 1
7. Stationery shops 5
8. Saloon 10
9. Restaurants 12
10. Welders/Welding 15
11. Milling machine 9
12. Butcher 11
(Source Mwananyamala ward executive office data 2007)
In addition to that for triangulation purpose the researcher did a transect walk with the purpose of observing physical business and investments opportunities that are found in Mwananyamala ward. Most of business opportunities that were pointed out in the documentary review were also observed during the transect walk. These included: whole sale and retail shops that were selling consumable goods, building material, electronic, pharmacies and stationeries etc. These shops were found along the Komakoma Street to Mwananyamala hospital.
Another category of business opportunities observed were that of carpentry, metal and garage workshops. In addition to that other business included; hair saloon for men and women, butcher for meat and fish; restaurants, bars and guest houses.
Another business opportunity observed during the transect walk was the market place at Mbuyuni commonly known (Magengeni ) this market provide space for selling various types of consumable goods ie, vegetables, fruits, flour, sweet and Irish potatoes, cassava, cereals, beans etc.
Photo of section Mwananyamala Msufini/ Magengeni market
6.0 Constraints on creating opportunities for business and investment:
Business opportunities available in Mwananyamala face a number of constraints that hinder its rapid growth and development and therefore reduce the weight of its potential contribution to the community social economic growth, and a nation at large. The most commonly cited problems by respondents were as follows:
Firstly, is the tough procedures tied to accessing Financial Institutions facilities that includes high interest rates and the requirement for loan collateral. Since the majority of Mwananyamala ward are poor and are self employed in non formal business or petty business that are often denied to get loans from the microfinance and financial institutions. The majority of the community members are unable to meet the collateral requirements and the high interest rates that often go higher than 30 per cent that can be difficult for the small entrepreneurs to repay. Factors such as these are detrimental to the start-up and growth of business and investment opportunities among the community members.
Secondly, the low level of awareness on financing and business matters amongst the community members that includes designing, and managing business opportunities, dealing with financial institutions, preparing and presenting a loan application and linking credit with business development support. These inhibiting factors results for community members fear to venture into new business and when they initiate it does not sustain for long period as they do not have skills in managing the business.
Thirdly, lack of market access, affordable technology and capacity for the bulk purchase of materials, as well as the low levels of education of entrepreneurs are considered to be the inhibiting developing or growing of their businesses as a result a majority of the community population often experience greater constraints on their economic actions and growth.
Fourthly, lack exposure and socialization among the Mwananyamala community members which restrict their ability to identify higher growth potential business ventures compared to rich entrepreneurs. They are likely to be operating in groups from home, and often lack social, cultural and business support for their role as entrepreneurs. The community member’s entrepreneurs have no technical and business management skills, including the knowledge for negotiation with financial institutions, marketing and search for market outside their community for more profit.
Fifthly, limited access to proper business premises, this was observed during the transect walk about half of Mwananyamala ward is not surveyed such that it faces serious problems of being able to access proper business premises. It is very difficult to acquire plots for constructing proper business premises because of bureaucracy, corruption, and the very limited number of surveyed plots. A large proportion of informal business enterprises operate along the roadside whereby always they do experience harassment from city or local government authorities as they do operate in locations and premises that are not meant for business. City authorities demolish their premises during the city cleaning operations as a result they get loss and most of them fail to repay loans that they might have secured from loan institutions.
Sixthly , from the interview result that was conducted to women it was revealed that ,women and other community members in different stages of transition from the informal economy to the higher level of business that require business skills, face other unique challenges of finding the time required to attend training supported by donors and NGOs. There business requires fulltime presence depending on the type of business. Take a case of food vendors (mama lishe) hawkers (Machinga) have to move from one street to another around looking for customers as the authorized areas for the business are limited.
Seventhly, At policy level it was identified that there is no pro- poor and gender-sensitive micro-economic policies such that the present ones impose complex tax policies, compliance procedures; complex business registration and licensing procedures for the smallest micro-enterprises where the majority of the Mwananyamala community members especially women are found. This results small entrepreneurs not to be able to create new business opportunities. In addition to that it was reveled that for a person to secure a license for business requires undergoing a long process. These include: getting authorization signature from a street chairperson, followed by the ward Executive officer then to Municipal trade department. Not only that health officer have to inspect and approve the business premises. All these procedures take place along with corruption at all stages.
Ninth, most of the whole sale shops, the bars and garages were found to be owned by people who are not residents of Mwananyamala such that the profit made from the sale does not benefit the community members of Mwananyamala. The owners of the shops were mostly from upcountry tribes who will always invest back home for example the chagga in Kilimanjaro.
7.0 Recommended actions for new business opportunities creation:
Firstly, access to Credit: In order to facilitate access to credit for Mwananyamala community entrepreneurs, banks and Micro Finance Institutions (MFIs) need to allocate a certain portion of their loan able funds for poor and women entrepreneurs. This has to be supported by special lending and repayment arrangements. The central and local governments have to play supporting roles in soliciting funds for on-lending small medium entrepreneurs like that of “Kikwete one billion” and also provide credit guarantees for small medium entrepreneurs. Not only the government but also the donors and NGOs have to play crucial roles in supporting MFIs and banks by providing soft loans and also channel resources to associations of poor entrepreneurs.
Secondly, access to land and premises: Local Government and Municipal council authorities need to engage themselves in constructing shades for poor community entrepreneurs to address the problem of premises, coupled with measures to encourage private investors to engage in construction of premises suitable for small medium entrepreneurs like that of Urafiki and Mchikichini where small medium can make their business. In this regard, the government should provide certain incentives such as tax reliefs for some time and availing of lease-free land, etc.
Thirdly, Marketing Assistance: With regard to marketing support specific measures need to be taken by government and support organizations:- Linking community members entrepreneurs with medium and large firms to serve as market outlets; Provision of training on quality improvement and cost reduction modalities; Provision of information on market opportunities and appropriate/improved technologies; Construction of display centers and provision of advertising support; The Ministry of Industry and Trade to design programs in association with a local business services provider, with the possibility of technical and financial support from the International Labour Organization (ILO) as part of its support for small medium entrepreneurship development in Tanzania.
Fourthly, facilitating training to the community members on initiating new business opportunities by involving various organization and CBOs. A series of seminars and other business support and financing options should be developed and delivered in Mwananyamala ward. Micro Finance Institution and other organizations need to develop sessions for community members when starting micro-enterprises, majority of the community do not consider the longer-term sustainability of their enterprises. They have tended to start entrepreneurship based on the business ideas that are taken from neighbors and friends within their communities. In most cases, these ideas have brought the community members into a very competitive on local market that offers limited prospects for business growth. Community members need to identify business opportunities that will lead to profit. The case of Mwanayamala community it was observed that most of the business opportunities types are the same competing each other. You find in one street more than five hair saloon serving ten households. Along the street going to Mwananyamala hospital there are more than five pharmacies competing such that the profit made is very small from the pharmacy business.
Fifthly, the trainings planned by NGOs and others should adopt flexible training approaches to meet the community especially women’s needs. Training initiatives need to focus on community member’s free time versus the more traditional two to five-day classroom training approach. To achieve the desired knowledge transfer objectives, follow-up should be incorporated in the training to assist trainees with the practical application of the new knowledge. The delivery must take into account that they often cannot leave their businesses and communities to attend weeklong training programmes since they are dependent on the business income for their livelihood. Family responsibilities also require their presence at home. It is important that programme delivery schedules accommodate this, and offer flexible timing and delivery in communities.
Sixthly, provide training on dealing with financial institutions and borrowing mechanisms. There is a low awareness of financing options among the Small Medium Entrepreneurs. Workshops should be designed with the objective of helping people to learn how to prepare and develop proposals and approach financial institutions. People also require a better understanding of the mechanisms of borrowing and the relationship between the injection of funds at certain stages of their development and business growth. Such knowledge will help those entrepreneurs to work with the MFIs.
Seventhly, community members themselves need to be creative to initiate new business. For example construct toilet facilities at bus stop and market place and can make money. In areas that have no houses in low land create gardens and many other opportunities
8.0 Conclusion:
Business opportunities are a critical element of an effective poverty reduction strategy among the community members. Improved access and efficient provision of savings, credit, and insurance facilities in particular can enable the poor community members to increase their capital for poverty alleviation. Business opportunities can provide an effective way to assist and empower poor community members, who make up a significant proportion of the population in Mwananyamala and the country at large. Therefore there is a need for proper policies and capacity building on designing, creating and managing business opportunities among the community members of Mwananyamala and the nation as a whole.


Reference:
1. Hardwick,P; Khan,B & Langmead, J (1994) An introduction to modern economic 4th Edition.
2. Kinondoni Municipal Profile (2007)
3. Niclas Berggen: The Benefits of Economic Freedom ( A survey) Volume viii No 2 2003

No comments: