Thursday, October 30, 2008

The available Financial Services and concrete proposals on what should be done to ensure community members accesses reliable financial services: A

1.0 Introduction:
The Government has been implementing financial sector reforms in order to create an effective and efficient financial system. Although the reforms have resulted in an increased number of banks and non-bank financial institutions and increased efficiency of the financial system, there has not been a corresponding increase in access of financial services by the most of population especially the poor and the rural people that make up 80% of population which the is majority of the Tanzanians. There is a need to enhance accessibility of financial services to the poor and the rural population in Tanzania so that the financial institution can serve them. It is the intention of this paper to examine the availability of Financial Services and give concrete proposals on what should be done to ensure community members accesses reliable financial services: A case of Kinondoni Municipal in Tanzania is taken for the discussion.
1.1 Background:
Legislation passed in August 1991 led to a fundamental restructuring of the Financial Institution in Tanzania. Prior to the legislation, the government exercised a complete monopoly over the banking sector. Under the old system, the Bank of Tanzania acted as the central bank, while the government-run National Bank of Commerce (NBC) accounted for over 75 percent of the country's financial transactions. Although the Bank of Tanzania has retained its functions, which include the administration of the exchange control, the NBC has been subdivided with the creation of a separate National Micro-finance Bank (NMB). Both the NBC and the NMB have been privatized. Since the financial institution legislation was passed, several private Financial Institution and banks have registered with the Bank of Tanzania. In addition to some domestic financial institutions, numerous foreign banks have established operations, including Citibank of New York, Stanbic Bank of South Africa, Standard Charter Bank , EuroAfrican Bank, Akiba Commercial Bank, Exim Bank
1.2 Definition of Financial Services:
Bank of Tanzania define financial institution as an institution licensed by Bank of Tanzania and authorized to engage in banking business not involving the receipt of money on current account subject to withdrawal by cheque.
Financial services is the products and services offered by institutions like banks of various kinds for the facilitation of various financial transactions and other related activities in the world of finance like loans, insurance, credit cards, investment opportunities and money management as well as providing information on the stock market and other issues like market trends
A bank is an institution authorized to receive money on current account subject to withdrawal by cheque. A bank is a financial institution where people can deposit money. Banks provide a system for easily transferring money from one person or business to another. Using banks and the many services they offer saves an incredible amount of time, and ensures that funds "pass hands" in a legal and structured manner. There are also other types of financial institutions that operate just like banks.
Microfinance
According to wikipedia Dictionary, microfinance refers to the provision of financial services to low-income clients, including the self-employed. The term also refers to the practice of sustainably delivering those services. More broadly, it refers to a movement that envisions “a world in which as many poor households as possible have permanent access to an appropriate range of high quality financial services, including not just credit but also savings, insurance, and fund transfers. Microfinance institutions exist in many forms — credit unions, commercial banks and, most often, non-governmental organizations (NGOs). Many microfinance institutions (MFIs) use social collateral in the form of peer groups to ensure loan repayment. Borrowers take out loans in groups of five to eight individuals. If a borrower defaults on her loan, the entire group typically is penalized and sometimes barred altogether from taking further loans
2.0 Kinondoni Community Profile:
Kinondoni Municipal is within the city of Dar Es Salaam. The Municipality is bordered by the Indian Ocean to the North East, Ilala Municipal to the South, Bagamoyo District to the North, Kibaha District to the West and Kisarawe District to the South West. The municipality is well linked by roads and other communication networks to the rest of the city and other parts of the country. Major road links are:- Morogoro Road, Bagamoyo Road, Kawawa Road, Mandela Road and, Sam Nujoma Road. Kinondoni Municipal has four (4) divisions namely: Magomeni, Kinondoni, Kibamba and Kawe. These divisions are then divided into twenty seven (27) wards, which in turn are sub divided into sub wards commonly known as Mtaa (singular) or Mitaa (plural). There are 127 Mitaa. According to the 2002 Census, the Kinondoni Municipality has a population of 1,088,867 people with a growth rate of 4.1%. The rapid population increase is influenced by both natural causes and immigration (birth rates and net immigration rates respectively). The Municipality has an area of 531KM2 and the population density is estimated at 2051 persons per square kilometer.
2.1 Employment and Economic Activities
It is estimated that 360,000 residents of Kinondoni Municipality are employed in both private and public sectors. Out of these, 95% are employed in the private sector while the rest 5% are employed in the public sector. A working force of 200,000 people is self-employed. The majority of the residents are involved in petty business, fisheries, livestock keeping and agriculture including horticulture. Only 3% of the working force is engaged in subsistence agriculture in the peri-urban areas. There are no big farms but small plots ranging from 2.5 to 6 acres. Others make small gardens around their houses in which various vegetables and root crops like cassava and sweet potatoes are grown for family food and the surplus for generating income.
2.2 Financial Services in Kinondoni:
The major financial services available in the Municipality includes National Bank of Commerce located in Magomeni, Kawe, Mbezi beach and recently opened in Mikocheni popularly Victoria bus stop and Mlimani City and one agency at University of Dar Es salaam. Others includes National Micro Finance Bank (NMB), CRDB at Mlimani City, Kijitonyama Millennium Towers and in Mbezi. Kinondoni Municipal council operates some credit facilities targeted toi women and Youth. These includes Kinondoni women and Youth Development Funds ( KWYDF), Women Development Funds ( WDF) and Village Community Bank (VICOBA) through Youth Employment Network for Urban Renewal ( K- YEN-UR) In addition to that there is FINCA nad PRIDE Africa with their offices at Magomeni and Savings and Credit Cooperative Organizations’ (SACCOS) which are being established from the level of mtaa to ward level
In summary is as in figure 1 below:

Figure 1; Banks and financial institution in Kinondoni Municipal
Na Institution Location Ward
1 NBC Ubungo Ubungo
2 NBC Mlimani Ubungo
3 NBC Mbezi Beach Kawe
4 NBC Kawe Kawe
5 NMB Magomeni Mzimuni
6 NMB Mwenge Kijitonyama
7 Postal Bank Manzese Manzese
8 Postal Bank Millenium Tower Mikocheni
9 CRDB Millenium Tower Mikocheni
10 CRDB Mlimani Ubungo
11 Akiba Commercial Bank Makumbusho Kijitonyama
12 Stanbic Bank Mikocheni Mikocheni
13 Dar es Salaam City Bank Travertine Mzimuni

2;Other financial institutions
Na Institution Location Ward
1 FINCA Magomeni Mzimuni
2 PRIDE Magomeni Magomeni
SACCOS
122 (active) 27 ( dormant) 149
(Source Kinondoni profile 2007)


3.0 Why community need financial institution services:
Community need to access financial institution for various reasons these includes keeping or depositing money; banks provide a system for easily transferring money from one person or business to another. While on the other hand financial institutions provide service for loans and credit facilities for communities to invest in business, building, farming, education for their children etc.
4.0 Shortcomings and constraints on accessibility of the financial Institution:
Although the reforms that took place in August 1991 on Financial Institution in Tanzania have resulted in an increased number of banks and non-bank financial institutions and increased efficiency of the financial system, there has not been a corresponding increase in access of financial services by the poor population that make up the majority of the population in Tanzania as well as in Kinondoni. Some of the shortcoming/ weakness includes:-
Firstly, problems in accessing loans and credits due to stringent requirements of lending institutions including collateral requirements and high interest rates as well as corrupt officials. The traditional banking system requires that a borrower have collateral to receive a loan. The majority of Kinondoni Municipal population (95%) is employed in the private sector and non formal sector that are poorer people who have no such collateral. Like land property title deeds. Most of the community members in Kinondoni leave in un surveyed area i.e. Manzese, Tandale, Mwananyamala, Kimara etc. that have no title deed such that community members can use as collateral for loan access. Furthermore, traditional banks are not generally interested in issuing small loans as the interest benefits do not exceed the transaction costs that most of the poor would have applied and be able to repay.
Secondly, With the Tanzanian banking sector undergoing significant reform, a consequence has been that almost all financial Institutions have stopped providing long-term loans and equity finance in favors of short-term lending. This has led to a shortage of funds available to small- and medium-sized enterprises that employ the majority of the community members (SMEs).
Thirdly, there is low level of business skills amongst the members that can translate to markets and lack of premises, which are always demolished by city council authorities in city cleaning operations and other resources required for growth. The result of such situation has made the members failing to extensively benefit through the loans they get and investment they launch fail for their economic growth.
Fourthly, it is clear, that poor households are not familiar with formal credits, which deliver funds through formal financial institutions, such as commercial banks. Not only that the majority of community members lack knowledge of what savings and credit co-operative societies (SACCOS) are and what the societies can do to make uses of SACCOS and do not know the benefit they can get from the SACCOS.
Fifthly, operationally, most of the SACCOS are having problem of charging high interest rate to about 2% per month, equals to 24% per year. This rate is considerably high to most of the poor community members to raise through their petty business and be able to repay the loans.
Sixthly, most SACCOS who can have served the poor community members also lack qualified co-operative officers, auditors, inspectors and consultants as a result many SACCOS in Kinondoni encountered operational problems such that most of them are dormant .It is reported that more than 27 SACCOS are dormant in Kinondoni ( Kinindoni profile 2007)
Seventhly, poor financial discipline and credit repayment culture among of the community members. Instead of using the loan in the activities aimed for the loan they utilize the loan to meet other needs that were not the part of the loan purpose. These includes buying commodities like TV, jewel especially for women etc as a result they fail to repay the loan.
5.0 Recommendation:
Firstly, the Government need to facilitate the appropriate design of linkage options, improve pro-poor financial policies and develop sustainable financial services tailored for the poor sector in the country. The Government to focus and support the formation of alternative financial intermediaries from the traditional banks such as Savings and Credit Cooperative Organizations’ (SACCOs). SACCOs are the most prevalent for poor and rural financial intermediary and a revised legislation in 1991 that re-established the voluntary nature of co-operative association, thus enabling poor and the rural communities to set up their own SACCOs. Such financial intermediaries are able to circumvent the large operating costs that fully fledged banks face operating in poor and rural areas.
Secondly, Government should implement the SME loan guarantee programs proposed in the SME Development Policy: The Government should set up government-backed pro-poor credit guarantee programs for individuals growing beyond the micro level; A loan guarantee fund would serve to reduce the risk to banks in cases of limited collateral, often facing informal entrepreneurs
Thirdly the government should undertake dialogue with lending institutions on informal entrepreneurs’ access to credit with a view to making more credit available to this part of the MSE market and improving the infrastructure for entrepreneurs. In addition to that government need to negotiate with banks to contribute a certain percentage of their loan funds for small business financing in the local community and formalization of property rights to allow more assets of the poor and rural population to be recognized as collateral, and formalize the informal business e.g. MKURABITA).
Fourthly, strengthening the overall legal and regulatory framework with a view to increasing the financial discipline and improving the credit repayment culture among the community members hence sustain the financial Institution especially the SACCOS and encourage community members especially the poor and women who are the majority in any economic activity at micro- level to become members of SACCOS wherever these financial institutions exist so that they are empowered to become better entrepreneurs.
Fifthly Financial Institutions (FINCA, PRIDE etc) to raise ceilings on micro-finance lending limits. The low lending limits currently in place tend to undercapitalize Micro Small Enterprises (MSEs) at the startup level, thus fostering low or no growth-potential venture creation. At present, most key microfinance institution serving the poor population women being the majority when requiring loans in excess of Tshs 5 million are referred to financial institutions (Commercial banks) having lending conditions, which in most cases cannot be met by poor/ women borrowers.
Sixthly, provide pro-poor and gender sensitivity training to credit officers serving the poor and women community members. Poor and women are different – they don’t think as “big” as their rich class counterparts and often are more cautious. Credit officers need to understand how to work with these clients, identify client needs, and coach the community members in the lending approach process. Pro poor and Gender mainstreaming workshops will help them recognize any gender bias they may have in their policies, procedures, perceptions or approaches.
Seventhly, improve the level of information among poor and women entrepreneurs regarding financing programmes and services. Produce a Guide to Financing for community members Entrepreneurs, designed to impart basic information to community-owned Micro Small Enterprises on sources of financing, terms and conditions, preparing financing proposals, and negotiating for credit. The aim is not only on lending institutions; community members also have to be oriented in the art of dealing with banks and packaging their loan requests for financing. They need to learn how to approach and negotiate with financial institutions, know the lender’s information requirements and how to prepare financing project proposals. The guide should be distributed widely throughout the community members, in both English and Swahili, and supported by information sessions, perhaps delivered in partnership with community member associations. The purpose is to get the message out to community-owned MSEs in order to improve their ability to source financing
5.0 Conclusion:
Financial Institutions are key for the economic growth for the community members. Therefore there is a need for the government to support the Micro-financial Institutions and SACCOS outreach to poor who are the majority of the population in Tanzania. Proper policy and training concerning access to financial institutions and micro entrepreneurship hence enhance accessibility of financial services to the poor and be a priority item on the agenda of the on-going financial sector reforms.
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
4. Principles of Economics Bankers work book series The Institute of Bankers
5. National Council on Economic Education, New York, NY
6. R.M. Khijjah, March 2004 PRESENTATION ON THE ROLE OF GOVERNMENT IN BUILDING SUSTAINABLE RURAL FINANCIAL MARKETS on The Future of Rural Finance in Tanzania Ministry of Finance, 8 March 2004
7. Robert,P & Quillfeldt, J; ( 1987) GCSE Economics
8. http://www.ingrimayne.com/ cited on 7th March 2008
9. http://economics.about.com/cs/studentresources/f/whatiseconomics.htm cited on 7th March 2008
10. http://academics.smcvt.edu/economics/Whatis.html cited on 7th March 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

Merits and de - merits of market economy and what would the government do to mitigate the demerits in Tanzania

Introduction:
Since independence, Tanzania, like many other African countries has experienced a remarkable political and economic transition. Formerly a one party state with a planned or command economy now is a multiparty democracy with a mixed market-oriented economy. Tanzania has, undergone a series of economic reforms, including currency devaluation, tariff reduction, domestic tax reforms, and increased investments in infrastructure. The country’s economic performance under these structural adjustment efforts has improved substantially in many respects and in some areas has not improved agriculture sector being the one. It is the intention of this paper to discuss market economic system by exploring its merits, demerits and suggests some alternatives to mitigate the demerits in Tanzania. In the course of the discussion the paper will first attempt to define the terms economics and economics systems types. Finally the conclusion will be given.
What is economics?
There's no one universally accepted answer to the question "What is economics?" Various definitions have been given out by scholars. The few to mention are as follows: The Economist's Dictionary of Economics defines economics as "The study of the production, distribution and consumption of wealth in human society."
(Wikipedia, the free encyclopedia) define economics as a social science that studies the production, distribution, and consumption of good and services.
Lionel Robbins (1932) defines economics as the science which studies human behavior as a relationship between ends and scarce means which have alternatives uses. Scarcity means that available resources are insufficient to satisfy all wants and needs.
The Tanzania Institute of Bankers (2006) defines economics as the social science concerned with the problem of using or administering scarce resources to attain the greatest or maximum fulfillment of society’s unlimited wants.
Therefore for the purpose of this paper discussion will define Economics as the social science which examines how people choose to use limited or scarce resources in attempting to satisfy their unlimited wants.
Economic system can be categorized into three categories as follows: Firstly, the Capitalistic economic system. This type of economy is characterized, dominated and guided by market and private ownership of economic resources. Relies on market forces to decide on what to produce, how to produce and how to distribute what is produced. The second type of economy is that of command/ planned sometimes called socialistic economic system. This is dominated by the state / central planning and public ownership of the economic resources. The decision on what to produce, how to produce and how to distribute is done by the government. The third type of economic system is that of the mixed economy which, apply both the two i.e. capitalist and planned/ socialistic economies. Individual people create demand and so determine some of the goods and services that are produced by the way that they spend their money. The government determines other goods and services that are produced ie education, health, public goods like street lights.
For the purpose of the discussion on the merits and demerits of the Market economic system or capitalistic economy, the paper further explore what is and the characteristics of Market economy as follows:
Market oriented economic system according to Wikipedia is defined as an economic system in which the production and distribution of goods and services take place through the mechanism of free market guided by free price system. In market economy, business and consumers decide of their own choice what they will purchase and produce and in which decisions about the allocation of those resources are without the government control. The producer has a power to make decision on what to produce, how much to produce what to charge the customer for the goods he produced what to pay the employees. The decision made depend on or influenced by the forces brought by competition, supply and demand.
This type of economy is opposite to the socialistic or planned economy whereby the government makes decision on what will be produced and in what quantities. In addition to that market economy is opposite to mixed economy in which the market system is not entirely free but under some government control which can not be like in the planned economy. Market economies work on the assumption that market forces such as, demand and supply, are best determinants of what is right for a nation’s well being. The economies are rarely engage in government intervention such as price fixing, license, quotas, and import duties and subsidies provision. Therefore, market economy relies chiefly on market forces to allocate goods and resources to determine prices; and hence this is called free economies, free market or free enterprises system.
Merits of market oriented economic system in Tanzania
Firstly, one of the market oriented economic system characteristics is that the economy is on the individual or private ownership where labor resources, natural resources, capital resources (e.g., equipment and buildings), and the goods and services produced in the economy are largely owned by private individuals and private institutions rather than by government. This private ownership is combined with the freedom to negotiate legally binding contracts permits people, within very broad limits, to obtain and use resources as they choose. This type of economy has some merits and promoted the economy of Tanzanian’s individuals and private companies as they now own the resources, run businesses and increased their investments. For example people like the Bakheresa are running flour business that used to be owned by a state through the National Milling Corporation. Companies like IPP media owned by Reginald Mengi and the like. In the market economy individuals are now able to own equipments and buildings of any value which was not a case during the socialist economy. The system allows increasing their entrepreneurship and investment among Tanzanians individuals hence poverty eradication at individual level.
Secondly, another characteristic in the market economic system is that of competitive motive which controls the market. The tendency of competition in Tanzania has benefited Tanzanians as it creates competition among the goods producer and service suppliers. Competition is evidenced in various products and supply of service. For example companies dealing with soft drinks soda Coca cola and PEPSI are competing for customers. Companies dealing with beer ie Serengeti and Tanzania Breweries are competing to produce different varieties of beer which gives better choice to consumers. Cell phone companies ie Vodacom, Tigo, Celtel and Zantel are competing to such that they are reducing service charges to customer. Through competition Tanzanian’s have benefited as they have good choice of quality at reduced price, variety of commodities and services and there is no shortage of commodities and services compared to the period of the socialistic/ planned economy where Tanzania used to have one company producing beer and one company for telecommunication service provider that of Tanzania Telephone Company Limited and transportation dominated by National transport Company ie KAMATA and UDA hence there was no choice or alternatives among consumers of the products and service.
Thirdly, in a market oriented system where there is an opportunity for the buyers and sellers freely to enter or leave any market. Buyers and sellers act independently in the marketplace. This system has benefited Tanzanians as people have freedom of choosing of being customer to a product or service of their choice. For example on communication service people can decide any time to be a customer of any communication service provider of their choice. The companies includes tigo, Celtel, Vodacom while during the socialistic/ planned economic system the country used to have only one company that of Tanzania Telephone Company Limited (TTCL) owned by the Government. People had no option regardless of poor services that were supplied by the TTCL. People can make a choice on buses to board for their journey.
On the other hand in the market economic system producers also have a choice on what they want to produce. A case of Tanzania agriculture sector farmers now have a choice on what to produce. Take a case of Shinyanga community which used to be forced to plant cotton and sale it to state owned authorities i.e. Tanzania Cotton Authority the only authority that used to buy cotton which in most cases the price was low and sometime it delayed payments for the farmers. Through the market economy farmers from Shinyanga and Mwanza now have a freedom of and changed from growing cotton to rice which have the ready market and good price. Another case is that of coffee farmers of Kilimanjaro also some opted to uproot coffee plants instead they grow maize and tomato that have good price and ready market. Farmers are now benefiting their product due to freedom of entering and leaving the market for both
Fourthly, in a market economy there is a motive of self interest whereby the "Invisible Hand" that is the driving force in a market economy is each individual promotes his or her self-interest. The entrepreneur’s motive is profit over the business. They try to achieve the highest profits for their firms while on the other hand workers want the highest possible wages and salaries and the owners of property resources such as building attempt to get the highest possible prices from the rent and sale of their properties. The system does not need official and government to deicide on price and profit margin. This is another merit for the market economy in Tanzania as individuals try to work hard to make profit from their business as they are not in control of the state or any authority as it is in the planned economy system where there are regulatory and price setting authorities which will not allow for maximum profit. Individuals and companies are able to set prices that will enable them to make profit. On the other hand consumers and the workers are getting the greatest satisfaction from their budgets as they can choose the type of employment that gives them highest possible salaries. People now can move from government to private organization or company and vice versa looking for well paid salaries depending on his or her qualification that enables them to have high purchasing power.
Fifthly, in the market economy, markets (goods or services) are the basic coordinating mechanisms no central planning is done by the government or authorities. A market brings buyers and sellers of a particular good or service into contact with one another. During the error of planned/ socialistic economy Tanzania used to have crop authorities that used to control and making coordination between buyers and sellers, Crop authorities included Cotton authority, Coffee authority, Tea authority and the like. These authorities used to have a lot of bureaucracy and inefficiency, giving low price to farmers such that farmers did not benefit on what they were producing. Through the market economy where there is no government or authorities control and coordination hence less bureaucracy and red tape, buyers and sellers are getting into contact with another directly and easily depending on the products, goods and service they sale or buy. For example growers and buyers of cereals e.g maize from Dodoma, Iringa and Sumbawanga do have a direct contact with Mohamed enterprise or Bakheresa who are the major milling and seller of maize flour in Tanzania. Farmers are getting good price through that direct contact instead of going through other coordinating authorities eg National Milling Cooperation (NMC) as it used to be in socialistic economy. At that period of planned/ socialistic economy if Bakheresa wanted to get maize have to buy from National Milling corporation where farmers would have sold their maize which resulted to high operational and administrative costs hence the price to the farmers was low while on other hand Bakhresa would sell the maize flour at high price to consumers as he bought it at high price from NMC
Sixthly, Market economy that promotes private investment it creates more opportunity for the increase of revenue collection by the government through taxation to private and individual business. Tanzania Revenue Authority now is collecting a lot of revenue from private owned companies these include: Tanzania Breweries. Tanzania Cigarette companies, Mining industries, Hotels etc. compared to the period of the planned economic system.
Demerits of market economy a case of Tanzania.
Market economic system apart from the above merits also has demerits in Tanzania as follows:
Firstly, in market economic system where there is a tendency of dependence on supply and demand theory have its disadvantages to small scale producers and consumers in Tanzania. This is more experienced in the agriculture products where during the bumper harvest the producers experience loss as they do lack storage and processing facilities for perishable products which they can store or process their products to wait for the period of high demand that will benefit from the increases of the price. For example during the harvest of farm crops eg fruits (pineapples, oranges mangoes) maize, rice etc the price goes down which make famers to get loss as they can not store and process to wait for the better price period.. While on the other hand when the products are scarce in the market consumers tend to suffer due to high price as the demand increases. This has been the recently experienced in a case of cement the price have gone up due to high demand of cement.
Secondly, in the market economy where is characterized by competition for the market, it give difficulties to small entrepreneurs due to poor technology and low capital. Small firms may be taken over by big companies. The majority of Tanzanian depends on agriculture which is not mechanized and well advanced. Farmers are using hand hoe such that they can not produce much to compete with big investors from other countries that have big capital and mechanized agriculture. This is experienced by the sugar cane farmers in Kilombero where small farmers are competing with big investors for the same market. Investors command the price as they have big harvest and good quality sugar. The same it applies to small entrepreneurs’ who are competing with big investors who have big capital such that they dictate price by selling at low price their commodities Small entrepreneurs’ are not able to compete as they do not have enough capital for competition. A case of Bakheresa who is in the business of ice cream, bread, chapatti as result small entrepreneurs such as food vendors (mama ntilie) can not compete with him as he sales at low price and big supply as a result the common people suffer. Chinese investors now are competing with local people such that the local industries are stagnant and are not making any progress. Interchick company has monopolized the market for chicken such that small scale poultry keepers are making loss as they do not have the market.
Thirdly, in the market economy the system does not require coordinating organ between producers and consumer. It is the type of market (product and service) that connects and coordinates consumer and buyers. In such economy where there is no coordination mechanism, for rural communities the majority in Tanzania suffer and do not benefit from the system as they do not have a coordinating mechanism with the consumers, the coordination forums would look for good price and control the price in favor of the farmers. E.g. Farmers cooperatives used to coordinate and negotiate price on behalf of farmers for better price of their crops. But in the market economy instead of having the coordination mechanism farmers from the rural area are conned by middle men by giving them low price as they are unaware about the price in the market. For example at Kariakoo there are people who work as middle men ( dalali). These people make sure that there is no contact and communication between the farmers who bring their products and the buyers at Kariakoo. The middle men always make double profit by putting low price to the farmer and they hike the price to the consumer
Fourthly, under the market economic system where there is no control mechanism there is a tendency of investors or suppliers to supply poor quality products. A case now in Tanzania there is a lot of poor quality and fake products in shops i.e. TV sets, radio electrical products etc as a result people are buying commodities that are not equivalent to the price they give. Many cases of building burnt due to poor electrical installed material.
Fifthly, in market economy with no government control on the economy producers of good and services would seek to maximize profits, and may pay little attention to they cause pollution to air, water etc from their industries and whether the employees work in a safe and healthy condition and paid good salaries and whether the goods and service produced is of good quality. In Tanzania there many cases of industries that do not consider that for example many complains have been given by community around KTM textile industries in Mbagala Dar-es-Salaam on the polluting the stream around that area. Industries and mining in Lake Zone are polluting Lake Victoria.
What Government can do to mitigate the demerits of market economy in Tanzania?
Firstly, Tanzania government needs to adopt an economic system that will enable the government to have policies that will allow a mixed economic system. The government still needs to have some authority in different sectors of the economy such as social services provision; education, health, transport, telecommunication, power supply water etc. This would be by establishing and strengthening boards and authorities that will work as regulatory authorities for quality and price control for the pro poor community. Authorities like Tanzania Bureau of Standards (TBS) that make sure all commodities produced and imported meet the standards; Other authorities like EWURA responsible for petrol quality control and price; SUMATRA regulatory board for transport, Tanzania Food and Drug Authority ( TFDA) etc.
Secondly is for the government to formulate policies and practices that will give fair competition in the market among local and small scale entrepreneurs; Small scale farmers and entrepreneur versus the high and foreign investors support them with capital support, create markets and technology for them to meet the competition For example the small scale miners to be supported by the government with capital so that they can compete with big foreign investors.
Thirdly is the government to formulate policy and measures that will support and improve the small scale farmers and investors by investing in transport, communication, processing, storage and marketing infrastructure. Such policies will help small scale farmers to bring their production to domestic and international markets more cheaply and effectively. They also tend to help the poorest households, which are generally engaged in small scale farming of non traded food crops, by gaining them more effective access to and participation in market. They can also improve the cost-efficiency of international trade.
Fourthly, government needs to promote credit facilities to small scale farmers and entrepreneurs so that they can have enough capital to compete with big investors that have high potentials of getting loans from banks. The credit system to small scale farmers and entrepreneurs’ will enable them to improve and expand their farming and businesses.
Fifthly, government needs to introduce policies that will be for pro poor by controlling and protecting the local industries and entrepreneurs’. Foreign investors should not be allowed to invest in sectors that the indigenous have capacity to invest in. For example in Kariakoo you find a Chinese who is a foreigners investor is selling the same commodities that are being sold by Tanzanians. In employment sector government should not give working permits to jobs that can be performed by Tanzanians to avoid unemployment to indigenous. For example now most of the foreign hotels especially those owned by Asians they are mostly employing workers from India which the jobs can be performed by local Tanzanians eg chauffeurs
Fifthly, government to put strategies that will promote the spirit of people to consume the local produced commodities compared to foreign. For example to strategies that will motivate super markets to sale Tanzania’s products like fruits, vegetables chicken etc. instead of selling the same products imported from South Africa.
Sixthly, government needs to waive or reduce the export and import taxes for the small scale farmers and micro business people. For example in order to promote agriculture sector for the indigenous people will need to have an exemption on import taxes for the agriculture in puts and an exemption for export taxes so that they can compete with other countries at the international market.
Seventhly, government needs to support local cooperatives and associations that will coordinate small scale farmers and entrepreneurs to advocate and coordinate for fair competition and protection of the local people industries and entrepreneurs. Associations such as the of Tanzania Export Association (TANEXA) that will advocate for local exporters interest
Eighthly, government needs to promote and support indigenous people to invest and get in partnership with big and foreign investors. This can be achieved by regulating the investment regulations to favors and support the indigenous. Some people could monopolize and become very rich and powerful because of their success in business while other peoples, especially the farmers, unemployed would remain very poor as a result an unequal distribution of wealth.
Conclusion:
Market economy system that work on the assumption that market forces such as, demand and supply, are best determinants of what is right for a nation’s well being. The economies that are rarely engage in government intervention such as price fixing, license, quotas, and import duties and subsidies provision has got both merits and de merits. For a country like Tanzania which of its majority citizen are poor. Small scale farmers and entrepreneurs still require the economic system that will be for the pro-poor community. Government need to have policies that will support and favors the poor to participate in the market oriented system otherwise will create classes in the society of “the have and have not” and a unequal distribution of wealth.

Reference:
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2. Niclas Berggen: The Benefits of Economic Freedom ( A survey) Volume viii No 2 2003
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Advantages and challenges of community participation in Community Economic Development: A case of Uluguru Mountain Road project in Morogoro Rural Dist

Introduction
Over the last decade, terms such as community mobilization, citizen involvement, community participation, community organizing, community dialogue, multi-stakeholder processes, interactive decision-making and social learning have been frequently used in the literature of community development. These terms embody the idea of bringing together different stakeholders (actors) who have an interest in a problem situation and engaging them in processes of dialogue and collective learning that can improve innovation, decision-making and action. For the purpose of this paper the term community participation has been used to discuss the benefits and challenges of community participation for community economic development, a case of Uluguru Mountain Road Project that was facilitated by Tanzania Social Action Fund (TASAF) in Morogoro Rural District. The first section of the paper will sight some literatures, on what is community and community participation. It will then discuss the process and principles of participation, why need community participation by pointing out its advantages and challenges that are faced in the process of achieving Community Economic Development programs and finally recommendation and conclusion.
What is community?
The term community is a changing and complex that might mean differently at different environment or situation and can have very different implications in practice. Various scholars have defined community in different ways as follows:
Stewart E. Perry defines community as commonly used in two different senses. The first definition refers to any category of people who are related to each other by virtue of specific common interest and values, for example the disabled, the members of Catholic Church, women, low income people and artists. The second meaning specify a category of people who are related to each other by virtue of living in the same particular locality which implies that they also have shared values and interest, arising from their common locality.
Alinsky Redux define community from a public health perspective as "a group of people with diverse characteristics who are linked by social ties, share common perspectives, and engage in joint action. It is the term "joint action" that changes a “field of shared meaning” into a community of solidarity and joint action does not come out of a vacuum, it always needs to be organized.
UNAIDS defines ``community'' in its widest and most inclusive sense by pointing out that a community is a group of people who have something in common and will act together in their common interest. A community's ability to act together may have existed for centuries, or it may be triggered in a very short time by some urgent problem. Many people belong to a number of different communities – examples include the place they live, the people they work with, or their religious group.
Therefore for the purpose of this paper community is a group of people with shared interest or goal within a specific locality: A case of Uluguru Mountain Road Project.
What is participation?
Participation has different meanings to different people as it has been pointed out by various scholars. The few definitions are as follows:
Oxford (1995) considers participation as taking part in something. While Freire (1998) says Participation is not only about people. It is a process where planners and change agents must take part. He further argues that, development organizations need to discover problems with people, but also allowing potentials for further action and reflection. While on the other hand Save the children (2003) in its discussion paper defines “participation as the process of allowing Children and youth to take part in the decision of their affairs”
The key similarities identified on both definitions consider sharing and taking part as key concepts in participation, they all talk about people as key actors and working together. They bring out the fact that human beings learn better through participation.
In communities where participation is encouraged there is high production and sharing of experiences and ideas. It gives communities chances to make decisions on their development activities
Community Participation process:
According to the definitions above, participation can occur at any stage in the development cycle as (Markey, 2003:64) has pointed out as follows: Firstly in articulating goals and objectives; secondly in the choice and implementation of development strategies; and thirdly through the use of local resources as a significant component of the initiative. Another way to put this is that there are opportunities for participation in research or situation analysis, planning, implementation and evaluation -- in short, at every stage of a development initiative. Community participation is an interactive process of ongoing dialogue between members of the public, key stakeholder groups, technical professionals, and local decision makers. It is not something that can happen effectively in a single meeting, particularly in a formal public hearing, where each person has limited time to present their opinion, and there is no opportunity for meaningful dialogue and consensus building between stakeholders. Community participation happens throughout the process, not just once. There should be at least one opportunity for community input in each phase.
Principles of community participation:
Through various literatures community participation has the following principles: Firstly, facilitate high quality dialogue that participation becomes more than just having facilitator’s say,” but also includes “listening to others have their say” and seeking out common ground and potential solutions. A skilled facilitator with appropriate sensibilities is essential, helping all participants to keep an open mind and to develop strategies that are in the best interest of the community as a whole. The quality dialogue should lead towards desirable outcomes: as follows: Is it deepening understanding? Is it building relationships? Is it expanding possibilities? Most public forums need good facilitation to ensure high quality dialogue.
Secondly, respond to all input and opinion given by community members to ensure every one has been heard and their input have been given due consideration. Ultimately, join in collaborative deliberation and co-creative problem-solving. The diversity of perspectives engaged in a wide participatory process will maximize the diversity of the views and ideas of community members that are affected by the problem. This will include the community wisdom and buy-in come from the fair and creative inclusion of all relevant perspectives: viewpoints, cultures, information, experiences, needs, interests, values, contributions and dreams will make valuable contributions toward the wise resolution of their situation.
Thirdly, empower the people's engagement to the extent that people feel involved in the identification and ratification of decisions made on the solution either directly or by recognized representatives. The decision-making process will be appreciated by everybody by saying that we, the community members made this decision thus they will support the implementation of those decisions as they clearly see the impact of their diverse contributions in the final outcome.
Fourthly, build Consensus, understanding that not everyone will completely agree on everything. Identify areas of agreement, acknowledging the usually significant areas of “common ground” among participants, and then focus on developing potential resolutions to areas of disagreement.
Fifthly, promote Transparency so that even if people disagree with the outcome of the process, they understand how it was reached and the reasons behind the decisions made. The documentation of the process should be clear and complete to provide full understanding of the decisions made.
Sixthly, follow-through on Commitments made through the community development process, and establishes mechanisms for monitoring of ongoing participation in the implementation process. It also recognize that the process of community engagement and participation is ongoing and an essential component of community development. One-time events such as public meetings and conferences are not sufficient for a larger ongoing participatory process as they are limited in their capacity to generate collective intelligence for a whole community or society.
Why community participation?
The objective of community participation is to strengthen the community’s capacity to identify problems and come up with the solutions, carry out action plans, as well as monitor the progress and make an appropriate evaluation, measurement, and analysis of impact and results and give feedback to the stakeholder, community and others who wish to learn about the program.
Community development facilitators (Government, Non Government Organizations, Faith Based Organizations, and Community Based Organizations) are involved in community participation process through various approaches. These includes: public community meetings, community dialogue/ conversation, Participatory Rural Appraisal (PRA) Strength Weaknesses, Opportunities, Threat (SWOT) analysis, Opportunities and Obstacle to Development (O & OD) promoted by Tanzanian Government. The approaches has been among of the most approaches applied within a community to identify problems, resources, locate resources, analyze local power structures, assess human needs, gender relations and investigate other concerns that comprise the community's character. By doing that the community becomes well informed and are aware of their shared concern or common need, and decides together to take action in order to create shared benefits. Community participation involves the community members at every stage of community economic development cycle.
Advantages of community participation:
Community participation emerged as an alternative approach to traditional community development as it was founded in the belief that problems facing community need to be solved by the community itself as they know what are real problems and solutions for their problems. Therefore the advantages of community participation are as follows:
Firstly, it empowers community members as it opens doors for exchange of ideas and sharing. It encourages active involvement through the participation of all members of the community in the planning, decision-making and it seeks to remove the barriers that limit the participation of marginalized citizens. It supports decentralized, non-hierarchical decision-making processes that strengthen the autonomy of the individuals in the community.
Secondly, Community participation builds on local strengths, creativity and resource, and actively seeks to decrease dependency on, and vulnerability to, economic interests outside the community as a result sustainability is ensured. This has been recognized by The Government of Tanzania that unless there is substantial improvement in institutional and fiscal capacity at the local level, effective and sustainable service delivery will not materialize. Government's basic strategy to bring about such institutional and fiscal improvements is decentralization, specifically the Local Government Reform Program (LGRP.) The LGRP which was effectively launched in 1999 that is focused on a medium to long term process of legal and institutional reform, local accountability and the promotion of community involvement in the planning and execution of infrastructure and service-delivery projects community driven development, (CDD.) It is housed in the Prime Ministers Office - Regional Administration and Local Government (PMO-RALG).
In this paper community participation has been evidenced in the implementation of the Uluguru Mountain road project in Morogoro Rural District. The project was facilitated by Tanzanian Social Action Fund. (TASAF). It involved the Uluguru Mountains community members fully in the identification, implementation and monitoring of the Kinole to Tegetero (twelve kilometers) village road construction project. The PRA approach was applied.
The community elected a committee among the community members to oversee and manage the project implementation. Apart from the committee community members participated in various activities of the road construction. They participated in contributing financial and labor e.g. digging of the trenches and fetching water during the construction of the road.
Thirdly, through community participation process there is equity in decision making processes, resources mobilization and benefits of the Community Economic Development regardless of race, gender, income, age and ability. Both are motivated to participate in decision-making on what actions to take, evaluate the results, and take responsibility for both success and failure. As a case of Uluguru Mountain road project all members in the community had equal decision making and use of the resources and benefits among the members through the elected leadership that was supervising the project.
Fourthly community participation process builds the capacity of the community by encouraging the acquisition of relevant skills in the identification of local resources, implementation, monitoring and evaluation for the sustainability of the project. A case of the Uluguru Mountain, community members were able to identify resources available in the community and outside. These included stones, sand, water and manpower that were available in the community and also the community identified TASAF as an outsider stakeholder that provided funds to hire equipments and purchase of material for road construction. Not only that the Uluguru management committee was exposed to project management skills these included leadership and financial management. On the other hand, the community members gained skills in road construction and maintenance.
Challenges in community participation:
There are certain things that can hinder community participation process in various ways as follows: Firstly, Government and development practitioners, political and legal structures do not encourage or give room for community participation. Most of the programs for community development are identified by the Government or Non Government organizations communities are just involved at the implementation level as a result most of the programs fails as they do not meet the community expectations and the real community needs.
Secondly, Government and NGOs that work with communities are often primarily motivated by their strong sense of urgency about achieving their preset objectives and timeline. They are likely to be frustrated by what they perceive to be a lack of progress. At the same time, community members can be irritated, offended or simply confused by the expectations of the facilitators. For example most of government and donors funded project do have pre-determined life spans of initiatives. Many community projects have a pre-planned project design imposed on them without the wide participation of community members. Typically, such a design has a specific schedule, including a fixed end-date and rigid reporting requirements. This builds inflexibility into the project from the start and frequently imposes an unrealistic pace on it. Inflexible planning often cannot adapt to events that are highly important to community members. For example a case of Uluguru Mountain road construction project, TASAF has a financial year period for ending the project that did not include the activities of the community such as farming season. During the road construction community members were fully involved in agriculture and there were no such time to participate in road construction activities. This led to delayed completion of road construction as per TASAF financial year.
Thirdly, incomplete participation or representation in decision making causes a risk that community leaders and influential people in the community whether traditional or external do not represent the whole community, but instead focus on their own concerns or agendas. At the same time, certain groups within the larger community whose participation can be highly important to community economic development may be marginalized or ignored due to culture and classes. This was observed in a case of the Uluguru Mountain road construction whereby women were often reluctant to speak publicly due to culture and religious norms. As per waluguru tribe who are most Moslem, women were not allowed to speak in the public as a result was not given room to participate during the planning processes which did not consider women’s other activities such as agriculture. In view of that the road construction was delayed as women were supposed to fetch water for the road construction instead they were busy with agriculture activities.
Recommendations:
Firstly, community development practitioners need to ensure that community members take ownership of the initiative. It is generally accepted that a true community-based initiative is one in which local people will say, we did it ourselves. This basic principle of community participation is frequently forgotten in the haste of many community initiatives. Facilitators and sponsors may rush the mobilization process in order to meet their planned goals, and in so doing, jeopardize its long-term success.
Secondly, creating strong links to outside resources and development partners as communities are not closed and self- sustaining systems. The ability of communities no matter how well organized and motivated to meet all of their needs is limited. These limits must be recognized and then planned.
Thirdly, for a successful community participation requires a strong skilled local leadership through a process of leadership development, community mobilization, capacity building, education, and consciousness raising on how-to organize communities that encompass such skills as chairing meetings, negotiating with government and NGOs institutions, fundraising, and handling budgets etc
Fourthly, optimal community leadership and optimal representation must be invested not only in supporting good leadership but in ensuring optimal representation. The participation of marginalized groups such as women, youth, old and poor class is an important part of community economic development.
Fifthly, Government need to promote community participation by encouraging grassroots self-help efforts like Uruguru Mountain road project in several ways, including funding direct operations, training, and subsidiary activities of community groups; making public information accessible to community organizations; and giving community organizations a legitimate role in the public policy process through the local government reform that advocate for community organized activities.
Conclusion
Community participation is a vital important strategy in efforts to work with community to improve their Community Economic Development. It respects the rights and ability of indigenous and other community members to design and implement programs within their community. It also opens the way for community members to act responsibly. Whether a participatory approach is the primary strategy or a complementary one, it will greatly enrich and strengthen programs and help achieve more sustainable, appropriate, and effective programs in the field. For real Community Economic Development calls for active citizen involvement in a development process which brings together a diversity of community interests and sectors. The central credo of CED according to Douglas (1994) is to develop the competency of the community to deal with its own problems. Real participation is an essential ingredient to building community competency.


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To what extent donor funded projects addresses poverty alleviation and contributed to the goals of development a case of Kilimanjaro Village Environme

Introduction
The intention of this paper is to make a critical analysis on the extent of donor funded projects has addressed poverty and contributed to the goals of development a case of Kilimanjaro Village Forest Project (KVFP) Tanzania that was sponsored by JICA.
The analysis will draw much of its information from the evaluation report that was conducted by a joint team of JICA and UNDP to KVFP. The evaluation took place between17th October to 11 November 1999. In due course of the analysis the paper will give a brief background of Kilimanjaro Village Forest Project. The evaluation exercise objectives, findings and recommendation. Beforehand the paper will sight some definitions by different scholars on what they have expressed on the concept poverty. Then finally the paper will discuss if the KVFP has addressed poverty as per the needs of the communities in Kilimanjaro and its contribution to the goals of development goals.
Poverty definition:
The word poverty has been a complicated and a relative term that has been defined in various ways from time to time by different scholars as Rahnema, M (1992: 158) pointed out that:
“There may be as many poor and as many perceptions of poverty as there are human beings-----World languages compete with each other for the number of worlds referring to the stations and conditions associated with the different perceptions of the poverty”
For the purpose of this paper discussion the analysis on poverty by Rahnema, C. 1992) has been sighted that gives different dimensions as follows:
The Materialist dimension:
Poverty is viewed as the lack, deficiencies, or deprivations of things that can be either of non-material and existential kind, or of material nature. It is inability to meet one’s end, lack of good fortune or self-confidence, not being respected or loved by others, being neglected or abandoned, etc. In addition could include discrimination, inequality, political or other forms of oppression and domination, absence of entitlements, non availability of minimum of necessaries required for economic or biological survival, as defined by one’s particular culture, all other forms of deprivation, destitutions, hunger, malnutrition, homelessness, ill health, and exclusion from educational possibilities, etc
Commenting on the materialistic point of view is that it gives a room for the meaning of poverty to be relative one, that it can differ from one culture, tribe or nation this is due to the fact that lacking or inability to meet ones end can mean differently in different culture. For example if somebody is lacking a TV set to un urban person ( Dar Es Salaam) can mean that person is poor while for the one in Kilimanjaro Masai can mean nothing compared to a person lacking a cow, which to the urban person can mean nothing.
Individual perception on poverty
Individual perceives poverty with its causes. Referring to the materialist that of lacking something someone will tend to attribute with what they lack to conditions independent of their will and beyond their control. Some can conclude that they lack the necessary ability to overcome their condition due to metaphysical causes such as God’s will or the unjust constitution of the society. On the other hand some can view the lack of things as something to be proud of it. This in some faith to both Islam and Christians shows that for the poor is likely to have more chances of going to heaven than the ones who have material things (it is real had for the rich to go to heaven as like a camel to go through a hole of the needle). Therefore differences in perceptions can give problems in getting the real meaning of poverty.
Social-cultural space-time
Time and social cultural also affect the definition of poverty. As it has been said societies can differ on lacking material thing for example in the past sukuma defined poverty as lacking of cattle while these days people talk about having a bicycle or nice house instead of a flock of cows.
The Global construct:
Global construct has come up as a result of the World Bank trying to economise the life and integrating the third word countries to world economy. The World Bank defines poverty according to the Gross National Product (GNP) and Gross Domestic Product. (GDP) They have ranked countries according to per capital GDP. They define poor countries as those who have the average of per capital income less than $100
From that perspective the economic poverty is to be perceived and acted at global level. This resulted to enrichment as desirable goal for the economy. The assessment of needs was evaluated on the bases of globally established economic criteria and systems for comparisons depending on the institution. For example the United Nations Education Social Culture Organisation (UNESCO) looked upon the percentage of illiteracy above a certain figure; World Health Organisation (WHO) poverty is expressed in terms of the ratio of doctors, nurses and health centres to the population; FAO, poverty is evaluated in terms of per capital calorie or protein in- take. UNICEF ranks countries according to their under five mortality in all these cases the poverty/ needs are perceived as figures.
All these shows up weaknesses in the correlations between income poverty and some other factors contributing to poverty “The income distribution is given more weight than other factors to wellbeing of a human such as love, story-telling, self- sacrifice, laughter, music, health, creativity” Chamber, R. (1995: 6)
Policies on poverty reduction
On view of the perception of poverty different policies and strategies have been developed in an attempt to alleviate poverty among poor countries these included: production of goods and services; sectoral reforms; redistributive policies; assistance and aid programmes. The results of all these policies and programmes on the well being of the deprived were often very different from the planner’s expectations. In most developing countries, neither the production of economic resources and commodities, nor the extension of social services has ultimately served the poor. More often has resulted in further diminishing their capacity to meet their real needs, which they used to do in the context of their traditional livelihood.
Globalisation as a recent strategy on poverty eradication aims at making the world to one village. The strategy argues the poor to follow the same route that the developed ones used to develop. The question comes how the poor can compete in the same market while they lack all necessary capacities for competing? The capacities include technology, infrastructure, human skills, capital etc. In this approach the poverty alleviation results into the poor to work for the rich rather than for themselves. Income–poverty thinking can neglect vulnerability in seeking to raise incomes. Some can think of providing subsidised loans to poor people to acquire assets aimed at raising their incomes. But this have been experienced that there is an increase of vulnerability: loss of the asset which lead to debt and being worse than before , wife separate to husband. FINCA, PRIDE Africa micro credit scheme or organization are among of the organizations in Tanzania giving small loans to women groups which for many years have not managed to alleviate poverty among women in Tanzania. Therefore Income poverty can serve only one dimension of many, and it is suspect because it serves the needs of professionals in the core of power, rather than emerging from the realities of the poor at the peripheries.
In view of the above definitions and explanations it can be summarised that poverty alleviation is a relative term that it can mean differently depending on who define it.
Background of the Kimanjaro Village Forest Project (KVFP)
In Tanzania semi arid areas are wide spread and savanna forest resources were rapidly decreasing due to the inhabitation on forest areas as well as over collection of firewood and overgrazing. The Tanzania Government thus requested Japans assistance in forestation activities in semi arid areas with purpose of deforestation and meeting local peoples needs for fire wood, through adopting community forestry approaches such as starting plantations of firewood and fodder trees and introducing an agro forestry system.
Purpose of the Kilimanjaro Village Forest Project (KVFP)
To assist forestation activities in semi- arid areas, for the purpose of alleviating deforestation and meeting local peoples needs for firewood, through adopting community forestry approaches such as starting plantations of firewood and fodder trees and introducing an agro forestry system.
Stakeholders of the project:
Forest and Bee keeping Division; Ministry of Tourism, Natural resource and Environment and staff of the Project; Village members, Government officers; JICA experts
The overall objective of the evaluation:
The evaluation aimed to grasp the local people's views on poverty and their recognition of the outcomes of KVFP in addressing poverty.
Methodology:
The evaluation applied the participatory Method as to get the subjective information such as views of the people on poverty and their recognition of the subject impact from objective indicators such as the number of seedlings distributed, survival rates and growth of planted trees. Such information can only attained through an evaluation based directly on people’s voices. The team used Focus group Discussion to identify villager’s perspective on poverty. The team held plenary meetings with female and male participants female and male participants had separate meetings respectively and were asked to identify their criteria for "poor families" and "poor people".
Results of Evaluation
The first point revealed from this study was that there was a gap between donors' and people's perspectives on poverty. The gap was seen, for example, in a finding that an "increase in income" or "improvement of economic situation", which donors have always put in the center of their programs for "poverty reduction," was not necessarily in conformity with the people's views on poverty. In this regard, it was interesting that the villagers seldom mentioned poverty factors related to money which the project of forestation did not bring any money to the community. Therefore at the project level did not address poverty alleviation according to the villagers perception on poverty.
Secondly, people seldom mentioned "empowerment" that is recently emphasized by bilateral donor agencies in western countries and international organizations, and other factors related to social justice including some concepts of democracy summarized as "good governance". This could be also considered as a gap between donors' and people's views on poverty. For the villagers, at least in their subjective views, the logic connecting "empowerment" and "elimination of poverty" did not exist. On the contrary, it was material needs such as "water", "schools" and "health facilities" that were mentioned first.
Thirdly although social justice might be an important factor for getting out of poverty in the long-term, donors should not neglect the fact that people would have little interest in social justice such as democratization unless material needs as a precondition are met. In this regard, a woman said during the female focus group discussion in that a characteristic of "poor villages" was the existence of men who would not listen to women, but this opinion was not supported as an indicator for poverty by the villagers.
Fourthly Gender and regional perspectives on poverty, the focus group discussions revealed the differences between men and women in their recognition of poverty. It was beyond question that people were mainly interested in "water", "hospitals/clinics" and "schools/ education" regardless of sex and geographical areas. However, while men showed relatively high interest in "agriculture (production aspect)" women in the same sub-village were more interested in "milling machines (processing of produced grain)" and "market (selling of products)"
Fifthly in regard to the gap among different village’s views on poverty, the team also confirmed by the crosschecking study in another sub-village that recognition of poverty also varied depending on people's living conditions. The sub-village that have good infrastructure provided by the government has better natural conditions than the other villages. Under these circumstances, the "poverty keywords" mentioned in this village, such as "water" and "school", literally looked similar to those mentioned in the first target villages, but what were meant by those words were different. For example, "water" was meant water for household use in first target village, while it was meant water for irrigation in the second village. Likewise, as for the word "school", there were high demands for primary schools in the first target village, while in other sub-village, where there were already primary schools; lack of kindergartens was mentioned as a "poverty keyword".
Also, in one sub-village the participants mentioned many agriculture-related "poverty keywords" such as "agricultural inputs", "farmland" and "irrigation water", which suggested agriculture was widely practiced there compared with the other villages.
From these findings, it could be said that even in the same geographical area, factors of poverty recognized by the people might be different from community to community and by gender. Therefore, poverty reduction activities must be carefully examined based on a solid understanding of these differences.
KVFP addressed poverty?
As it has been discussed in the results of what the people differed in the perception of poverty it can be said that the KFVP project did not address poverty as per the first target village members’ perception on poverty. Throughout the FGD participants did mention "school construction" or "well digging", agriculture inputs, farmland, irrigation water; health facilities and road. They did not mention the KVFP activities such as "distribution of seedlings" and "establishment of Village Environmental Conservation Committees (VECCs) which were the major activities of the project. Villagers hardly recalled the KVFP activities until a reminder was given by the study team. This fact itself was evidence of low recognition of people regarding the impact of KVFP.
In another village where KVFP had provided water to produce bricks for school construction, procured 100 iron sheets for the school roofing. It was obvious from the focus group discussions where these activities were frequently mentioned that people appreciated this support and acknowledged them as positive impact for poverty reduction. People pointed out that as the result of the construction of a new school in the village, children were able to attend school from home, not from under someone else's roof in another village, and that saved living costs and parents became able to pay more attention to children. Moreover, there was an opinion that women's workload would be reduced if children live together and help with housework and thus they might become able to spend their spare time for income-generation or other activities. From this it could be said that KVFP's assistance, though indirectly, addressed a poverty. In addition to that on the other hand, villagers pointed out that the school brought about positive effects beyond its original purpose: for example, the school roof provided shade for village meetings or for nearby cattle, and the school building was suitable for antenatal care or other activities in which privacy must be considered. In this regard, the assistance from KVFP had indirect connection to the poverty alleviation.
Lessons Learned and Recommendation
Consideration of the multidimensionality of poverty the evaluation study confirmed that there were many aspects of peoples' perspectives on poverty, which also varied by sex and region. When planning a project for poverty reduction, one should keep such differences in mind and formulate an appropriate plan for the project site.
Addressing social aspects of interventions Originally, KVFP was a purely technical project in the forestry sector, not a poverty reduction project. The project thus did not clearly intend to directly address poverty issues. However, the experts came to recognize that people would not plant trees until their minimum needs were met, and started efforts for the improvement of the target groups' living conditions as a prerequisite for tree-planting activities.
The first lesson learned from this case is that JICA experts must give more attention and sensitivity to the living conditions and needs of the people living in the project sites. Secondly, when a social problem is found, it should not be addressed from the individual judgment of an expert or different interpretation of budget items: JICA should arrange to incorporate measures to address social issues in project activities under certain conditions, and should prepare a mechanism for such arrangements.
As stated above, the impact of technical cooperation to a specific sector on multi-faceted poverty issues is limited a case of KVFP. That is why other donors implement poverty reduction projects dealing with several sectors under the name of "integrated approach" or "multi-sector approach". However, it is impossible in reality for one project to include all sectors related to poverty factors. In Tanzania, where poverty reduction has consistently been a priority since independence, the government and donors have tried a variety of poverty reduction approaches. However, none of them can be said to take a full-fledged "integrated approach".
JICA could look towards having flexibility to extend assistance in one sector to others without losing its strength of sector-specific technology transfer. It is very important to JICA projects to have attempted to ensure that beneficiaries participate in the design process whereby the predefinition of poverty alleviation is well understood by both stakeholders this will avoid the misconception of poverty alleviation among stakeholders.
The above recommendations are in the same position with the Poverty-Reduction Strategy by the Government of Tanzania that was issued in October 2001, which was prepared in the context of the enhanced Debt Initiative for Highly Indebted Poor Countries (HIPCs). The PRSP provides a medium term strategy for poverty reduction and is seen by some as an element of the Tanzania Assistance Strategy a strategy for economic and social development, developed at national initiative and encompassing the joint efforts of the Government and the international community. The PRSP may also be considered as a follow-up both to the Government’s Vision 2025 (the Government’s vision of economic and social objectives to be attained by 2025) and to the national poverty-eradication strategy, which outlines objectives for poverty-eradication efforts through 2010. The PRSP defines the priority sectors; and within these, priority items as education/primary education; health/primary health; water; roads/rural roads; judiciary; agriculture/agricultural resources and extension; and HIV/AIDS.
The strategy also points out that substantial efforts towards poverty reduction by international partners are still being implemented outside the framework of central government budget. To ensure maximum progress toward poverty reduction and improved predictability of budgets, these efforts would need to be rationalized and realigned progressively, to reflect PRSP priorities. Second, a large amount of international resources is being channeled through specific donor-driven projects, sometimes entailing duplication. An effective struggle against poverty will require continued efforts to channel these resources in the context of sector-wide development strategies that will achieve the millennium goals.
Conclusion
The realities of poor are local, complex, diverse and dynamic. Income poverty, though important, is only one aspect of deprivation. The participatory evaluation/ appraisal confirm many dimensions and criteria of poverty alleviation according to the beneficiaries. Therefore poverty alleviation strategies by donors/ practitioners need to realise that “to successfully overcome poverty of the local people KVFP being a case requires not only addressing the income aspect, but also requires a broader transformation that includes involving the community in defining poverty alleviation strategy for viable project design, building the capacity of the people, empower local people in the governance of the community economic development organisation as a whole. This shows that people develop themselves. They are not developed. Tanzania should rely on its own strategies in responding to poverty according to its reality.





References:
1. Majid Rahenema: 1992 the development Dictionary; A Guide to Knowledge as Power,
2. JICA/UNDP Joint Evaluation (Poverty in Tanzania)
3. http://wwwjica.go.jp/english/evaluationreport/pdf (sighted 19th Nov 2007)
4. Robert Chambers; 1995 Poverty and Live hoods: Whose reality Counts? Institute of Development Studies (monograph series) DP347
5. Stan Burkey; Peoples First: A guide to self- reliant participatory rural development ZED Books, London