Enabling environment needed for youth entrepreneurship - Written By Dr Prosper Ngowi

Dr Prosper Ngowi

Given the current increasing competitive labour market in Tanzania, attention should shift from getting a job to creating jobs through entrepreneurship. Focus should be on creating an enabling environment for having more job creators than job seekers through an entrepreneurial process. Various demographic groups have issues specific to themselves in the context of entrepreneurship. One of such groups is the youth. This is a very important group, which forms the largest, most dynamic, vibrant, innovative and potential segment of the Tanzanian youthful nation. Given the importance of youth entrepreneurship, selected issues on the matter are identified below.

Bad entrepreneurial era

In order to understand the current entrepreneurship landscape in Tanzania, it is important to look at the country’s history. There are two major epochs in the development of entrepreneurship in the country. The first one is the period between 1967 and the mid-1980s. This is an epoch that characterises Tanzania’s socialist past. The country embraced a state-controlled economy. There was no room for market economy due to the dominance of Marxist-Lenninist oriented social, political and most importantly economic thinking. Development of the private sector in general and free enterprises in particular had no chance.

One experienced an anti-entrepreneurial educational, political, legal policy and regulatory environment in this epoch. It is an epoch where attempting to create free private enterprises was more or less equivalent to being an enemy of the state. This was arguably the dark age and lost years in the context of entrepreneurial development in Tanzania.

Good entrepreneurial era

Major and far-reaching reforms in the management of Tanzania’s economy saw the light of day from the mid-1980s onwards. This is the time when the country embraced the private sector and market-led economic policies. Among others, this new era marked the beginning of somehow a friendly educational, political, legal policy and regulatory environment as far as entrepreneurship is concerned. It is in this era where corporate chiefs and captains and titans of the industry both small and big, started walking proudly. One looks forward to seeing better and eventually best entrepreneurial years in Tanzania

State of youth entrepreneurship

Increasingly, the youth of all calibre in Tanzania are becoming more and more aware of, as well as interested in, entrepreneurship. A good attitude of becoming job creators rather than job seekers is arguably slowly penetrating into some minds. This has been partly the case due to a rather tight and ever competitive labour market. It has also been caused by various policy and educational interventions.

Finance for youth entrepreneurship

Availability of finance was a big challenge before the mid-1980s. This was due to a rather limited space in the supply of financial service providers. Banking and non-banking financial institutions were short of supply before liberalisation in the mid-1980s and 1990s. After liberalisation of various sectors, the challenge of availability of finance was almost kissed goodbye thanks to the multiplicity of financial institutions that established themselves in Tanzania. What has remained a challenge, however, is access to generally available funds. The youth, in particular, face extra hurdles in accessing the available finance as partly outlined below.

Constraints in accessing finance

There is a long litany when it comes to constraints that stand between the available finance, on the one hand, and the youth, on the other. These constraints take a form of requirements that most financial institutions put forward for those wanting to access their funds.

Typical requirements for accessing the funds from a particular financial institution, include having a formal business with a business license and a business address, having a good, convincing and bankable business plan, having collateral, showing good business records, including sales, sales revenue and profit, indicating reputable referees, having to pay for loan processing fees, paying high interest rates and at times rough treatment incase of delayed payment or default. All these and many other factors are hindrances for the youth to access finance. They are understandable from a business perspective, but they remain a necessary evil that can be solved.
 

A way forward

Recognizing the importance of and a need for supporting the youth in their entrepreneurial ventures is not a contested matter. Among the most important issues is identifying the game changer that will turn the entrepreneurial potential into the youth’s reality. Among such game changing approaches include the provision of adequate training, mentoring and access to finance for the country’s bulging population of young men and women.

It is in this context that various initiatives to unleash the entrepreneurial potential in the youth must be supported by all stakeholders. One of such unfolding initiatives that deserves support from all corners is the Youth Business International (YBI) –  the Prince of Wales Foundation - that aims at introducing its proven model of providing training, mentoring and access to finance for young entrepreneurs in Tanzania

source: http://www.thecitizen.co.tz/oped/ECONOMICS-MADE-SIMPLE--Enabling-environment-needed-f/-/1840568/2435204/-/12nu78sz/-/index.html