BizCLIR

The ability to launch and build one’s own enterprise that provides income, stability, and opportunity for growth is a dream the world over. Particularly in poor or remote areas where industry is weak and full-time jobs are few, there is enormous promise in the idea that one’s own enterprise, or an enterprise formed as a cooperative, can be the source of a livelihood and perhaps also provide work for others.

Yet even for entrepreneurs with a sound concept and a viable market, the forces against launching a successful business can be fierce. The act of registering with the state, thereby joining the formal economy, can be cumbersome, confusing, and expensive, particularly for small entrepreneurs with limited education and few resources. The licensing and regulatory environment can be so thick that enterprises opt to stay out of the formal sector, thus sacrificing the many opportunities for growth that accompany formalization. The path toward forming a cooperative or producers association, a business model that assists small farmers and rural constituencies in particular, may be blocked by bureaucratic interference. Foreigners who wish to launch or invest in a business may also find that they are on hostile ground. In some instances, the state can be so invested in its economy through the operation of its own enterprises that it is nearly impossible for private companies to compete in certain sectors. The influence of large private players can also make entry into certain markets wholly unviable.

The purpose of this chapter is to build upon the World Bank’s general examination of what it takes to start a business in Tanzania – how many steps to register, how much time registration takes, and so forth – and examine the legal, institutional and social backdrops against which new private enterprises can be launched and take root. This analysis is directed toward enterprises across the business environment, including micro-enterprises, small and medium-sized enterprises (SMEs), cooperatives, large domestic firms, and regional and international investors. The findings indicate that such conditions in Tanzania are far from ideal, but not without promise.