BUSSINESS IN THE THIRD WORLD COUNTRIES: A CASE STUDY OF THE DAR ES SALAAM CITY OF TANZANIA By SAID I. ALLY A Dissertation submitted in partial fulfillment of the Requirements for Masters of Business Administration in Corporate Management (MBA-CM) of Mzumbe University December, 2020
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BUSSINESS IN THE THIRD WORLD COUNTRIES:
A CASE STUDY OF THE DAR ES SALAAM CITY OF TANZANIA
By
SAID I. ALLY
A Dissertation submitted in partial fulfillment of the Requirements for Masters
of Business Administration in Corporate Management (MBA-CM) of
Mzumbe University
December, 2020
i
CERTIFICATION
We, the undersigned, certify that we have read and hereby recommend for acceptance
by the Mzumbe University, a dissertation entitled: Business in the Third World
Countries: A Case of the Dar es Salaam City of Tanzania, in partial fulfillment for
the degree of Business Administration in Corporate Management.
Table 4. 4: Working Experiences of Workers ........................................................... 26
xi
LIST OF FIGURES
Figure 4. 1: Number of Workers in Management levels........................................... 27
Figure 4. 2: Kinds of Business Conducted in the third world countries .................... 28
Figure 4. 3: Forms Business in the Third World Countries ....................................... 29
Figure 4. 4: Extent staff motivation influence business development in third ........ 31
Figure 4. 5: The extent unemployment rate increased business development ........... 32
Figure 4. 6: The Extent Management Experience is the dominant factor ................. 33
Figure 4. 7: Number of Founders Contributing Development .................................. 35
Figure 4. 8: The extent prior self-employment is dominant factor for business ....... 36
Figure 4. 9: The extent Prior Business was domiant factor for business .................. 37
Figure 4. 10: Extent Prior Size Experience is the dominant factor for business...... 39
Figure 4. 11: Extent workforce Training is the dominant factor for Business........... 40
Figure 4. 12: Extent Management Training is the dominant factor Business ........... 42
Figure 4. 13: Extent Technological Sophistication is the dominant factor .............. 43
Figure 4. 14: The Extent Market Positioning is the dominant factor for Business .... 45
Figure 4. 15: The Extent Market Adjustment is the dominant factor Business ....... 46
Figure 4. 16: The Extent New products is the dominant factor for business ............ 48
Figure 4. 17: The Extent Management Style is the dominant factor for business .... 49
Figure 4. 18: The Extent Customer Concentration is the dominant factor for .. 51
Figure 4. 19: The Extent Competition in Business is the dominant factor ................ 52
Figure 4. 20: The Extent training knowledge and skills increase business................ 54
Figure 4. 21: The Extent staff and innovative knowledge for business ..................... 55
Figure 4. 22: The Extent Tax payments and compensation knowledge and skills . 56
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CHAPTER ONE
INTRODUCTION
1.0 Introduction
This chapter presents background to the study, statement of the problem, the general
and specific objectives, research questions, significance of the dissertation, definitions
of the key terms and the study limitation and delimitation. The chapter also provides
the outline of the dissertation to bring more clarity.
1.1 Background of the Study
Different countries in the world strive to promote their economies via encouraging
business activities in different areas. Majority developed and developing countries in
the world have used various strategies in encouraging people in their country on
appropriate ways of conducting business so as to increase household and national
income.
Small and medium enterprises (SMEs) developments in the majority countries of
America including USA have employed about 58.9million people such that about
47.5percent were private workforce in the year 2015 similarly all which employed
less than 100 staff had largest share in terms of employment (SBA., 2018). The
increase in the number of SMEs in the USA has increased significantly the
employments opportunities to about 1.8 in the period of twelve months. Moreover,
the number of proprietors has increased in 2016 by 2.3 percent relative to the
previous year (Hart et al., 2016). In Tanzania, the Tanzania Development Vision 2025
documented that the SMEs are key towards the countries long terms development i.e.,
social-economic development. The estimates revealed that the SMEs sector of
Tanzania’s consists of more than 3million enterprises which contribute more that
27% of the country’s Gross Domestic Product (GDP).
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In the European countries that used various strategies in promoting business
environment. The government of UK has been established a National Action Plan to
implement the United Nations Guiding Principles on Business and Human Rights
(UNGPs) and as established in 2013, however the main focuses were to promote
business in country, prevent human right of people in doing business and creation of
employment opportunities (Chris, 2018). However, In China business has become
much easier than it was decades ago which enabled the economic growth since its
economic reforms of the year 1978 in three decades ago (McFarlan, 2012). Now,
China is among of the leading countries economically which is followed the
developed nations like USA, UK, German and other nations but at past it had the
same level with Africa and other Asian nations and projected to become largest by
2020. Apart from that Tanzania has also some strategies for improving small and
medium enterprises to its people through providing soft loans by government, identity
card for 20,000 for each entrepreneur and addressing conflicts between interact and
government municipals as well as allowing commercial banks to provide training and
loans to the entrepreneurs.
Also, in Asia, India is among of the second country in the Asia continent after China
that has already attain higher advance level of business, because it being the 7th
largest and 2nd country that have many firms which are greatly involved in economic
activities including business and industries, however, India was considerably easier
over the last two years. It now takes 35 days to register a company in Mumbai,
compared with 71 days a year ago (Gardens, et al, 2010). Tanzania also has provided
simple ways to the small and medium entrepreneurs to register their business and
company from BRELLA with simple conditions through online. Currently the
government of Tanzania has been providing business numbers and registration to the
small and medium entrepreneurs within the country.
Business in Africa are facing significant challenges of low progress for small and
medium entrepreneurs mainly to youth and women which contributed greatly
increased poverty and poor living conditions to the people particularly in rural areas.
Shortage of jobs in South Africa has been led to the poor living conditions of people
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and beside South Africa is one of the most unequal countries in the world, where the
top 1 percent of households own 70.9 percent of the wealth (WORLD BANK, 2018).
In addressing these challenges, the government has been encouraged the people to
South Africa, to participated effectively in business activities that can create
employment. Over the past several decades, business in South Africa emerged at the
larger extent and larger number of youths and other people outside from the countries
were employed while many hindrances for development of business to small and
medium entrepreneurs are lack of enough capital, low knowledge of tax payments,
rejection of financial institution in access loans and lack of business education.
In Tanzania, business plays a great role to the development of economy through tax
collection and employment opportunities, improvement of living standard of people,
as well as country’s social-economic and environmental development. In the past
several years, the Tanzania business sector has contributed greatly to social-economic
developments mainly via job creation, improved livelihood of the people, income
generation and equal allocation of the income, among others thus contributing
towards poverty alleviation. On the other hand, it has been estimated that about a
third of the Gross Domestic Product (GDP) in Tanzania originated from business
(World Bank, 2012).
Small and medium enterprises in Tanzania are the engine for the economic growth
and poverty reduction in Tanzania. There are larger number of people in the country
are involved in small and medium enterprises (SMEs) and almost 95 percent of
the businesses in Tanzania are Small and Medium Enterprises (SMEs), and they
represent about 35 percent of the country's GDP, according to the Tanzania Chamber
of Commerce, Industry and Agriculture (TCCIA) in 2018 (TIC, 2018). The increase
of the number of small and medium enterprises has been increase the improvement of
the living standard of people also government collect taxes from the business where
35 percent of GDP was collected by the year 2018 according to Tanzania Investment
Centre (TIC, 2018).
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1.2 Problem Statement
Over the years, the government of Tanzania, has put different strategies to support
development of Business in the country through different efforts as support growth of
her SMEs particularly provision of the access to loans from different financial
Institutions in Tanzania (TIC, 2018. For example, in December 2016, the African
Development Bank (AfDB) approved USD120million Line of Credit (LOC) to
Tanzania to financial infrastructure, and SME projects. The LOC is allocated to
CRDB bank, the largest commercial bank in Tanzania that supports different sectors
of the economy including power generation plants, manufacturing, agriculture,
mining, fishing, education and SMEs. Besides in 2016, the Tanzania officially
launched the Tanzania’s Entrepreneurship and Competitiveness Centre (TECC) to
promote entrepreneurial innovation and competitiveness in the country which aims to
promote entrepreneurship and competitiveness in SMEs in Tanzania through skills
development in entrepreneurship, innovation and competitiveness promoting local
economic development using the triple helix cluster approach such as university-
industry-government relationships for innovation and providing business intelligence
through studies and advisory services (TECC report, 2018).
Apart from these strategies made by the Government Tanzania in supporting business
in the country business is still weak compared to other developing like Kenya,
Rwanda, South Africa and Nigeria. According to OECD (2015) on the roles of
business in third world countries is providing employment opportunities to masses of
people where by over 95 percent of in the third world countries including Tanzania
business were small and medium enterprises, which account for 60-70 percent of
employment in most countries. As larger firms downsize and outsource more
functions, the weight of small and medium business in the economy is increasing.
Therefore, study was conducted on the study titled business in the third world
countries.
1.3 Objective of the Study
The main objective of this study was to assess business in the third world countries
using case study of Tanzania of, Dar es Salaam region.
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1.3.1 Specific Objectives
i. To ascertain kinds of business conducted in Tanzania.
ii. To determine dominant factors for business development in Tanzania.
iii. To examine Knowledge and skills for business development in Tanzania.
1.4 Research Questions
i. What are the kinds of business conducted in Tanzania?
ii. What are the dominant factors for business development in Tanzania?
iii. What is the knowledge and skills for business development in Tanzania?
1.5 Significances of the Study
This study was beneficial to the developing nations like Tanzania after observing
ways of addressing challenges that are still facing business in the country. Developing
nations like Tanzania may used findings from this study when need to improve
business in the country.
Also, the study also was beneficial to the policy makers of business: policy makers
may use findings from this study when need to create policy that will favor
development of business in the country. Many of the policy makers used research
when adopting new policy that need to address various challenges facing people in
the country.
Furthermore, the study also added literature reviews for the other students and
researchers when need to conduct studies on the same related topic. This study used
as references for further research to the students and researcher.
1.6 Limitation and Delimitation of the Study
Insufficient of funds: In this study, the researcher was expected to face challenge of
shortage of fund for stationeries including photocopy, printing, binding and transport
cost during movement in data collection from the field area. In addressing this, the
researcher seeks financial assistance from the family members and friend in order to
get fund for stationeries when needed.
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Poor cooperation from some respondents: some of the respondents provide enough
cooperation to the respondents during data collection particular in public offices;
some of the respondents are not ready to give official data for the research activities.
The researcher expected to use various strategies that influenced respondent’s
participation from the study including educating them about important of research to
the people.
Time limit: One of the limitations that researcher expected to face during data
collection is shortage of time for data collection. There is only one semester for the
researcher to complete his study. This time is not enough to complete his study.
Therefore, the researcher ensured that all activities within the study are conducted
timely as planned by the management of research unit at Mzumbe University.
Some of the respondents may not able to filled questionnaire during data collection
hence the researcher used interview as a method of data collection. In order to ensure
that respondents do not ignore in providing data to the researcher interview method
employed in collecting data from respondents.
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CHAPTER TWO
LITERATURE REVIEW
2.0 Introduction
The section presents key concepts of the study, theory explaining the study,
theoretical literature reviews related to the specific objectives of the study such as
kinds of business conducted by the third world countries, dominant factors for
business development in the third world countries and knowledge and skills for
business development in the third countries and gap of research.
2.1 Key Concepts
2.1.1 Business
Lei, (2005) defined business collection of people and resources organized to provide
a product or service to others with the objective of sustaining themselves
economically and/or for generating economic profit. Business is a set of interrelated
activities carried out with a view to make profit.
2.1.2 Third World Countries
According to Bozyk, (2006) Third world countries means less developed
countries, less economically developed country or underdeveloped country is a
country with a less developed industrial base and a low Human Development
Index (HDI) relative to other countries.
2.2 Theory of the Study
2.2.1 Growth Theory
This is among of the business theory which explains how business can grow and
sustain in the community. This theory was first created by Jovanovich in 1950 and in
1960 and models are collected in Uzawa in 1969. The theory was first published by
the National Bureau of Economic Research in Cambridge University as a business
theory. This theory offers two explanations for the growth of and says roughly that
the growth of living standard of people depends on the science. The other
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explanations that discussed by theory involved the incentives those businessmen
receive from government and financial institutions for conducting business. Growth
of business could begin only when we hard work on business and business enterprise
were free of interference by authority. However, the growth of business also depends
on the evolution of the policies and institutions that shape our incentives. Moreover,
the theory explaining that the growth and development of the business depends on the
factors: The progress of science and productive knowledge, the growth of individual’s
skills on business incentives and government policies of business.
This theory was applicable on this study since can be used for developing business
activities in Africa particularly in Tanzania when we use incentives that we get from
government and financial institutions also setting important government policies of
business that is implemented practically, providing skills and knowledge to the
people on business and applying science and technology on business.
2.3 Theoretical Literature Reviews
This chapter presents the theoretical literature reviews that basing on the specific
objectives of the study as explained below:
2.3.1 Kinds of Business Conducted by the Third world countries.
In recent years, the African markets are ever-increasingly open for various businesses
to local and international citizens. Despite the perception, that were elevated and
uniform risk in different forms, yet there is no any potential difference with others.
The sound business practices usually enable a well-functioning firms and funds to
change business strategies into realistic results. However, the continent’s rich
diversity and undoubted complexity make it possible to identify five strategic critical
success factors that likely distinguish success from failure when executing African
growth strategies.
Akinboade, (2010) the study reported on Business conducted in Africa. The study
employed interview and questionnaire in collecting data from the respondents. The
respondents were selected through snowball sampling and simple random sampling in
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collecting data from the people in South Africa. The study found that Africa is known
for its vast supply of natural resources. The continent is rich with oil, gas and other
energy sources. It is well known for its gemstone mines, particularly diamonds. It has
some of the most lush, dense tropical rain forests on Earth, which are home to
thousands of species of flora and fauna not found anywhere else. But Africa has
another vast resource its people. Africa has vast opportunities for workforce
development, particularly in the area of unskilled or minimally skilled labor.
Furthermore, the study reported that Business in ensure employment opportunities for
members of the unskilled and lower-income groups of African society are turning
these groups into consumers of previously inaccessible and unaffordable goods. Some
of the Africa countries are involved in selling luxuries goods due to the level of
development attained by such African countries for example South Africa, the
African nation widely regarded as the most “first world” of all nations on the
continent has the highest per-capita population of luxury car owners of any country in
the world. The middle class in the Western sense of the term is a very small segment
in the African population, which is mostly either very rich or very poor. But the
African middle class is growing, and as more people benefit from business in the
form of job creation and access to previously unattainable luxury goods, the middle
class.
2.3.2 Dominant Factors for Business Development in the Third World
Countries
Kuzilwa, (2003) revealed that, over the past fifteen years, Tanzania has embarked on
an ambitious and long process of economic, social, and political reforms to improve
the business environment and to increase economic growth and reduce poverty. In the
past five years, despite adverse weather conditions and deteriorating terms of trade,
the economy of Tanzania has been growing at an annual average rate of more than 4
percent (UNDAF, 2006). For example, in 2003, the economy grew by 5.6 percent in
real terms. Inflation had been reduced to 4.6 percent by March, 2004 (Budget speech,
2005). The balance of payments position has also improved substantially with foreign
exchange reserves rising and maintained at a sustainable level (UNDAF, 2006).
10
There are different dominant factors that influencing development of business in
Africa, one of them is business partnership which is almost is in every sector, there
are different business in Africa which are conducted under the partnership of different
people in Africa, the focus of business partnership is to increase capital and wealth of
business also to share business profits and to increase business achievements. But
also, the implementation of business partnership in Africa is challenged by the
situation where government is under increasing pressure to demonstrate
improvements in local quality of life and skills-transfer, deriving from the presence of
foreign business. Some business will hope that the narrow pursuit of their business
objectives suffices in the eyes of host governments; however, those that conceive of a
longer-term strategy will, within what is reasonable for their size and sector, other
business continued to complain about poor quality regulators and government
counterparts.
On the other hand, African business operations strategies that are formed and rolled
out with such a mindset are more likely to encourage and enable staff to anticipate or
recognize challenges and to reposition the business to learn and gain from these.
Business that succeeds in Africa will be those that find ways to prevail and to
regenerate not just endure amid various likely difficulties. They will be those that
probe alternatives and do not let errors go to waste, instead using these to adjust
approaches. Therefore, one should expect the unexpected as strategy rolls out.
Business that account for relevant threats will see enormous opportunity within the
continent.
UNDAF, (2006) conducted the study in Tanzania on the study factors influencing
development of business in Africa. The employed simple random sampling and
system sampling in selecting 150 respondents from the study area in Tanzania. The
findings revealed that among the dominant factors for the business development in
Tanzania are development of infrastructures like roads, railways airports,
development of transport and communication, good policy of trade, presence of peace
and security within the country. The study also added that business development in
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Tanzania is improved due to the good business environment created by the
government.
2.3.3 Knowledge and Skills for Business Development in the Third Countries
Ajen, (2011) revealed that business in the developed nations are part of larger
category for the development of economic sectors for the developed countries, this
made the government in developed countries to introduce different initiatives that can
be used to improve business development in the developed countries (Ajen, 2011).
For examples in the European countries such as United Kingdom, German, Belgium
established different business colleges that aimed at conducting training for the
people who are intended to conduct business.
There are different business colleges that supported in providing skills and knowledge
for the people and businessmen. It was revealed that due to the provision of skills and
knowledge to the people on business in Europeans countries, it helped to the
development of business in the countries, for example, they all together form 98.8
percent of all business companies in European Union, therefore education is
considered to be the engine for society development in business and that can increase
knowledge and skills of practicing business. Small and medium business in Europe
plays significant part in employment and professional training of young people.
Compared to big business, they employ more women, young people and part-time
employees. Businesses are closely connected with the region than large employers
and therefore have significant influence on further the region’s development. Only
this way the mayors can secure loyalty of these employers and support them in their
business through provision of skills and knowledge of business (Wach, 2014).
The other dominant factors that influencing the development of business in Africa is
developing local content capacity, working with other investors, indigenous firms,
local communities and governments to improve the quality and quantity of local
suppliers particularly around transparency, sustainability and the credibility of anti-
bribery and corruption measures. Improving the business environment coordinating
with governments and communities to convert shared investor challenges into
12
opportunities in Africa this improved the business environment and further
demonstrate to the international investment community that Africa is truly open for
business (Ajen, 2011). These initiatives were initially being launched in Ghana,
followed by Kenya and Uganda. While these are the priority markets, the reach of
Invest in Africa is far wider, and our operations on the continent grew in parallel with
our expanding membership.
2.4 Empirical Studies
2.4.1 World Related Studies
Udell (2004) carried out a study in the United States. The objective of the study was
to find out whether banks are more stringent and cautious in approving the financing
for SMEs, as they do not consider them as attractive and profitable undertakings. The
finding shows that nearly half of small business (SMEs) financing comes from
externally provided debt. Realizing that, SMEs continued to receive strong support
from the banking sector. In 2004, the banking system approved RM31.6 billion of
new loans to more than 92,000 SME accounts which shown a significant increase of
21.9 percent from 2003. Loan disbursements grew strongly by 15.3 percent to
RM100.4 billion, while outstanding loans to SMEs expanded by 7.7 percent to
RM88.3 billion.
Krishma et al. (2012), carried out the study on factors affecting the Performance of
SMEs in Malaysia. In Malaysia, despite SMEs’ have a significant contribution to the
economy, they have not been given adequate attention as the various researchers have
been biased towards larger and listed enterprises in Malaysia. So, this study aims to
investigate the factors affecting the performance of SMEs in the manufacturing sector
in Malaysia. The Contingency Theory developed by Fiedler (1964) was used to
support this research. Based on the data collected from 300 SMEs in the Malaysian
manufacturing sector, the results showed that there is a significant negative
relationship between ineffective entrepreneurship as well as inappropriate human
resource management (HRM) and the performance of SMEs. On the other hand, the
results also proved that there is a significant positive relationship between the use of
marketing information as well as the application of information technology and the
13
performance of SMEs. In short, this study found out that the use of marketing
information can influence the performance of SMEs at the highest. Rodriguez et al. (2008) carried out on the study on bank financing to Small and
Medium-Sized Enterprises (SMEs) in Colombia. The descriptive study aimed to shed
light on current trends and policy challenges in the financing of small- and medium-
sized enterprises (SMEs) by banks in Colombia. The paper is motivated by the well
documented financing gap for SMEs, whose causes are complex and multi-
dimensional. The descriptive study based on data collection and interviews with the
authorities, a representative sample of banks, and other relevant entities, the authors
analyze the evolution and characteristics of this market in recent years. The findings
show that bank financing to SMEs is becoming a strategic segment for Colombian
credit institutions. The current business and risk management models for SME
lending are still relatively underdeveloped, but greater sophistication is expected as
the market matures. Important institutional and policy constraints to SME lending
remain, but are not yet binding. In order to address these constraints before they
“begin to bite”, the authors identify and describe a potential policy reform agenda.
Kariuki’s, (1995) study on small and medium-scale firm’s bank credit access in
Kenya. A survey of 89 small and medium-scale firms in manufacturing and service
industries, combined with secondary information from commercial banks, found that
from 1985 to 1990 the average real volume of credit for the sample firms fell, except
for the year 1986 which showed a marginal increase of 1.5 percent. Several deterrents
to utilizing formal credit were identified. Small scale borrowers were found to be
faced with higher nominal interest rates at higher inflation rates in the latter half of
the 1980s. Moreover, the explicit transactions costs of borrowing were found to be
high in relation to interest costs.
Graham and Quattara (1996) carried out a study on financial challenges facing SMEs
in South Africa. They carried out a cursory analysis of survey and research results of
SMEs in South Africa. Survey results revealed the common reactions from SME
owners interviewed. When asked what they perceive as constraints in their businesses
14
performance and especially in establishing or expanding their businesses, they
indicated that access to funds is a major constraint. This is reflected in perception
questions answered by SME owners in many surveys (Graham and Quattara, (1996).
The gap for the survey was to identify financial challenges facing SMEs in South
Africa.
Hall and Fang (2004) also found out that the lending to SMEs is generally more risky
than larger firms. Therefore, it has been found that most of the financial institution
and non-financial institution required collateral in the form of land or buildings. The
value of the real-estate security is usually set at twice the amount of loan
(Bhattacharya, 2000), which many enterprises fail to provide as collateral. SMEs also
regarded as high-risk borrowers because of their low capitalization, insufficient
assets, and high mortality rates (Sia, 2003) and consequently, they are not offered any
attractive deals in terms of loans and interest rate. Thus, this research is aimed at
investigating the factors that are evaluated by banks providing business financing to
SMEs. World Resources Institute (2009) carried out in Malaysia showed that in most
countries, SMEs have difficulty in securing financing because they do not have the
necessary systems in place to provide transparent information to investors or lenders.
In addition, they cannot provide the high collateral requirements that banks require
for the higher risk. These financial conditions are similarly found in Malaysia
whereby SMEs like in most other developing countries typically operate in a much
less supportive environment whereby opportunities to tap into formal commercial
lenders are much fewer than developed economies. With regard to debt financing,
SMEs are often considered too large for microfinance institutions and too small for
the commercial lenders besides from being lacking the collateral requirements of
banks. The World Resources Institute also posits that for the large majority of local
banks, SMEs finance is regarded as unattractive business as their perception is
characterized by high risk and transaction costs. This perception may have resulted
from the mismatch between the bank’s requirement and the accounting and
15
management practices common among SMEs as well as the lack of suitable credit
scoring mechanism for the SMEs (Wendel and Harvey, 2006).
2.4.2 Tanzanian related studies
The survey of SMEs in Tanzania was carried out by Swiss contact in May, 2003.They
conducted a survey of 4,050 households in the Uruhu Corridor, which includes five
regions of the country. The number of households in these regions totals about 2
million and represents about a third of the country’s population. The purpose of the
survey was to estimate the number of micro and small enterprises (MSE) and micro
and small farms (MSFs), and to explore their challenges and use of financial and
nonfinancial business services. Fifty-seven percent of the households had a member
who was operating an MSE or an MSF; for the MSE portion, it was over 38 percent.
Almost 43 percent of the MSEs were owned by women, 48 percent by men; 8.6
percent by families (husband and wife), and 0.5 percent by multiple owners. The
781,687 MSEs employed 1,260,520 persons, including the working owners, an
average of 1.6 per enterprise.
Ngowi et al. (2006) carried out a study on SMEs competitiveness facility (SCF). The
desk study review methodology was applied to find out the benefits gained through
the removal of economic barriers. Findings from the research therefore are based on
the review of appropriate literature on the subject of this study. Generally, the review
process has been carried out by way of three different but interrelated stages of
methodology and approach. The first stage involved a pre-study meeting and
discussion between research consultants (sub-contractors), Lattice Consulting Ltd
(contractors) and SCF (client). The reviewed literature and the analysis of the same
indicate that SMEs in Tanzania play a substantial role in jobs and incomes creation,
in economic growth and poverty alleviation.
The SMEs however are not competitive enough in terms the capacity to produce the
high-quality products demanded in the export market. Initiatives and activities that
focus on addressing quality issues in the SME sector should therefore be supported.
SMEs are also not competitive enough in terms of prices of their products due to high
16
production costs, which are the result of many constraints facing the sub-sector. The
constraints, including weak, ineffective and inefficient LRJ framework harm SME
competitiveness; poor infrastructure and inadequate capital, lead to high transaction
costs that make the SMEs less competitive than those that do not face the constraints.
These gaps in knowledge in the reviewed literature are presented here: SME rate of
growth, the regional presence of SMEs by sector and the proportions of small
enterprises to medium enterprises to micro enterprises. Evidence of similar benefits
being derived from increased access to better quality imports has also been recorded
by Kessous and Lessard, (1993) in Mali. Despite the success stories however, a
significant number of studies indicate that the majority of small-scale enterprises lack
the capacity to meet standards required within these niche markets (Dawson, 1994).
The gap for the study understood the benefits gained through the removal of barriers
which previously restricted access to imports have been offset by the rising and
prohibitive cost of imports, created by currency devaluations. While several firms in
(Dawson’s, 1993) Tanzanian study contracted as a result of increasing import costs,
others were forced to cease operation.
2.5 Conceptual Framework
A conceptual framework can be defined as a set of broad ideas and principles taken
from relevant fields of enquiry and used to structure a subsequent presentation
(Reichel and Raey, 1987). It is a research tool intended to assist a researcher to
develop awareness and understanding of the situation under scrutiny and to
communicate. It forms part of the agenda for negotiation to be scrutinized and tested,
reviewed and reformed as a result of investigation (Guba and Lincolin, 1989).
17
Figure 2.1: Conceptual framework for the study
Independent variables Independent variables
Source: Developed by using Literature Review by the Author, 2020
2.6. Explanatory of Conceptual Framework
According to the conceptual framework of the study on business in the Tanzania
imply that most of the kinds of business conducted in Tanzania are sole proprietors,
general partnership, limited partnership and Business Corporation. The dominant
factors for the business development are staff motivation, unemployment rate,
management experience, number of founders, prior self-employment, prior business
failures, prior size experience, working training and management staff training while
knowledge and skills needed for the business development are training knowledge
• Staff motivation • Unemployment rate • Management experience • Number of founders • Prior business failure • Prior size experience • Workforce training • Management staff
training.
• Training knowledge and skills
• Staff innovative knowledge
• Tax payment knowledge
• Sole proprietorship • General partnership • Limited partnership • Business corporation
Kinds of business conducted in Tanzania
Dominant factors for business development
Knowledge and skills for business development
18
and skills, staff and innovative knowledge and tax payment knowledge. Therefore,
this imply that dependent variable and relationship with independent variables.
2.7 Gap of Knowledge
This study was intended to reveals the business in the third world countries since
many studies did not focus on that study area. Previous studies did not focus direct in
the business in third world countries for examples Akinboade, (2010) the study
reported on Business conducted in Africa, Kuzilwa (2003) reported on the ambitions
made by Tanzania on long process of economic growth and reduce poverty and Udell
(2004) reported on the objectives whether banks are more stringent and cautious in
approving the financing SMEs. Therefore, this study intends to revels on the
delineation of business in the third world countries specifically in Tanzania.
19
CHAPTER THREE
RESEARCH METHODOLOGY
3.0 Introduction
Kothari, (2003) defines research methodology as a scientific and systematic way to
solve research problems. The chapter presents the procedures, methods that used in
gathering information. This chapter presents area of the study, study population,
sample and sampling procedures, data collection instruments and data analysis plan,
validity, reliability of data collection instrument and the issue of ethical consideration.
3.1 Research Design
According to Bryman, (2008) research design entails the detail exploration of the
specific case, which could be community, person or organization. Generally, research
design is a framework for collecting and analyzing data. Kothari, (2004) define
research design as the arrangement of conditions for collection and analysis of data in
a manner that aims to combine relevance to the research purpose with economy in
procedure. The research design is very important in doing research as it plays major
task to define the research problem. According to Kothari (2004), Frankfort (2004)
mention some significance of research design in doing research, research design
stands for advance planning of methods to be adopted in collecting the relevant data,
helps to time and money, helps to test hypothesis. Generally, it was a logical model of
proof that allowed the researcher to draw inference concerning the causal relationship
among the variable under investigation.
The research design was case study where by Tanzania was selected as the case study
for this study. This was a place that many business activities were conducted. The
area was selected because there were larger numbers of small, medium enterprises
hence it was easy to get relevant information based on study. Also, this was the place
where by researcher was coming from.
20
3.2 Area of the Study
The study was conducted in Ilala district in Dar es Salaam region. The district covers
an area of 365 km² with the total population of 1,220,611 people. According to
Kothari (2004) area of the study as the place where the researcher is intended to
collect the data for his/her study. In this study the researcher conducted the data in
Tanzania. However, the study was be conducted at these areas because there were
popular number of business related to those in third world countries hence it will be
easy to get relevant data for the study. The study also was conducted at this area
because are the representative areas of third world countries that have many business
activities compared to other areas of Tanzania.
3.3 Study Population
Kothari (2007) defines population as the group of people who researcher is interested
to collect the study. From this study researcher was preferred to use Businessmen,
TRA Officers and municipal officers in getting relevant information for the study.
The researcher used these study populations because were easily available from the
field area and they have relevant information concerning business in Tanzania.
3.4 Sample and Sampling Procedures
3.4.1 Sample Size
Kothari (1990) defined sample size as the total numbers of people where researcher
selecting them in order to obtain relevant information from his/her study. In this study
researcher used total number of 50 respondents. These number of were selected
through simple random sampling and purposive sampling.
3.4.2 Sampling Procedures
Cohen (2008) defines as the techniques used by researcher to select respondents from
a given lager population. The researcher is intended to use purposive and simple
random sampling in selecting the respondents. Below is the way simple random and
purposive sampling was employed in selecting participants from the study area.
21
3.4.2.1 Purposive Sampling
According to Kombo and Tromp, (2006) purposive sampling means ways of selecting
particular units of the universe for constituting a sample which represents the
universe. From this study the researcher used purposive sampling to collect data from
TRA and Municipal Officers. The purpose sampling was employed by the researcher
TRA officers through direct approach where by researcher follow them at their
working place and included in the study since they were only participants who had
more information concerning with the study. This made 10 participants to be included
from the study during data collection. This technique employed because it helped
researcher to get participants who gave detailed information. Moreover, the
researcher used this technique because it helped in selecting right respondents from
the field area.
3.4.2.2 Simple Random Sampling
Kothari (2003) defines simple random sampling as the chance sampling or probability
sampling where each and every item in the population has an equal chance of
inclusion. The researcher used simple random sampling in selecting businessmen.
The researcher selected participants with this technique by providing randomly piece
of card from 80 participants numbered from 1 to 80 and then selects those participants
with number divided by 2 which provided total participants of 40. Then these were
included from study. The researcher used this technique because it was the fast
method used to cover lager number of respondents. This technique used in selecting
respondents because it helped him to gives equal chance to all participants.
Table 3. 1: Summary of Sample Size and Sampling Techniques No Sample Size Population Total Sampling Techniques 1. TRA officers 30 15 Purposive sampling 2. Municipal officers 30 15 Simple Random Sampling 3. Businessmen 40 20 Simple Random Sampling Total 100 50 Simple Random Sampling
Source: Field Study (2019)
22
3.5 Methods of data collection
Kothari (2007) defines methods of data collection as the ways used by the researcher
in data collection from the field study. In this study researcher used different methods
of gathering information base on the topic of study conducted, from the study
researcher used questionnaire.
3.5.1 Questionnaire
Kothari (2003) explains questionnaire as a research instrument’s consisting of a series
of questions and other prompts for the purpose of gathering information from
respondents. The researcher prepared the printed questions and administering to the
municipal officers. This method used because it used to cover larger number of
people at the short time. However, the researcher was familiar with the method of
data collection. Moreover, the researcher used this researcher helped researcher to get
more views from the field area.
3.6 Validity and Reliability of Data Correction Instruments
The instruments which were used by the researcher in data collection such as
questionnaire was reliability. The instrument used for data collection from this study
was validity and reliable because researcher pre-test all questions to the participants
of the study who gave relevant and expected information by the researcher.
Therefore, the instrument for data collection validity and reliable because participants
provided data based on the purpose of research and needs of researcher. Few small
and medium entrepreneurs were selected by the researcher to fill questionnaires.
3.7 Data Analysis
According to Kothari (1990) data analysis is the process that implies data collection,
editing, coding, and classification, analysis and cross tabulation. In this study, the
researcher employed descriptive method of data analysis in analyzing data from the
study area. The quantitative data were analyzed through the use of graphs, tables,
charts, percentages and figures and qualitative information were analyzed through the
use of explanations.
23
3.8 Ethical Consideration
The researcher observed the discipline and ethic during data collection from the
respondents in order to create positive mind of the respondents. However, the
researcher showed the relationship with the respondents in order to open the mind or
the respondents to give more information openly. However, the researcher escaped
from using bad language to the respondents in order to create peacefully environment
between researcher and respondents.
24
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
4.0 Introduction
This chapter presents preliminary information of the study including age, sex,
education levels and experience of the workers. Moreover, the chapter shows data
presentation as well as data analysis of the findings.
4.1 Respondents Profile
This preliminary information includes age, sex, education level, experience of the
workers at the working places, number of working staffs in business organization,
management levels of business organization and management levels of business
organization.
4.1.1 Age
The study collected information about age of participants who were involved in the
study during data collection from the study area. The findings based on the age of the
participants were indicated on the table 4.1:
Table 4. 1: Ages Ages Frequency (F) Percentages (%)
10 to 35 20 40 35 to 45 10 20 46 to 55 15 30
56 and above 5 10 Total 50 100
Source: Field Study (2019)
The results (Table 4.1) indicate that out of 50 (100%) respondents, 20 (40%)
respondents have age ranging 10 to 35, 10 (20%) have age ranging 36 to 45, 15 (30%)
have age ranging 46 to 55 and 5 (10%) have age ranging from 46 and above.
Different age of participants was involved in the study because helped researcher to
examined types of ages that were involved from study at larger extent.
25
4.1.2 Gender
The study also collected data from both male and female participants from the study
area in order to ensure their gender equality and all sexes providing their views from
the study. The following were the gender of the participants involved from the study:
Table 4. 2: Gender Genders Frequency (F) Percentage (%) Male 36 72 Female 14 28 Total 50 100
Source: Field Study (2019)
The results (Table 4.2) shows that out of 50 (100%), 36 (72%) participants were male
and 14 (28%) participants were female participants. In this study both male and
female were involved because participates in business activities and they have
opinions that can contributes data collection. This indicate male participants were
popular than female because male have good economic status than female and hence
larger number of business in the study area were owned by male, this made them to
be popular in the study during data collection.
4.1.3 Education Levels of Participants
The study also collected data related to the education levels of participants involved
in the study during data collection. The aim was to observe whether participants have
knowledge and skills related to business. Different education levels were involved in
the study as follows:
Table 4. 3: Education Levels Education levels Frequency (F) Percentage (%) Standard seven 2 4 Form four levers 3 6 Form six 5 10 Certificates 7 14 Diploma 12 24 Bachelor degree 14 28 Master degree 7 14 Total 50 100
Source: Field Study (2019)
26
The results (Table 4.3) shows that out of 50 (100%) participants, 2 (4%) participants
their educational levels were standard seven,3 (6%) their education levels were form
four leavers, 5 (10%) their education levels were form six leavers, 7 (14%) were
holder of certificates, 12 (24%) were diploma, 14 (28%) were bachelor degree and 7
(14%) were master’s degree holder. The dominant popular population had bachelor
degree education levels because many of the businessmen and administrative officers
from TRA and municipal they already have participated in business colleges found to
field are in order to get experience that will improve their business activities.
4.1.4 Experience at Working Places
The following are the working experience of participants as indicate on table 4.4.
Table 4.4: Working Experiences of Workers Year of experiences Frequency (F) Percentage (%) 6 12 24 8 13 26 5 14 22 4 11 22 Total 50 100
Source: Field Study (2019)
The results (Table 4.4) showed that out of 50 (100%) participants, 12 (24%) said they
had been working for 6 years, 13 (26%) participants said they have been working
position for 8 years, 14 (22%) participants said they have been working for five years
and 11 (22%) said they been working for four years. The study implies that
participants with experience of more than three years of working experience were
involved at larger extent.
4.1.5 Management Level at Business Organization
The respondents were asked to indicate the management levels in business
organization. The following figure 4.1 provide the findings:
27
Figure 4. 1: Number of Workers in Management levels
20%
33.33%
46.67%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Strategic level Tactical level Control level
Source: Field Study (2019)
The results (Figure 4.1) shows that out of 50(100%) participants said 20% of workers
they are working in strategic management levels, 33.33% of workers they are
working at tactical level and the remaining 46.67% of workers in business
organization they are working at control level. The implication of this study is that
many workers in business organization they working at control levels in business
organization. The findings are supported by Tan (2013) who agree that both tactical,
control and strategic are important for the management of information system with
the business hence businessmen should ensure that these levels of management
should employed at the business in order to ensure that information concerning with
the business is well managed within the organizations.
4.2 Research Findings
The findings collected from the study based on the specific objectives of the study are
presented as follows:
28
4.2.1. Kinds of Business Conducted in Tanzania
The respondents were asked to indicate kinds of business activities conducted by the
people in Tanzania particularly in Dar es Salaam region. Hence figure 4.2 represents
the four types of business as follows.
Figure 4. 2: Kinds of Business Conducted in Tanzania
10%16.67%
23.33%
50%
0%
10%
20%
30%
40%
50%
60%
Sole propritorship General patnership Limited partnership Bussiness corporation
Source: Field data (2019)
The results (Figure 4.2) show that out of 50 (100%), 10% of the businessmen were
sole proprietorship, 16.67% were general partnership, 23.33% of the businessmen
were limited partnership and the remaining 50% were business cooperation. The
findings imply that many of the businessmen participated in business activities at the
field area were business cooperation. The findings are supported by the Owino,
(2013) who reported different forms of business which normally conducted in the
third world countries particularly Tanzania which were sole proprietorship, general
29
partnership and Business Corporation while few people conducting limited
partnership.
Forms of Business in Tanzania
The respondents were asked to indicate forms of business conducted in Tanzania. The
following the figure 4.3 show their responses concerning with forms of business
conducted in the third world countries.
Figure 4. 3: Forms of Business in Tanzania
10%16.67%
23%
50%
0%
10%
20%
30%
40%
50%
60%
Manufacturing Service Wholesaler Retailer bussiness
Source: Field data (2019)
The results (Table 4.3) show out of 50 (100%) of the participants, 10% said forms
business conducted in the third world countries were manufacturing, 16.67% of the
participants said forms of business conducted were service, 23.33% said form of
business conducted were wholesaler and 50% said form of business conducted were
retail business (Figure 4.3). The findings imply that many participants said forms of
30
business conducted were retail business since there were larger numbers of people in
the community who are practicing small business in retail form. The findings can be
supported by Wino (2013) who reported that indicated that forms of business
conducted by people of Tanzania particularly in Dar es Salaam region were
manufacturing, service, wholesaler and retailer business.
In African nations there are different businesses which are conducted by the people
including both wholesale and retail trade. For example, in Kenya the dominant
business forms conducted by the popular of the people are sole proprietorship which
is owned by single person, partnership where two or more people share capital and
management of business.
These are among of the forms of business which are popular dominant to the people
of Kenya and these forms of Business in Kenya are conducted by both business
companies and individuals themselves (Campbell, 2014). But in some areas there are
Limited Liability Company (LLC) which conducted by the people but not in larger
extent compared to sole proprietorship and partnership. Uganda and Rwanda have the
same forms of business which are conducted in the countries. Uganda and Rwanda
have sole proprietorship, partnership and corporation forms of business which are
conducted by the people legally while these forms of business are owned by the
people while others owned by the companies (IRS, 2015).
4.2.2 Dominant factors for business development in Tanzania
The participants were asked to indicate the dominants for business development in
Tanzania. The responses of participants were indicated in the figures as follows:
Staff motivation
The researcher wanted to know from participants on how staff motivation influence
business development in Tanzania. The following were the responses of participants
on such question in figure 4.4.
31
Figure 4. 4: Extent staff motivation influence business development in Tanzania
13% 13%7%
13%
50%
0%
10%
20%
30%
40%
50%
60%
Strong disagree Somewhat disagree
Neutral Somewhat agree Strong agree
Source: Field data (2019)
The results (Figure 4.4) showed that out of 50 (100%) of the participants, 13.3%
participants were strong disagree staff motivation influence business development in
the third countries, 13.3% indicated somewhat disagree that staff motivation influence
business development in business development, 6.67% were neutral that staff
motivation influence business development in third world countries and 13.3%
indicated somewhat agree that staff motivation influence business development in the
third world countries and 16% were strong agree that staff motivation influence
business development in the third world countries.
The implication shows that many participants were strongly agree staff motivation
influence business development in the third world countries. The findings are
supported by Johnson, (2015) who indicated the roles of motivation to the
performance of workers at the working place. On his findings showed that
improvement of organization increased through staff motivation of workers within the
32
organization. Therefore, staff motivation is important for the business development in
the third world countries.
Unemployment rate
The respondents were also asked to indicate on how unemployment rate was the
dominant factors for business development in Tanzania. The following figure 4.5
provides the findings.
Figure 4. 5: The extent unemployment rate increased business development
33.30%
13.30%
20%
26.66%
6.67%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
Strong disagree Somewhat disagree
Neutral Somewhat agree
Strong agree
Source: Field data (2019)
The results (Figure 4.5) shows that out of 50 (100%), 33.3% of the participants were
strong disagree that, unemployment rate was dominant factor for business
development, 13.3% of the participants indicated somewhat disagree that
unemployment rate was the dominant factor for business development, 20% of the
participants were neutral that unemployment rate was dominant factor for business
development, 26.66% of the participants indicated that somewhat agree that
unemployment rate was dominant for business development and the remaining
33
6.67% of the participants were strong agree that unemployment rate was dominant
factor for business development. The implication showed that many respondents were
strongly agree that unemployment rate has contribution to the business development.
Management Experience
The researcher was interested to know whether management experience contributed
to business development in the third world countries. The findings of data were
presented in the figure 4.6:
Figure 4. 6: The Extent Management Experience is the dominant factor for
business Development
33.30%
13.30%
30%26.66%
6.67%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
Strong agree Somewhat agree
Neutral Somewhat disagree
Strong disagree
Source: Field data (2020)
The results (Figure 4.6) shows that out of 50 (100%), that, 33.3% of the participants
were strong agree that management experience was the dominant factor for business
development in the third world countries, 13.3% of the participants indicated
34
somewhat agree management experience was dominant factor for business
development in Tanzania, 20% of the participants were neutral that management
experience was dominant factor for business development in the third world
countries, 26.66% indicated somewhat disagree that management experience was
dominant factor for business development and 6.67% were strong agree that
management experience was dominant factor for business development in Tanzania.
The findings imply that many of the respondents were strongly agree that
management experience was dominant for business development in Tanzania.
Therefore, in order to increase development of business in the third world countries
including Tanzania it is important to ensure there is experience of management in
business activities. The findings are supported by Johnson, (2015) who indicated
that management experience was the dominant factor for business development in the
third world.
Number of founders
The researcher was interested to examine the extent of founders’ business was the
dominant factor for business development in Tanzania. The findings are presented in
the figure 4.7.
35
Figure 4. 7: Number of Founders Contributing Development
33.30%
27.67%
20%
13.30%
6.67%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
35.00%
Strong agree Somewhat agree
Neutral Somewhat Strong disagree
Source: Field Study (2019)
The results (Figure 4.7) shows that out of 50 (100%) participants, 33.3% of the
participants were strong agree that number of founders was dominant factor for
development business in the third world countries, 26.67% indicated somewhat agree
numbers of founders was dominant factor for growth and development of business in
the third world countries, 20% were neutral that numbers of founders was dominant
factor for business development in the third world countries, 13.3% indicated
somewhat agree that numbers of founders was dominant factor for business
development in the third world countries and 6.67% were strong disagree numbers of
founders was dominant factor for business development in the third world countries.
The implication shows that many of the respondents were strongly agree that number
of founders was dominant factor for business development.
36
Prior self-Employment
The researcher wanted to know how prior knowledge to people was dominant factor
for business development in the third world countries. The findings were presented in
the figure 4.8.
Figure 4. 8: The extent prior self-employment is dominant factor for business
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APPENDICES
Appendix I
QUESTIONNAIRE FOR GOVERNMENT MUNICIPALS
Introduction
Dear participant, Iam a student from Mzumbe University undertaking Master Degree
in Business Administration. I request you in providing information on the delineation
of Business in the third World Countries. The information provided will be used for
research only and otherwise.
Personal Information
Date…………………………
A. Age……………………
B. Sex………………….....
C. Education level………..
D. Professional expertise Engineer [ ] Entrepreneurship [ ]
Business Management [ ] Agriculture [ ]
Food science [ ] others [ ]
How Many Staff Working in the Business Organization?
………………………………………………………………………………………….
What is your working Level at the business organization?
Strategic Level [ ]; Operations/Tactical [ ]; Control [ ].
QUESTIONS
1. The kinds of business conducted by the third world countries.
(Please tick where appropriate)
i. What are the kinds of business conducted by the people in your community?
Sole proprietorship [ ] General Partnership [ ] Limited Partnership [ ]
Business corporations [ ]
ii. Which are the forms of business conducted by many people in the third world
countries like Tanzania?
(Please tick where appropriate)
71
Manufacturing [ ] Service [ ] Wholesaler [ ] Retail business [ ]
2. Determine dominant factors for business development in the third world
Countries
2.1: To what extent entrepreneurship and/or resources has hindered
Development of your business
SN
Measure variable
Likert scale 1 2 3 4 5 6
ii. Staff motivation iii. Unemployment rate iv. Management experience v. Number of founders vi. Prior self-employment Vii Functional skills viii. Prior business failure ix. Prior size experience
Five point Likert scale: 1 = Strongly disagree, 2 = Somewhat disagree, 3 = Neutral, 4 = Somewhat agree, 5
= Strong agree 3.2 To what extent does firm type has hindered development of your business
SN
Measure variable
Likert scale 1 2 3 4 5 6
i. Workforce training ii. Management training iii. Technological sophistication iv. Market positioning v. Market adjustment vi New products vii. Management style viii. Customer concentration ix Competition in business
Five point Likert scale: 1 = Strongly disagree, 2 = Somewhat disagree, 3 = Neutral, 4 = Somewhat agree, 5
= Strong agree
72
3. The knowledge and skills for business development in the third countries.
SN
Likert scale 1 2 3 4 5 6
i. Training and knowledge and skills ii. Staff and innovative knowledge
iii. Tax payments and compensation knowledge iv. Technological knowledge and skills
vi. Technology knowledge and skills
Five point Likert scale: 1 = Strongly disagree, 2 = Somewhat disagree, 3 = Neutral, 4 = Somewhat agree,