Entrepreneurship in Dar – challenges and opportunities

The CDI and KITE Dar es Salaam (KITE DSM) Entrepreneurship Project is currently running two projects, Youth Business Challenge (YBC) and InTo Business Seminar Series (ITB), to encourage local entrepreneurship and increase entrepreneurial skills among young people in Dar es Salaam in an effort to reduce youth unemployment. This week’s Entrepreneurship blog post will give some background as to why we are doing this, both through providing some insight to the general employment situation in Dar es Salaam, and through providing some personal testimonials from KITE DSM volunteers with first-hand experience from seeking internships and employment in the city.

Youth unemployment in Dar es Salaam is a large and growing problem. A growing population and consequently growing labour force is competing for employment opportunities. There are approximately 800,000 young Tanzanian professionals competing for 416,000 formal jobs. However, a significant proportion of economic activity in Dar es Salaam is highly informal in nature and the informal sector accounts for about 85% of employment in Tanzania. This is very much in line with the experiences of the KITE DSM volunteers;

“It is difficult in Dar es Salaam, in fact not only in Dar es Salaam, people look for work all over Tanzania but it’s still really difficult,” Collince, who just graduated with a Bachelor of Arts in economics and statistics, says. Bryson, a Bachelor of commerce and finance student, further adds that “Very few students get internships and work during the summer after completing their education, it’s a big problem these days in Dar es Salaam because of the current situation – there are lots of graduates and very few employment opportunities available.”

While Tanzanians struggle to find employment in the formal sector, employers also testify that they struggle to find applicants with the right skills, mainly mentioning English proficiency, communication skills, problem-solving ability and innovation. Both YBC and ITB focus on bridging this gap between skills gained through the formal education system and the skills that employers request. This is done partly through placing young people within start-ups where they get to gain first-hand experience participating in the type of activities that builds these skills. Because the start-ups are fairly small in scale the role of each person is also more versatile, which optimises the learning process. It is further done through inviting young people to learn from more experienced entrepreneurs who, through a series of seminars, will communicate the type of skills that will increase the employability of young people, or even encourage them to start their own enterprise.  

Many of the KITE DSM volunteers mentioned that rather than taking a job in a sector that was unrelated to their field of education or interest, they would be happy to start their own enterprise. In fact, several are already running their own small-scale businesses. Bryson, for example, supplies electronic cell phone appliances and helps fellow students with software problems on their PCs, a skill he has gained from his first year of study that he is now putting to use, and Fatma, a Law student, is selling clothes and cosmetics to fellow students and members of her community, using her knowledge of where the informal marketplace for such goods is situated and marketing her products through WhatsApp.

So is Tanzania fertile soil for entrepreneurship then? Tanzania ranks 118 of 137 countries globally in GEDI’s 2018 Global Entrepreneurship Index, with the strongest area being product innovation and opportunity perception and the weakest being start-up skills and risk acceptance. There surely seems to be no lack of innovation, at least not amongst the KITE DSM volunteers, but Collince raises an important issue as the most important reason to why he has not started his own business yet, “Sure, I would like to, but… where is the capital?”

He is correct to ask where the capital is; more than half of Tanzanian MSMEs (Micro, Small and Medium Enterprises) state lack of capital as the main constraint to growing their business, and for entrepreneurs who wish to start a business, access to capital is likely to be a complicated process. MSMEs in Tanzania typically lack access to finance from local banks, partly as a result of regulations and strict requirements from banks. Only 12% of SMEs currently own a credit line at a financial institution. This limits the ability for entrepreneurs to source capital and venture, expand their enterprises and to bring them online. For entrepreneurs operating outside of major cities, financial inclusion is another obstacle, as financial services are not as accessible, and most banks’ branches are concentrated in Dar es Salaam.

We therefore consider access to knowledge about how to navigate this situation through learning from experienced entrepreneurs key to success, but also to gain entrepreneurial and start-up skills that are vital to secure and manage capital, and through our projects we are trying to communicate and spread such skills – and we have an optimistic outlook on the future. The KITE DSM volunteers share some of the skills they personally feel have benefitted their entrepreneurial activities: Fatma mentions that communicating and networking has opened up a lot of opportunities for her, Edward mentions digital skills and Bryson emphasises the importance of planning ahead for the future to make the most of available opportunities.

They all took part in organising the opening event for this summer’s projects, which took place on Monday. We are looking forward to tackle some of these challenges together with a bunch of ambitious participants, experienced entrepreneurs and motivated volunteers!

By Sofia Elvira Persson, Entrepreneurship Volunteer 2019
Sofia is a first-year studying Human, Social and Political Sciences (HSPS) at Lucy Cavendish College.

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