MZUMBE UNIVERSITY

DAR ES SALAAM BUSINESS SCHOOL

RESEARCH PROPOSAL

CONTRIBUTION OF PUBLIC - PRIVATE PARTNERSHIPS IN JOB

CREATION IN TANZANIA’S SME SUB – SECTOR

SUPERVISOR: DR. F. MWAIJANDE

REGISTRATION NUMBER: 1806/T09

IRENE C. MWASAGA

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 CHAPTER ONE
Background Information and Statement of the Problem
Background Information
Tanzania embarked on macro economic reforms in the 1980s, it adopted the policy position to
allow the private sector to play a major role in the provision of goods and services. The
Government of Tanzania has been implementing socio-economic reforms aimed at stimulating
high rates of economic growth for the achievement of poverty reduction goals, resulting in
substantial economic performance. The reforms include fiscal and monetary policies,
privatization of state owned enterprises, trade liberalization, improvement of the business
environment and strengthening of public expenditure management.

These reforms have resulted into encouraging performance of the economy. Tanzania has
experienced steady recovery in growth from 2 percent per annum from 1990 – 1995; to 4 percent
during the period 1995 – 2000. Macro – economic performance over the period 2001 – 2007 was
impressive: the GDP growth during this period averaged 7.0 percent per annum; and inflation
averaged 6.5 percent over the same period. Inflation rate for Tanzania was 7.2 percent in 2008,
and rose to 12.1 percent by September 2009. This was caused by rising fuel prices, drought, and
the global financial crisis (URT, Economic Survey, 2010)

However, Tanzania needs to sustain a high GDP growth rate of 10 percent or more in order to
achieve the goals of the National Development Vision 2025. Investments have also increased
from 17.6 percent of GDP in 1995 to 26.3 percent in 2008; while savings as a percentage of GDP
remained at a low level of 15.4 in 2008. However, credit to the private sector has maintained an
upward trend from 4.6 percent of GDP in 2001 to 13.8 percent in 2007, but it remains low
compared to other developing countries.

According to the Poverty and Human Development Report (2009), the proportion of population
below the basic needs poverty fell from 18.7 percent to 16.6 percent. Poverty is mainly a rural
phenomenon whereby 37.6 percent of rural households live below the basic needs poverty line,
compared with 24 percent of households in urban areas and 16.4 percent in Dar es Salaam.

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National Vision 2025 requires the Government to permit and facilitate various actors to
participate in economic growth, inter-alia, by encouraging the private sector to undertake
investments in all social and economic development. Such investments can be achieved through
PPPs frameworks. The government anticipated that, private sector will be an engine of economic
growth thereby creating jobs, contributing to government coffers in terms of employment
opportunities and hence reduction of poverty.

The 2005/06 Integrated Labour Force Surveys that have been undertaken show that, Labour in
Tanzania is engaged mainly in 22 occupations. The largest occupation group of these is the small
holder farming in the agriculture sector, followed by service/shop sales workers and elementary
occupations, which account for 91 percent of the total occupational employment. The services
sector on the other hand, has improved its performance, growing at 6.6 percent in 2002 from 4.8
percent in the previous year. Trade which include hotels, retail and wholesale trade, expanded by
7 percent in 2002.

The extent to which the private sector through PPPs had contributed to job creation has been a
matter of debate among the policy makers, private sector itself and other groups in the society. It
is from this background that the researcher wants to find out the extent to which the private
sector under Public – Private Partnerships (PPPs) has contributed to the to job creation mainly in
the SME sector in the country

Problem Statement
According to the Tanzania’s National Employment Policy of 2008, Tanzania embarked on
implementing series of economic reforms that gradually placed the economy on a sounder
footing. The ongoing reforms have yielded substantial economic growth and impressive
performance of the economy at the macro level in the past ten years. The achievements in GDP
growth stemmed from improved performance in agriculture, wholesale and retail trade, hotels,
restaurants, tourism, mining, and manufacturing. In spite of the positive achievements recorded
through Tanzania’s macroeconomic stabilization policies, crucial challenges remain. One of
these; is the high levels of unemployment and poverty in the country.

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Empirical evidence from the ILFS 2006 shows that unemployment rates area highest for persons
below 35 years of age in all areas. On the other hand, the total number of employed youth 9aged
15 – 34) according to the National definition is 9,056,217 while the unemployed youth are
1,398,667, about 13.4percent of the total youth workforce (ILFS 2006). This high rate is calling
for the attention of the government and other stakeholders to prepare well – targeted policies and
programmes that address youth unemployment. The growth in the labour force consists mainly
of primary and secondary leavers with little or no skills. This demands substantial investments in
human capital development as well as development strategies to ensure future job creation
opportunities and accordingly also the elimination of child labour country wide. On the other
hand, the increasing number of entrants into the labour market also offers an opportunity for
increased production and productivity if these new entrants are equipped with the employable
knowledge, skills and training, required by the labour market.

The researcher needs to conduct a study which will come out with empirical evidence to support
the proposition that the Public – Private Partnerships provide a powerful instrument among
others in job creation in Tanzania.

Research Questions
This study will be guided by the following research questions:

i) What is the contribution of PPPs in job creation in the SME sub – sector?

ii) How the implementation arrangements of PPPs in the country are supporting the creation
of job as a means to promote SME sub - sector in Tanzania?

iii) How does the government facilitate PPPs through SME sub sector in the country?

iv) To what extent has the private sector taken the available opportunities existing in the
country to create more jobs in the country?

Research Objectives
The overall objective of the study is to explore the contribution of PPPs in job creation in the
SME sub – sector.

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Specifically, this study intends to:

i) Examine the implementation arrangements of PPPs in the country are supporting

the creation of job as a means to promote SME sub - sector in Tanzania;

ii) Examine the institutional factors established by the government to facilitate PPPs
through SME sub - sector in the country.

iii) Analyze conditions and identify potentials opportunities for improving the role of
PPPs in fostering the development in respect of creating job in the country.

Significance of the study

i) It is expected that the study will provide in – depth insights on better utilisation of
available opportunities in SME Sub – sector in building a vibrant private sector to achieve
desired growth.

ii) Findings will contribute to readily available national policies and strategies especially on
the role of SME Sub – sector towards creating a strong economy through PPPs.

iii) Moreover, this study will aid SMEs in the country to be able to meet current and future
challenges of increasing number of job seekers in both formal and informal sector.

iv) The study will also contribute knowledge to other researchers and policy makers on
coming up with focusing their studies and/or actions to the improving human capital with
regards to increasing productivity.

Scope of the study

The study is limited as it looks at exploring the contribution of PPPs in job creation in the SME
sub – sector in Dar es Salaam. The City constitutes an important location and holds a large
number of employed and unemployed populations. Accordingly, the analysis and conclusions
will be based on the time period of TPA since it was changed from Tanzania Harbours
Authority.

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Limitations of the Study
The problems which will limit my study include financial constraints since doing a research is
costful and hence requires financial support. Furthermore, communication and time expected is
too short thus this might limit the study to some extent.

Delimitation
There are many SMEs in the country which are both in urban and rural areas. I have decided to
focus on SMEs available in Dar es Salaam because, it is the commercial capital of the country
and hence it is easy to have both natures of urban and rural settings. Furthermore, it would be too
expensive to study all SMEs in the country in general as well as consuming a lot of time.