19th annual research workshop mobile phones and micro and small enterprises (mse) performance and transformation in dodoma, tanzania by Dr. V. Venkatakrishnan

Draft – Strictly Not for Quotation


19^th ANNUAL RESEARCH WORKSHOP


MOBILE PHONES AND MICRO AND SMALL ENTERPRISES (MSE) PERFORMANCE AND TRANSFORMATION IN DODOMA, TANZANIA
By 
Dr. V. Venkatakrishnan
Draft Working Paper S1G

Presented at REPOA’s 19^th Annual Research Workshop

held at the Ledger Plaza Bahari Beach Hotel, Dar es Salaam, Tanzania;

April 09-10, 2013

This preliminary material / interim, or draft research report is being disseminated to encourage discussion and critical comment amongst the participants of REPOA’s Annual Research Workshop. It is not for general distribution.
This paper has not undergone REPOA’s formal review and editing process. Any views expressed are of the author(s) and do not necessarily represent the views of REPOA or any other organisation.

Table of Contents

ACKNOWLEDGEMENT ii

Introduction 1

SECTION I: SMEs IN TANZANIA 2

SECTION II: LITERATURE ON ICT USE BY SMEs 5

SECTION III: MOBILE PHONE SERVICES IN TANZANIA 8

Teledensity of Tanzania 9

Market share of mobile operators in Tanzania 10

Voice minutes and SMS per user 11

Unstable tariff for on-net mobile calls in Tanzania 12

Stable and low charges for SMS and high charges for off-net calls 13

High off-net calls tariff – challenge for further growth in the telecom sector 14

The Average Revenue Per User (ARPU) 15

SECTION IV: MOBILE PHONES FOR DEVELOPMENT IN TANZANIA 17

SECTION V: MOBILE PHONES AND SMEs 23

Mobile phones usage by African SMEs 23

Smart phone applications for SMEs 24

Mobile phones usage by Tanzanian SMEs 24

SECTION VI: MOBILE PHONES USAGE AND MSE TRANSFORMATION IN DODOMA 28

Research Methodology 28

Profile of the enterprises surveyed 28

ICTs used by MSEs 28

Ranking of mobile phone services usage for business purposes 30

Mobile service providers subscribed 30

Business related use of mobile phones by MSEs 31

Ranking of technological barriers for using mobile phones 34

Cost of using mobile phone services 34

SECTION VII: CONCLUSION AND RECOMMENDATIONS 36

Summary and conclusion 36

Recommendations 38

Select references 40

Kisini M B (2012), The implications of integrating smart mobile phone applications on Small and Medium Enterprises (SMEs) in Kenya-a case study of mobile usage in Nairobi region, Manakin Repository, University of Nairobi, Nairobi 43

ACKNOWLEDGEMENT

The cooperation extended by all the respondents of this study is hereby acknowledged. Mr Mnyaonga, Samora P, my former BA (Development Studies) student who graduated in 2012 has helped in the survey of the MSEs at Dodoma. My dear children Karthik and Gokul facilitated the data entry and analysis using SPSS. My wife Kavitha has motivated me to use our personal resources for undertaking this self-sponsored study. My thanks and appreciation to all of them; however, the errors and omissions, if any, are mine.

MOBILE PHONES AND MICRO AND SMALL ENTERPRISES (MSE) PERFORMANCE AND TRANSFORMATION IN DODOMA, TANZANIA
V. Venkatakrishnan¹

Introduction

Tanzanian Small and Medium Enterprise (SME) sector was said to contribute about one-third of the GDP (Olomi, 2006:1). In 2010, the small businesses were estimated to contribute about 27% of the GDP to the Tanzanian economy (URT, 2012b:16). It has also been claimed that the micro and small enterprises (MSE) play a crucial role in employment creation and income generation in many developing countries (Kuzilwa, 2005: 131; Fjeldstad, Kolstad and Nygaard: 2006:1). With regard to many African countries, the SMEs are stated to account for a significant share of production and employment and are therefore directly connected to poverty reduction (Wolf, 2001:2). Even in Malaysia, which has been cited as a relevant model to Tanzania in the REPOA’s 18^th ARW held in 2013, SME sector was considered to be of great importance to the economy. Therein, it had been recognized as the backbone of the economy and played a significant role in generating employment, enhancing the quality of human resources, nurturing a culture of entrepreneurship, supporting the large scale industries and opening up new business opportunities. The SME sector in Malaysia reportedly employed about 5.6 million people, contributed 32% to Malaysian gross domestic product and 19% of total exports of the nation (Selamat, Jaffar and Kadir, 2011: 135).

In Tanzanian context also, SMEs are seen as a key to the economic growth and poverty reduction. The National Strategy for Growth and Reduction of Poverty (NSGRP) has identified development of SMEs as among the key strategies to attain the target of reducing poverty (URT, 2005). A study conducted in Dar es Salaam has found that the small businesses contribute to alleviating poverty. It also showed that the average incomes generated by surveyed businesses (both profit margins and salaries) were above the basic and food poverty lines, much more for small-scale enterprises than micro-enterprises (Mnenwa and Maliti, 2008:viii)